| Commentary

126.4 Refusal to provide retention

| Commentary

126.4 Refusal to provide retention

Where the sellers refuse to agree to provide a retention, the buyer will generally become an unsecured creditor of the seller in the event that there is a breach of the share purchase agreement and the seller become insolvent. Unsecured covenants on the part of the sellers for example, to maintain assets within the jurisdiction, maintain net worth, restrict dividend payments in the case of a corporate seller or maintain deposits at a prescribed bank, will provide no effective comfort in the event of a breach of those obligations by an insolvent seller. The buyer

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