Post-completion reality check: Lessons from the learning curve judgment

Post-completion is often when the real challenges of a transaction emerge. In Learning Curve (NE) Group Ltd v Lewis & Anor [2025] EWHC 1889 (Comm), the Commercial Court considered how post-completion findings can escalate into significant claims, highlighting the interplay between indemnities, warranties, disclosure, and valuation in M&A disputes.

Part 1 – Clawback isn’t closure: Rethinking indemnity risk in M&A

Indemnities are often seen as the cleanest way to allocate risk in an SPA: a specific liability is identified, a payment mechanism agreed, and once settled, the issue is assumed closed. The Court’s decision makes clear this is not always the case. Where the underlying issue affects valuation, an indemnity may only be the beginning.

The deal and the fallout

In 2021, Learning Curve acquired a training provider heavily reliant on ESFA funding. The purchase price reflected a maintainable EBITDA of £2.571m and a 5.5x multiple. Soon after completion, an audit revealed significant funding irregularities. The gross overclaim exceeded £1.25m, with a negotiated clawback of £783,325.

The SPA included a specific indemnity for funding clawbacks, which the buyer recovered under. But the buyer argued the regulatory failings went further: historic profitability and future funding prospects were affected, meaning the business had been overvalued at completion, giving rise to a warranty claim. The sellers contended that this amounted to double recovery.

The Court focused on warranties relating to regulatory compliance and historic financial accuracy, confirming the nature of the warranties determines whether parallel claims are permissible. In commercial terms, this distinction can be the difference between recovering a minor clawback and recovering millions more in lost enterprise value.

No double recovery? Think again

The SPA included a “no double recovery” clause, stating that:

“if the same fact, matter or circumstance gives risk to more than one claim for breach of any of the Warranties, or to a claim under the Warranties, an Indemnity Claim…the [buyer] shall not be entitled to recover more than once in respect of such fact, matter, event or circumstance”.

At the same time, the funding indemnity was “without prejudice to any other rights or remedies.”

The Court clarified that the clause prevents recovery of the same loss twice but does not make an indemnity automatically exclusive. It distinguished between the repayment obligation under the indemnity and the diminution in share value addressed by the warranty claim, treating them as distinct losses arising from the same facts. Parallel claims were therefore permissible.

The decision illustrates a simple commercial reality, that a clawback may settle a discrete regulatory liability, but it does not necessarily address the broader financial impact on the business. Buyers seeking to recover lost value are entitled to pursue warranty claims even when an indemnity has been paid, provided the losses are not identical.

The warranty claim was therefore permitted to proceed, showing that paying an indemnity does not always close the door on further claims. Where an issue affects valuation, buyers may pursue warranty claims in addition to recovering under an indemnity.

The true cost

The financial impact was significant: The indemnity payment was £783,325, while the warranty damages came to £5,211,625. The difference reflects a practical business reality, that a repayment obligation is not the same as an overvalued acquisition. Where the purchase price is driven by an EBITDA multiple, regulatory issues can affect not only historic accounts but also future risk and maintainability.

The Court applied a multiple-based adjustment to reflect regulatory uncertainty, illustrating how valuation techniques interact with warranty claims. Even relatively minor compliance issues can translate into significant financial exposure.

Key takeaways

Learning Curve reinforces that indemnities and warranties serve different purposes:

• Indemnities allocate specific liabilities.
• Warranties protect against overvaluation and broader financial consequences.

Unless the SPA expressly states that an indemnity is exclusive, a court may permit parallel claims, provided that the same loss isn’t recovered twice.

For sellers, paying an indemnity may not deliver finality if the issue impacts price. For buyers, recovery may extend beyond the immediate liability where valuation has been affected.

The starting point remains in the drafting, if exclusivity of remedy is intended, it must be stated clearly.

Additionally, in regulated businesses, post-completion audits should be closely monitored. Buyers should consider not only clawbacks but also the potential for valuation-related warranty claims, and sellers should ensure that disclosures are accurate, specific, and comprehensive.

How we can help

For guidance on negotiating, bringing, or defending warranty and indemnity claims, our Commercial Disputes team is able to help clients manage post-completion risk and protect deal value.