Standstill Agreement

Key Highlights

• A Standstill agreement is a legally binding contract where parties agree to temporarily pause or limit specific actions for a set period.

• Types includes mergers & acquisitions, litigation standstill, financial standstilland shareholder standstill.

What is Standstill Agreement?

A Standstill Agreement is a legally binding contract where parties agree to temporarily pause or limit specific actions for a set period. It acts as a "timeout," enabling negotiation, dispute resolution, or strategic planning without immediate pressure from hostile actions or legal proceedings.

Key Features

• Purpose: Halts actions like hostile takeovers, share purchases, litigation, or debt enforcement to foster stability and dialogue.

• Duration: Clearly defined start and end dates or conditions for termination.

• Parties Involved: Involves two or more consenting parties.

• Legal Clauses: Outlines restricted actions, terms, and consequences for breaches.

Types of Standstill Agreements

• Mergers & Acquisitions: Prevents hostile takeover attempts by limiting stock purchases or bids during negotiations.

• Litigation Standstill: Pauses legal actions to allow settlement discussions, avoiding costly litigation.

• Financial Standstill: Creditors suspend debt enforcement to facilitate debt restructuring for financially distressed companies.

• Shareholder Standstill: Restricts shareholders from selling shares or influencing decisions during sensitive periods.

Benefits of Standstill Agreement

• Negotiation Support: Creates a safe space for parties to explore solutions without aggressive moves.

• Strategic Flexibility: Allows companies to reassess strategies or restructure without immediate threats.

• Dispute Resolution: Facilitates settlements or mediations by pausing disputes.

• Protection: Shields companies from hostile takeovers or shareholder disruptions during vulnerable times.