Possible Opportunities to Correct Transaction Errors

This article originally appeared in Bloomberg Tax/Tax Management MemorandumTM

After months of negotiations, countless modifications to financial models, and multiple iterations of step plans, the transaction is ready to close. Amidst the congratulations and deep breaths of relief, no one notices the ‘‘glitch’’ within one of the executed agreements. The parties eventually identify the error and begin to evaluate its potential consequences. The conversation shifts to correcting the error and how to correct it without unwinding all aspects of the transaction. 

This article considers potential opportunities to correct errors in executed agreements with retroactive effect back to the date of the transaction, relying on substance-over-form arguments, the rescission doctrine, or a state law reformation.