The purchase and sale of the productive unit

The purchase and sale of the productive unit

The purchase and sale of the productive unit is one of the mechanisms that the insolvency legislation contemplates for the commercial entities to continue with their activity outside the insolvency process, with the singularity that they will do so under the tutelage of another owner. Under the management of the acquirer, the company, as a subject, will avoid, among other things, the destruction of the human and business fabric on which its activity is based.

The process is initiated by the interested third party informing the Bankruptcy Administration and the company of its primary intention. The Insolvency Administration, who represents and ensures the effective protection of the company, will be in charge of studying the proposal of this third party. Once the proposal has been evaluated, it will have to inform the Commercial Court in charge of the insolvency proceedings of its report in relation to the previous one, so that the Judge can approve or reject the proposal, as the case may be.

It is vital for this process that the Insolvency Administrator evaluates whether the projected transaction is carried out in the interests of the insolvency proceedings: of the creditors of the workers and of any other creditors affected by the insolvency proceedings.

The insolvency legislation foresees that there will be no succession of companies, except in the labor section. The succession will not affect the bankruptcy credits, including those qualified as against the mass prior to the sale.

The acquirer is therefore not subrogated in any of the previous obligations, with the only exception of those related to the labor order, which will be those arising in the 3 previous years. The credits of Administrations such as the Social Security or the Spanish Tax Administration Agency will not be enforceable.

Article 42.1 c) of the General Tax Law expressly recognizes the aforementioned exemption for:

“acquirers of holdings or economic activities belonging to an insolvent debtor when the acquisition takes place in an insolvency proceeding”.

As regards the contractual assignment, it is not necessary to obtain the consent of the insolvent company or of the other contracting party in order to subrogate contracts that the company previously had in force with strategic suppliers or other third parties that are vital for the performance of the business activity, the assignment being understood as automatic, except for exceptions.