Menú

All

productive units

Types and stages of the sale of the Productive Units

What is the Productive Unit? How is the Productive Unit valued? Forms in which the sale takes place. Direct sale. What is a specialized entity? How is the sale of Production Units carried out in the insolvency process? What do Judges consider in the sale of Production Units? Conclusion.

Introduction.

The society’s extinguishment is a drama that is too frequent in our Country. The massive extinction of many companies, of the productive fabric, is a tragedy for Spain. Spanish judges, aware of this tragedy, are promoting the sale of Productive Units.

The ultimate goal is to reverse the insolvency situation.  It is the mission of the Insolvency Administration to gather in a report all the assets of the insolvent Company. The sale of Production Units is a method available to the Company in insolvency proceedings. With the sale of the Productive Units the Company will be able to face its debts and try to survive.

Contacto No te quedes con la duda, contacta con nosotros. Estaremos encantados de atenderte y ofrecerte soluciones.

What is a Productive Unit?

Productive Units are considered to be the set of means available to a Company to carry out its own business activities, whether they are necessary or auxiliary.

How is the Productive Unit valued?

The Productive Unit will be appraised according to the market value. In addition, the valuation will include the charges that affect such value.

There are multiple criteria used to determine the value of a Productive Unit. This value is not considered as a determining factor, but rather as a reference at the time of disposal.

The term “value” is a very subjective concept. It is not a unique and inflexible parameter. It is a concept that, depending on the position, buyer or seller, acquires a very different valuation.

One factor to take into account when selling is to maximize profits. The goods obtain a higher profitability liquidating in Productive Units than individually.

Circumstances that have a significant influence are: the arrival price, the synergies that the buyer can obtain in his activity, elimination of competition…

Types of sales.

The ordinary way of sale is by auction. The insolvency law states that the auction may be: “judicial or extrajudicial, including electronic”.

Within the auction, the judges prefer a bid for the whole, rather than a bid for a single part. And if all the offers turn out to be partial, the Judge will opt for the offer of the largest Productive Unit. And of course, always observing the maximization of profits, price and preservation of jobs.

Direct selling

Direct selling is becoming more and more common in Spain. The reason is that it allows many benefits to the Company in competition.

The direct sale is agreed by means of a reasoned order at the request of the competent Court in charge of the insolvency proceedings. The sale is authorized through a specialized person or entity. This is due to the fact that the price offered for the Production Units is reasonable with the market value.

During the process, there is a continuous judicial control. This avoids the possible existence of hidden interests of both the buyer and the seller, as well as of other professionals or parties involved in the process.

What is a specialized entity?

It is a specific method of asset disposal used by the Insolvency Administration for the liquidation of assets in insolvency.

The idea is based on the outsourcing of the sale procedure through an expert third party. It pursues a series of advantages over the judicial sale. The main advantage is that of choosing the best possible bidder profile. That is, in relation to the specific asset to be sold, in order to achieve the highest possible price.

How is the sale of Production Units carried out in the bankruptcy process?

The sale and purchase of the Productive Units can be closed at any stage of the bankruptcy process. This is in:

  • Common phase, at the beginning of the procedure, the authorization of the Judge is necessary to be able to approach a sale and purchase operation.
  • Phase of agreement, through an assumption agreement. It is about the purchaser complying with the payment criteria agreed with the creditors.
  • Liquidation phase, provided that the Judge agrees with the liquidation plan presented by the Bankruptcy Administration.

What do Judges value in Productive Unit sales?

Judges value the sale of Productive Units positively as long as they meet a series of criteria. The most commonly used criteria are:

  • The offer made by the buyer is very close to the market value.
  • The Company will stop accruing expenses that are detrimental to the assets of the insolvency proceedings. They are usually difficult for the insolvent company to assume due to the lack of sufficient Treasury.
  • Considerable savings for the insolvency proceedings of credits against the mass.
  • The business activity will be maintained by the buyer. (in most cases).
  • Jobs are maintained.
  • The negative reputation cost is avoided.

Conclusion

There are several ways of disposing of the Productive Units.  The main objective is to maximize the profit at the time of sale. Besides, the valuation depends on each situation. Finally, the way to carry out the sale is again susceptible to each circumstance.

We can emphasize that there is no single and adequate form accepted for the sale of productive units, quite the contrary. Each contest will be free to set the form and valuation most suitable to its own conditions.

If this article has been of interest, we also suggest you to read the following article published on our website: The Sale of a Production Unit in a Bankruptcy Procedure.

Publicaciones relacionadas