on bankrupcy

[email protected] & ASSOCIES – BUSINESS LAWYERS

FailConParis – September 22, 2011

Kahn & Associés

FailCon Paris

September 22, 2011



Preparing For Bankruptcy

by

Daniel P. KahnFounder/Partner

and

Gilles GrinalPartner



Kahn & Associés

• A law firm• Created in 1988• Full service business law firm• International law firm, with relationship with firms around the world• Focused on Technologies/Internet/Telecom/Life Sciences/Media/Clean-green tech

companies• 35 lawyers in Paris, of which 10 partners• Practical and business oriented practice• 350 recurring clients (from the start up to the multinational companies)• Offices in Paris, Shanghai and Sophia-Antipolis• Works with its clients for the long term in day to day matters and transactions• Has obtained many awards (in technology, private equity, M&A….)



I. Structuring and conducting your project

II. What to do when difficulties arise

III.Conclusion - practical advice

Preparing for bankruptcy



I. What is to be done when you structure and conduct your project?

Preparing for bankruptcy



When you structure

•Mature your project•Launch only when initial necessary financing is secured or can be secured•Select your partners with greatest care•Limited liability company only •No personal guaranty•Get insurance (D&O)•Employment Agreement/officer position



When you conduct your project

•Behave well, reputation is everything•Get good advisors (BoD, BoA, professionnals)•Do not take commitments you cannot satisfy•Keep those around informed (banks, bus partners…)•Avoid management mistakes•Do not be afraid to change model or restructure•Manage your board•Most important anticipate financial difficulties in monitoring your cash position and 3 and 6 months forecast



II. What to do when difficulties arise?

Preparing for Bankruptcy



Most important test

Cessation of payments is when you cannot pay due debts with available assets (impossibilité de payer le passif exigible avec l’actif disponible)



When difficulties arise

A . If you know that you will be in cessation of payments in the future (but not yet):

•Re negotiate with private and public creditors (Codechef), possibly with court appointed trustee (mandataire ad hoc, or conciliateur). This will not be known to third parties ;

•Go into a procédure de sauvegarde; debts are frozen. This is known to third parties.



B . If you are already in cessation of payments

Then, no choice, file for bankruptcy:

•required by law;

•do it on due time and do not delay to avoid personal liability;

•prepare the filing before.Court opens an observation period in order to decide if there is a future for the company:

a.If there is still cash and business can be run profitably, after restructuring, redressement judiciaire. Debts frozen, while business is restructured. At end of observation period, court decision either to continue business (plan de continuation);

b.If no cash, and if business is viable, court may decide to sell it as a global concern(plan de cession);

c.If business is not viable, liquidation (business closed and assets sold separately).



• Structure the business well• Monitor your cash situation and forecast• Anticipate difficulties• Take the appropriate measures on time• Chose the best advisors• If you anticipate difficulties, define and execute a

strategy where you will be calling the shots and not lose total control

• Behave well in all cases, be frank and open with your partners, creditors… if you want to rebound!

Conclusion - Practical advice



Thank you for your attention

« Shoot for the moon, even if you miss you will land among the stars»

Les Brown

If you have any question: [email protected]



Main office

51 rue Dumont D’Urville

75116 Paris, France

Tel.: +33 (0)1 45 01 45 01

Fax: +33 (0)1 45 01 45 00

Côte d’Azur Office

2229, route des Crêtes

06560 Sophia Antipolis, France

Tel.: +33 (0)4 92 94 20 40

Shanghai Office

1901, HuaxiaBankMansion, No 256

Pudong(S) Road, Pudong New Area

Shanghai 200120, P.R. China

Tel.: + 86-21-68866598

on bankrupcy

Education

liquidation business

business oriented practice

partners practical

financial difficulties

shanghai office

cash position

bus partners

court decision