What Is A Hive Down Agreement

December 20, 2020 – 5:22 pm

There are different ways for the former group to sell the operating companies or assets to the new group. Recent relocations to New Zealand have resulted in the security agent exercising his security interest in operating companies and then exercising his sales power to immediately transfer these assets to the new group. Funding documents often allow the security officer to apply this type of enforcement action on the instruction of a certain proportion of the union (p.B 66.7%) so that the transaction can be completed without the unanimous support of the lenders. This can be very important for the effectiveness of any restructuring proposal and help to take a major step forward to prevent a minority lender from blocking the progress of restructuring, perhaps in the hope of achieving a better price than it otherwise could have done. Although insolvency and breach of financial pacts are standard events in insolvent investments and probably give the lender the right to accelerate credit, many lenders have realized during this recession that as creditors they can often earn better returns by supporting an orderly restructuring of a company`s debt than by forcing the company to formally go bankrupt. Restructuring may result in a “change of control” of termination rights in commercial agreements concluded by operating companies. Pre-restructuring diligence can identify potential changes in control issues that may address key trading partners at an early stage. In general, restructuring is good news for trading partners who might otherwise be concerned about their current business relationships with an insolvent company. If the company went into liquidation or liquidation after the bankruptcy, it appears that a “director” did not comply with this obligation, the court may order the director to make personal contributions to the company`s assets.

Therefore, any sale of a troubled business or its assets (including restructuring or dismantling) is an area in which the management of the company must exercise caution. Regular board meetings should be held to ensure that the actions of directors and the reasons for these acts are taken into account. Often, it is wise for directors to receive independent legal advice on their personal obligations. When a person is at risk of being considered a shadow or de facto director, he or she should also act in accordance with a director`s duties and be aware of potential liabilities. It is unlikely that a judicial administrator will be able to provide protection in the form of guarantees, compensation or other guarantees. Therefore, when buying an insolvent target, it is a case of buyer caution. If the objective is the holding company of a group, the complexity of insolvency, particularly the taking of assets in several jurisdictions, can slow down the acquisition process and create an increased level of complexity and risk for each buyer. The potentially expedited procedure for purchasing a target subject to insolvency proceedings may also mean that, although the potential risks associated with the objective are higher, the time of care is significantly reduced. A hive-down is legal.

However, the circumstances must be carefully considered before being implemented. Given all this, it is necessary to determine as precisely as possible, before the start of a hive, whether the process is worth the cashier if the full analysis allows it. Transaction costs, as described above, should be compared to potential net returns if compared to the option of continuing to “bankrupt” as opposed to a simple sale of the company`s assets.

Sorry, comments for this entry are closed at this time.