Distressed M&A

With about 15,000 corporate insolvencies a year reorganising a company remains being an important issue. Selling off individual economic goods, divisions or entire companies is often a part of the restructuring process.

The legal, tax and financial aspects of acquiring companies are highly demanding in normal cases, and experience shows that they have become even more complex in a crisis.

In this connection the timing factor is of utmost importance in two respects. Firstly, the point in time when a company is acquired is important concerning the liability for old payables and secondly, the sale of an insolvent company is under greater time pressure than the sale of an economically healthy company. A longer transaction process is almost not possible to combine with a reorganization objective. The reputation of the company suffers, the threat of losing customers and suppliers looms, and important employees may leave the company.

In designing the legal structure of a transaction, all of the normal forms of making a deal (e.g. asset deal, share deal, debt-equity swap, etc.) may, in principle, be considered. Nevertheless, these instruments must frequently be aligned with the special conditions defined in reorganisation and insolvency law.

Our experts can support the M&A process as consultants, can perform the required due diligence audits and embed the process in compliance with reorganization and insolvency law.