Preparing a bankruptcy

Imminent bankruptcy?

When things go bad for a corporation, questions arise whether a controlled bankruptcy could be one of the possible ways out. However, in the majority of the cases that thought is already too late.

Controlled bankruptcy

It is wise to install measures at the creation of a corporation which provide certain protection when a bankruptcy would be imminent in the future. This contributes to a more certain possibility of a controlled bankruptcy and easier conditions concerning a potential relaunch after the bankruptcy. This is therefore something to take into account when improving the ‘fitness’ of your corporation, especially before financial problems start. What can you do?

Relaunch after bankruptcy

The moment that you invest in your corporation, you can stipulate private pledges in his own LLC. This is possible on all current and future inventory, supplies, debtors and intellectual property. When 

you support your corporation financially you should always consult an attorney. Preparing a bankruptcy is therefore something you can do before your corporation gets in difficulty. At that moment, when you are financially healthy, you can do more compared to times when a bankruptcy is more imminent.

How to prepare for a bankruptcy

When a corporation invests substantially in research and development or intellectual property rights, or invests in licenses; these rights can be placed in the mother or sister company. When the operating corporation comes in difficulty or could go potentially bankrupt, the entrepreneur still remains (indirectly) owner of the intellectual property rights via the mother or sister corporation. When you think through the structure of the group very well, you can prepare for a potential bankruptcy and even can arrange a controlled bankruptcy more efficient. This is because not all of the parts of the corporation go bankrupt and some assets, property and capital remain available. A possible relaunch is therefore easier when you divide the activities and assets over several LLC’s.

Also with decent contract management you can properly prepare for a potential bankruptcy. You can agree with customers that activities can be transferred to other operating corporations or by placing new activities in a separate LLC.

Our attorneys assist gladly with all your questions regarding the preparations of possible bankruptcies. With the tool ‘Legal Scan contract law’ you, as entrepreneur, can prepare yourself for the coming 5 years.