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Relaunches after bankruptcy and pre-pack deals

Liquidation does not necessarily mean the end of a business. It often creates an opportunity to continue the business on a smaller scale by preserving the profitable parts. 

The story of DAF Trucks is a well-known example of this strategy. DAF was relaunched after going into liquidation and subsequently gained an impressive track record as a successful business. However, this avenue may be pursued only if the correct legal procedure is followed and all the various steps are taken at the right time. The important thing is to ensure that the transaction is not subsequently annulled by the receiver.

In fact, a relaunch or restart only makes sense if a good business plan has already been prepared and if shareholders or other third parties are prepared to provide the necessary funding.

The company in question must be relaunched shortly after its liquidation, as its value evaporates day by day. Generally speaking, suppliers and customers will be prepared to agree to a relaunch only if they rapidly receive full information on the situation and are presented with a plan that inspires confidence.

Pre-pack deals have become increasingly popular in recent years. The full term is a ‘prepackaged bankruptcy’, and it involves the sale of an insolvent company’s business before the company goes into liquidation. At the company’s request, the court appoints a receiver who is required to make a quick and confidential assessment of whether a relaunch would be in the creditors’ best interests. If the receiver decides that this is indeed the best solution, the company is pronounced bankrupt and relaunched on the same day. The Ruwaard van Putten hospital, Marlies Dekkers and Heiploeg Garnalen are all recent examples of Dutch companies that have made use of pre-pack deals. The government is currently preparing legislation to make pre-packs fully legal.

Our lawyers have plenty of experience with business relaunches and pre-packs and can provide excellent help and advice during the process, thus considerably improving the chances of a successful relaunch.

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