Acquisition of business or productive units under bankruptcy or pre–bankruptcy situations

Acquisition of business or productive units under bankruptcy or pre–bankruptcy situations

Abstract:

The purchase of Business Units represents an opportunity to make strategic acquisitions in
times of crisis under beneficial conditions. A valuable function is carried out, such as the survival under new ownership of viable projects as a business, which means maintaining employment and generating wealth and value. Those deals do not match very well with the classic M&A model, and the transactions must be approached from a position of understanding and with a strategy which aligns to the bankruptcy regulations. This includes an analysis of which ordinary agreements must be waived and what advantages imply, as well as assessment and assumption of the risks which cannot be avoided or negotiated in these processes. Although acquisition can come to fruition during any of
the various stages of bankruptcy proceedings, the purchaser will be in a stronger position if the offer goes together with the bankrupt entity’s voluntary filing. The legislator has also included in the recent reform of September 2022 the prepack regime, which certain courts had been applying in the past. Therefore, we should be alert to potential targets, competitors, or suppliers in which we have a strategic interest, and which are suffering from solvency or liquidity–related difficulties. Approaching such targets at such prompt stage could be decisive in planning and executing a transaction optimising the benefits provided by an acquisition within the framework of a bankruptcy, whether using the prepack, or within the framework of a restructuring agreement.

Keywords: M&A (Mergers and Acquisitions), Business Units, Bankruptcy, Contract assignment, Sellers Liability, Prepack, Restructuring Agreements, Insolvency. under the best possible conditions, as well as opti