LegalDeal Structure
Indemnification Basket
Also known as: Indemnity threshold, deductible basket, tipping basket, dollar-one basket
The threshold below which a buyer cannot file indemnity claims against the seller. A true deductible absorbs early claims; a tipping basket lets the buyer recover from dollar one once the threshold is crossed.
WHY IT MATTERS
The basket determines how much the buyer must absorb before making indemnity claims against the seller. Two types exist and they work very differently. A true deductible basket means the buyer absorbs the first $X of claims — the seller only pays amounts above the threshold. A tipping basket (dollar-one basket) means once total claims cross the threshold, the buyer recovers everything from the first dollar. The Crossfield deal had a $1 tipping basket — meaning every claim, no matter how small, was indemnifiable from dollar one. Combined with offset rights against seller notes and earnout payments, this turned every minor breach into a purchase price reduction.