This week’s question from our portal “Ask Us Anything” comes from someone who wishes to remain anonymous.
"Our accountant is about to finalize the post-closing adjustment statement, but we are still working out how much a liability we found is actually worth. Do we lose the claim if our number is not ready before that statement is due?"
Not necessarily, and the reason is that you are looking at one deadline when there are usually two clocks running.
The working capital adjustment is a short, mechanical process with a tight timetable written into the agreement. A statement gets delivered, and the other side has a defined window to object. Miss that window and the statement typically becomes final and binding, which does close off the adjustment route for anything you should have raised in it.
The indemnity is separate. It has its own survival period, usually far longer than the adjustment window, and it is not extinguished merely because the adjustment statement was finalised. So a liability you cannot quantify in time may still be recoverable through the indemnity even after the adjustment closes.
That said, do not treat the indemnity as a comfortable fallback. Some agreements say expressly that the adjustment is the sole remedy for anything within its scope, and where that language exists, letting the adjustment window lapse can take the indemnity with it for that item. Which route is available for which problem is the question our working capital adjustment or indemnity claim post works through.
The practical answer to your immediate problem is that you almost certainly do not need a final number to protect your position. Most adjustment mechanisms require an objection identifying the disputed item and the basis for it, not a fully quantified figure. Delivering an objection that names the liability, explains why it belongs in the calculation, and gives your best current estimate while reserving the right to refine it, is usually enough to keep the item live.
What you should not do is let the window pass in silence because the number is not finished. Silence is the thing that forecloses the route. An objection with an imperfect figure in it can be corrected. A missed deadline generally cannot.
Two things to check today, in this order. First, what the agreement actually requires in an objection notice, because that wording governs and the general position above yields to it. Second, whether the agreement makes the adjustment an exclusive remedy for items of this kind, since that determines whether the indemnity is genuinely still there behind it.
If the deadline is close, get the objection out on the strength of what you know now. Refining a number is a conversation. Reopening a statement that has gone final is litigation.
This answer is general legal information, not legal advice, and it cannot account for the facts of your situation. Always speak with a lawyer before you act on it.
P.S. If a question like this one has come up in your own business, schedule a complimentary discovery call with our firm and we will walk through it with you.
