Insolvency & Restructuring
In a crisis situation, the managers of a business in distress often have to deal with a lot of unpredictability. They want to do right by everyone, yet in many respects, they risk civil liability and even criminal liability, some of it substantial. Most of these liability risks can be avoided, however, with competent guidance and reliance on relevant expertise. CMS will advise the management of distressed businesses and enable you to duly comply with your obligations in such challenging situations.
What are the options for management?
In a crisis situation, we will provide counsel at an early point in time so that management actions you take in good faith, believing that your business can be reorganised, do not become potential liability risks. We will provide detailed advice on all reorganisation measures you are considering and draw up a legal risk and opportunity matrix tailored to your situation, so that you are optimally protected from potential recourse at a later point.
- Avoiding liability risks (including documentation of ongoing operations to guard against later claims, insolvency assessment, and timely response to crisis indicators)
- Averting criminal prosecution and civil liability claims against management
- Advising on strategic questions of labour law during restructuring processes of all kinds and sizes, and on issues related to public contracts in case of insolvency (or insolvency risk)
What are the effects of these measures?
The management of a distressed business should be able to fully concentrate on reorganisation. With us as your legal counsel, you can focus on the business side of reorganisation. Moreover, we will help you defend against any claims that may be brought against you, such as potential third-party claims and liability claims by the tax and revenue office or by social insurance institutions.
What are the key issues to consider?
A crisis situation is a race against time, and reorganisation measures always require diligent and professional preparation. Once a legal entity has become insolvent and overindebted, its management only has 60 days at most (while carrying out realistic and diligent reorganisation efforts) to eliminate the causes of insolvency or to file a request to open insolvency proceedings. Moreover, if there is cause for insolvency, management needs to be careful not to give preference to any individual creditor in the conduct of business. For these reasons especially, it is essential that you are able to rely on experienced legal counsel in a crisis situation.
