Further to our earlier post discussing COVID-19 and Material Adverse Change (“MAC”) provisions in M&A Agreements that addressed the lack of relevant Canadian court decisions and the associated uncertainty in their interpretation, Canadian capital market participants are watching with keen interest the dispute between Rifco Inc. (“Rifco”), an alternative auto financing company that trades on the TSX Venture Exchange, and its potential acquiror CanCap Management Inc. (“CanCap”).

CanCap is looking to back out of the deal signed on February 2, 2020 on the basis Rifco has suffered a MAC for, among other reasons, the outbreak of COVID-19. We note that the definition of a MAC in the agreement does not specifically carve-out COVID-19 or pandemics. A full-day hearing tomorrow at the Court of Queen’s Bench of Alberta in Calgary is expected to consider the proposed arrangement and the purported MAC. We will provide a further update as the saga unfolds.