The term ‘restart’ is frequently used on the news when a large company has gone into liquidation. A recent example thereof is Imtech. But what exactly is a restart?
A restart is a transfer of the assets and activities of a company after its liquidation. The restarter purchases the assets from the receiver. Usually, it is agreed that some of the personnel will be taken over by the restarter as well.
In practice, it is important to arrange for a restart in the shortest possible term. After being put into liquidation, a company quickly falls apart. Customers become worried and start looking for an alternative supplier, personnel goes looking for another job and suppliers demand goods back. In order to slow this disintegration, a receiver will usually prefer to keep a company ‘going’ for a little while longer. Often, suppliers and service providers whose services the receiver needs demand all kinds of guarantees before supplying goods or providing services again. It is only natural for these parties to be wary of sustaining further losses. However, when it comes to providing payment guarantees, a receiver’s options are often limited, as a result of which a company can only keep going for a short time after being put into liquidation. At the same time, the receiver will enter into negotiations with those parties that are interested in the company. The restart agreement will be entered into with the party that makes the best offer. The restarter will have to be a legal entity or natural person other than the party that went into liquidation. In the event of liquidation, the debts remain. The proceeds from the sale can be divided amongst the creditors according to the statutory order of priority.
It is a good thing that the restart as an instrument exists. One positive effect is that a lot of jobs can be retained and the loss to the customers is limited. From an economic point of view, it is good that the ‘earning capacity’ is not lost. However, the option of going into liquidation (and subsequent restart) should not be abused to prejudice personnel and creditors improperly. Therefore, extra care must be taken if a party linked to the liquidation wishes to restart the company.
Further information
For additional information please feel free to contact Peter de Graaf.
