Purchase price adjustment (locked box vs. closing accounts)

Under closing accounts, the price is set provisionally at signing and adjusted after completion based on a balance sheet drawn up as of the closing date — typically against net debt and working capital relative to an agreed target (peg). Under a locked box, the price is instead fixed once, based on a reference date before signing; the seller warrants no value leakage between that date and closing (leakage protection — e.g. a ban on distributions or disguised payments to shareholders), and the buyer usually receives interest (a ticking fee) for the period until completion in return.

In insolvency, locked-box logic or an outright fixed price clearly dominates: the administrator wants proceeds paid to the estate promptly and without a later dispute over an adjustment — a closing-accounts process with a possible post-closing dispute doesn't fit the goal of a swiftly concluded, distributable case. Where an adjustment happens at all, it typically covers narrowly defined, quantifiable items (e.g. inventory on hand at the reference date) rather than a full closing-accounts mechanism.

For buyers, a locked box out of insolvency means the operating risk and upside of the business between signing and closing sit with the buyer — for an already distressed company, that tends to be a risk skewed against the buyer, since the position is more likely to worsen than improve in that window. A short signing-to-closing period and robust leakage protection in the purchase agreement matter accordingly, even where the administrator otherwise excludes warranties broadly.