b'Mergers & AcquisitionsOrdinary Course of Business Covenantsin the Shadow of the PandemicIn November 2020, in a post-trial opinion, the Delaware Court of Chancery held in AB Stable VIII LLC v. MAPS Hotels and Resorts One LLC that the seller had breached its covenant in the acquisition agreement to conduct the business of the acquired companies pending closing only in the ordinary course of business consistent with past practice in all material respects (the Ordinary Course Covenant). The court ruled that the seller violated this covenant when the seller took drastic measures in response to the COVID-19 pandemic without obtaining or seeking the buyers prior consent and as a result a related closing condition was not met. DiscussionIn its analysis, the court reiterated prior Delaware decisions that interpret ordinary course as the normal and ordinary routine of conducting business. The court stated that the precedents in this line of cases compare a companys actions with how that company routinely operated, and a company would breach the Ordinary Course Covenant by depart-ing significantly from that routine, even where such departure was in response to extraordinary circumstances. Consistent with such precedents, the court acknowledged and determined that the actions taken by the seller in response to COVID-19, even if arguably reasonable and prudent, were not a sufficient justification to excuse it from complying with the Ordinary Course Covenant.The seller argued that it was contractually obligated to deviate from the ordinary course of business in connection with its obligations to comply with law and other covenants within the acquisition agreement itself. While the court rejected these arguments on a procedural basis, it partially addressed them on substantive grounds as well. The court noted that no party is required to comply with an illegal contract and no party receives damages based on a breach of an unenforceable obligation. On this basis, the court discussed a hypothetical situation where the seller could argue that its deviation from the Ordinary Course Covenant was justified if it were done in response to a governmental order requiring it to take such deviat-ing action. However, in order to succeed on that argument, the court noted that the seller would have to show that it was in fact legally required to deviate from the ordinary course. The court went on to find that, in any event, the sellers actions in response to COVID-19 were taken due to its own commercial considerations and not because they were necessary to comply with any applicable governmental orders. As part of its decision, the court also analyzed the consistent with past practice qualifier included in the Ordinary Course Covenant. The court noted that there are two principal sources of evidence that it can examine in determining what constitutes the ordinary course MAYER BROWN 27'