EMEA Seminar continued from page 17 sale( 2): Once formal insolvency proceedings are opened, the court will rapidly authorise the pre-arranged sale. Panellists highlighted how the statutory anchoring of prepacks is particularly significant in light of rulings of the Court of Justice of the European Union concerning the Directive 2001 / 23 / EC on the approximation of the laws of the Member States relating to the safeguarding of employees ' rights( usually referred to as the Transfer of Undertakings Directive).
Some conclusions:
• Employment protection varies significantly from country to country. III President Stephan Madaus intervened and explained that in Germany, employees benefit from insolvency wage protection covering up to three months of salary while a transaction is prepared. It is also common practice to transfer selected employees to a special purpose vehicle( SPV), allowing operational continuity and selective workforce integration.
• Contract assignment rules also differ. Spain and France offer relatively similar mechanisms permitting court-supervised assignment of contracts in insolvency. The Netherlands adopts a more restrictive approach. In Norway, the purchaser gains a competitive advantage through access to data and early engagement with contractual counterparties, but there is no compulsory assignment of contracts. Finally, III Chair Mark Bloom contributed comparative insight into U. S. practice under Sections 363 and 365 of the U. S. Bankruptcy Code.
• Section 363 allows“ free and clear” sales of assets, enabling purchasers to acquire assets without successor liability for most pre-existing claims, provided statutory requirements are met. These sales resemble, in functional terms, EU prepack-style transactions.
• Section 365 is central to going-concern sales. It permits the debtor, subject to court approval, to assume and assign executory contracts notwithstanding anti-assignment clauses, provided defaults are cured and adequate assurance of future performance is given. This facilitates the transfer of key contracts to a purchaser and underpins transactional certainty. The III EMEA Regional Seminar highlighted that while convergence is visible within the region, significant national differences remain, particularly in labour law, contract assignment and procedural design.
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