Asset deals

In order to enable the survival of crisis-prone business operations of a company or employer on a permanent basis and outside running insolvency proceedings, a transferring reorganisation is regularly conducted within insolvency proceedings or as part of an out-of-insolvency reorganisation on the basis of what is known as an asset deal. The takeover of essential assets, such as land, buildings, machinery, patents and other tangible and intangible assets from the insolvent company minimises the risks of the purchaser, as all liabilities and contractual relationships connected with the insolvent legal entity remain attached to the latter. This means that all assets can be taken over unencumbered by the insolvency. 

Asset deals for existing employment contracts

There is an exception for employment contracts, as these are transferred to the purchaser if a so-called transfer of an enterprise takes place with the transfer of material assets. Compared to a share deal, that is, the direct takeover of a legal entity along with all its contracts and existing liabilities, the execution of an asset deal does not require prior financial restructuring of the legal entity or even costly legal due diligence as part of insolvency administration. This means that an asset deal can be successfully planned and implemented with professional support in a very short time. Professionally executed asset deals regularly give the purchaser the opportunity of continuing business operations from the start and, ideally, without interrupting of business (so-called transferring reorganisation), using the acquired operating materials and employees.

Advantages of an asset deal

An asset deal is particularly advantageous for all parties involved in insolvency proceedings if business operations would otherwise have to be irreversibly discontinued by the insolvency administrator due to a lack of prospects and to protect creditors. In this case, the insolvency estate will be relieved of run-off liabilities, the quota prospects for the creditors will increase further due to the purchase price received, and those employees taken on during the transfer of the enterprise maintain future prospects. In many cases, business operations must be halted by the insolvency administrator immediately after insolvency proceedings have begun, since the continuation of business operations at full cost can no longer be expected of the insolvency creditors after the expiry of the insolvency funding period in the provisional insolvency proceedings due to the considerable risks involved.

Support in asset deals at LEONHARDT RATTUNDE

The consultants and insolvency administrators at LEONHARDT RATTUNDE have a long history of planning and successfully implementing countless asset deals of all sizes, always managing the specific challenges of individual cases and often working under considerable time pressure. Within insolvency administration, this has allowed transferring business operations and associated employees to be regularly saved for the long term, as well as quota payments to insolvency creditors to be considerably improved. Insofar as we act in an advisory capacity, our clients benefit from the fact that we are extremely familiar with this area (so-called distressed M&A) and can therefore accurately assess the interests and negotiating scope of the parties involved, to the advantage of our clients, even in extremely complex situations, and can act on this basis. In so doing, we always pay attention to adjacent areas of law, such as company law and employment law, and are therefore able to draw on specialists at LEONHADRT RATTUNDE for individual questions. 

Should you be contemplating taking over the business operations of a company in crisis, we will examine all restructuring tools that will allow you to take over business operations, taking your acquisition interests into account. In close coordination with the client, we can draw up and review the underlying contracts to ensure the greatest possible legal certainty for the purchaser, taking into account the particulars of each individual case. We are also able to conduct or attend purchase contract negotiations on the purchase price as well as other transfer modalities for those that need it. In addition, we can offer support in the implementation of concluded contracts or advise in the event of default in connection with such takeovers. 

For many years we have been advising entrepreneurs and companies, as well as the advisors of these companies themselves, in reorganisation and commercial law.

Reference procedure

Cocoa manufacturers Euromar

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