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  • Case Study

    How to Sell a Business and Liquidate it at the Same Time?

    We encountered such a difficult challenge two years ago. The holding company, let us call it Seller Holding, had its headquarters outside Poland – in the European Union. The portfolio of Seller Holding included several companies in various business areas, including a company responsible for operations in Poland – let us call it Seller OPS. Seller OPS further managed Polish special purpose vehicles – Seller SPV.

    Baseline situation

    Through companies in other areas, Seller Holding ran into financial problems. It was on the verge of bankruptcy and the company was consequently introduced to a court supervisor and liquidator. Despite the relatively good financial health of the other SPV and OPS companies, he decided that the companies either had to be liquidated or immediately sold off. The company turned to us for support.
    This was an unexpected situation, and we had very little time to act. With great effort from our law firm, Seller Holding’s shareholders and the Seller OPS and SPV team, we secured two potential buyers.
    After conducting a brief due diligence, we rejected one of the entities because it did not offer a guarantee to finalise or even secure payment in the stipulated time.
    The second buyer, let us call him Buyer, appeared to be much more promising. However, he set a number of conditions which initially seemed impossible to meet – considering the time constraints set by the liquidator.

    Rapid developments and another challenge

    Buyer was an international capital group, which, although present in Poland, did not have a well organised operational department. The required competencies for smoothly executing the transaction in Poland were not readily available at the Buyer, thereby hampering the process of acquisition terms’ valuation and determination.
    Moreover, there was another problem: due to fear of liability to Seller Holding and other potential creditors of these companies, Buyer did not want to take over the shares in Seller OPS and SPV.
    He was only interested in acquiring individual business components which he considered valuable. It was irrelevant that the concerns about liability to the holding company were unfounded.
    Everything is missing and time is pressing
    No documentation was prepared for the sale of the Seller group companies, and the whole transaction had to be carried out in three months. It had to be approved not only by the Seller Holding’s liquidator, but also by their board of creditors.
    In addition, there was a problem of leases of premises since the operations of Seller SPVs took place in service outlets in various locations in Poland. Buyer did not want to take over the SPVs in their entirety and also refused to assign the contracts due to the fear of liability for debts to the landlords.
    At this stage, only two things were certain:
    1) Seller Holding wanted to sell and Buyer wanted to buy.
    2) If we did not close the deal, over a hundred people could lose their jobs overnight and Seller Holding’s creditors will not be satisfied.

    All hands on deck! Our approach and solutions

    We worked for Seller Holding under the watchful eye of a liquidator and a court of foreign jurisdiction.
    We started from scratch:

    • setting up the data room and valuation of the company’s assets for the purpose of the transaction – we turned to proven partners in both these matters,
    • we undertook the preparation of the Seller OPS and SPV documents for analysis ourselves,
    • we carried out on-site inspections for the purpose of valuing assets,
    • we coordinated the participation and consultation of service companies regarding valuable equipment which was to be sold.

    The result? A big saving of valuable time.

    And now for the most interesting part…

    The deal outline was ready and the deal amount was slowly crystallising. Unfortunately, it became apparent that due to events which occurred during the preparation of the transaction, Buyer would not be able to outright pay 100%, and the payment would have to be made in instalments.
    Exactly what the liquidator and the board of creditors of Seller Holding feared has happened. The whole transaction was called into question. We had to quickly find a way to effectively secure all payment tranches.

    How did we manage?

    We took advantage of the fact that the inventory of the SPV companies was already valued. We established a registered pledge on the SPV companies to secure the repayment of further tranches. Finally, we created a master agreement with additional documentation.
    The parties agreed to the plan and signed a general agreement which was accepted by a board of creditors in a foreign jurisdiction, the liquidator and the court.
    The final step was the transfer of all employees who, on the basis of agreements, ended their work one day in one company and started the next day in another company in the same positions. We maintained the functioning of operations and production by preparing all employee documentation in advance. Within a week, we ensured a smooth transfer of over a hundred employees in various Polish cities.


    The whole transaction was a great success; it was appreciated by all participants: the board of creditors, the employees and the liquidator, the tax authorities who of course verified the transaction after the fact. In the following months, we de-registered the pledges from the Court and started the process of liquidating Sellers’ Polish companies.
    This was certainly the most complex transaction we have handled, but thanks to the determination and professionalism of our team, we completed a deal which seemed to have little chance of success.
    Most of the employees we transferred between companies are still working in the same places today.