When is a warranty a representation: layered agreements in acquisitions

22/04/26

Hoffman & Greenbaum v Finalto Group Limited & Gopher Investments [2026] EHWC 921 (Comm) concerned the acquisition by Gopher of Finalto (a fintech business) from Playtech plc.

The Claimants (the CEO and COO of Finalto) contended that they were promised equity in a new holding company to be established following the acquisition. Having completed its acquisition of Finalto, Gopher did not provide such equity, and terminated the Claimants’ employment. The Claimants claimed that they had thereby been denied equity worth c.USD 20 million, and sued for damages.

Gopher contended that it had no obligation to provide equity to the Claimants. In any event, Gopher contended that the equity would have had no value to the Claimants on the date on which the Claimants would (on their own case) have sold it, given the value of Finalto’s business and the size of Finalto’s outstanding debts on that date.

Butcher J concluded that the Claimants  had a right to receive part of the equity that they said they had been promised. However, he accepted Gopher’s expert evidence in relation to valuation and concluded that – given the scale of Finalto’s debts – the Claimants’ equity would have had nil value. Accordingly, the Claimants had not suffered any loss and their claim for damages based on the value of the equity failed.

Gopher counterclaimed for deceit. It contended that the Claimants had made false representations within a management warranty deed which was entered into prior to the point of acquisition.

Butcher J did not consider that the representations were in fact false, so the counterclaim failed on the facts, but the Judgment contains an instructive analysis of whether statements in a warranty deed can, properly considered, give rise to misrepresentations. He agreed (at [195]) with the statement of the law by Sean O’Sullivan KC, sitting as High Court Judge in Veranova BidCo v Johnson Matthey [2025] EWHC 707 at [58]-[59], namely that “without more” a contractual warranty does not amount to an actionable representation, but beyond that “it all depends” and it is likely that it will be “necessary to show that a reason for making the factual statement [i.e. the warranty] is to provide information to the other party, as opposed to only for the purpose of making a contractual promise.” That was the case on the facts, because (i) the warranties provided information about the past or present which would be unlikely to be in the knowledge of the buyer; (ii) the statements were contained in draft documentation and in any event the management warranty deed preceded the SPA; and (ii) the terms of the management warranty deed and accompanying disclosure letter indicated that it was understood that their contents could contain representations.

The judgment will be of assistance for those considering (or resisting) claims for misrepresentation based on statements made in contractual warranties.

The judgment is available here.