A claim is an issue brought forth by the buyer or a third party against the securityholders. Claims can be the result of a perceived breach in the representations and warranties outlined in the transaction documents.  When a claim is presented, a dollar amount is usually specified and that amount must be set aside in the escrow until the claim is resolved.  If the scheduled release date occurs and there is a pending or unresolved claim, usually the escrow agreement will provide that the unclaimed portion of the escrow will be distributed to the securityholders.  Once the claim is resolved (and assuming there are funds still to be distributed from the escrow after any agreed upon claims are paid to buyer), an additional distribution will be made to the securityholders. 

An escrow release date, or escrow claims expiration date, is the last date on which new claims may be made by the buyer against the amount in the escrow fund. Since claims can be made up until the last minute, the process to release funds to securityholders (assuming there are no pending claims) does not begin until the day following the release date.  There is a small delay before the disbursement of funds as the escrow and paying agent banks complete their internal processes of getting final confirmation from the parties. The process leading up to distribution typically takes 7-10 business days.

Adjustments are credits or debits against the Expense Fund is set aside out of the purchase price at closing for expenses that might be incurred during the post-closing period. Such costs typically include legal or accounting fees that are incurred to protect securityholders’ interests when a dispute about the escrow arises.

The date of the escrow period’s expiration, commonly referred to as the scheduled release date, is the last date on which the buyer can make claims against the escrow. Funds remaining in the escrow at the expiration date may continue to be held in escrow if the buyer made claims prior to expiration that have not yet been resolved. However, if there are no pending claims or once existing claims are resolved, any available (unclaimed) funds will be distributed to the former securityholders.

Additionally, the timing for when securityholders will receive their payment will depend upon how quickly the parties can finalize allocations and instructions for the Paying Agent and surviving corporation/payroll processor.  A slight delay may occur between the escrow expiration date and the date of the disbursement of funds, due to the escrow bank completing its process of getting final confirmation from the parties, sending the funds to a Paying Agent/surviving corporation, and then the Paying Agent and surviving corporation processing applicable checks and wires to the securityholders.