When a bankruptcy is declared, one of the first questions employees and creditors often ask the trustee is whether a restart is possible. A relaunch, also known as a restart, involves the continuation of business activities under new ownership or management after bankruptcy. But what does this process entail, and how does it work? This article explains the key aspects of a relaunch after bankruptcy.
Asset Transfer
In a typical acquisition outside bankruptcy, the transaction often involves a share transfer. The buyer acquires control over the company by purchasing its shares, and as a result, existing contracts — such as employment agreements — and outstanding debts remain intact. However, in the case of bankruptcy, the process is fundamentally different. A relaunch usually takes place through an asset transaction, where the relauncher acquires all or part of the bankrupt company's assets. These assets, which can include movable or immovable property and goodwill, are transferred from the bankrupt estate to the buyer's estate, often a newly established entity created by the relauncher. Debts and existing contracts are not transferred in this process. The relauncher must negotiate new agreements with third parties, such as landlords, suppliers, and employees, or arrange for contract novation where necessary.
Bidding Process
The bidding process is a critical step in achieving a relaunch. Interested parties who wish to acquire (part of) the assets of a bankrupt company must act quickly after the bankruptcy declaration. Upon signing a confidentiality agreement, they gain access to financial and operational data compiled in a bid book. This bid book includes information on assets, rental agreements, and an anonymized overview of the workforce. Based on this information, prospective buyers can submit their offers. If multiple bids are received, a second bidding round may be organized to ensure competitive pricing.
The trustee will negotiate with the party submitting the most favorable bid to finalize an asset purchase agreement. Key considerations during these negotiations include the purchase price and payment terms, employment opportunities offered to former employees, the rights of third parties, and the financial stability of the relauncher to ensure long-term success. Before concluding the asset deal, approval from the supervisory judge is required. Once finalized and implemented, the relauncher can commence operations under the new company structure.
Employment Considerations
Employment considerations play an important role in a relaunch. It is at the discretion of the relauncher to decide which employees are offered new employment contracts. These contracts do not have to match the terms of previous agreements, as those were terminated by the trustee upon bankruptcy declaration. However, if an employee continues performing similar work for the relauncher—where duties, skills, and responsibilities remain largely unchanged — the relauncher qualifies as a successor employer under Dutch law. This qualification has significant implications, including the continuation of employment history for purposes of calculating transitional compensation and the application of rules regarding successive fixed-term contracts.
Expert Assistance
A successful relaunch requires careful preparation and legal expertise. From structuring your bid to navigating employment law implications, our Restructuring & Insolvency team can guide you through every step of the process.
If you have any questions or need assistance with this topic, please feel free to contact Linde van Dieren-Muller or Noa Gamliel.
