From big success to bankruptcy: how my innovative, award-winning company went bankrupt, and what I learned. Small disclaimer: of course this is just a summary, the complete process is very complex and consists of a series of events that determine future, inevitable outcomes for all parties. (This presentation was part of YES!Delft's learn from failures event, September 25, 2014).

1. BANKRUPTCY:
a POOR event, a
RICH experience
Benno Groosman
www.groosman.info
Founder & former CEO of Salusion B.V.
www.salusion.com

3. Outline
• The products and successes of Salusion
• Financial structure
• The bankruptcy: a poor event
• Lessons learned related to the bankruptcy
• The aftermath: a rich experience

4. The products and successes of Salusion

5. Fact
Over 30% of replacements of
incontinency diapers in nursing homes
is not at the right moment.
This leads to leakages and
unnecessary replacements.

6. The solution for nursing homes:
Sensotive

7. Sensotive in use

8. The solution for home and disabled care:
Sensotive Home

9. Validated product and business case:
Salusion’s customers

10. Validated product and business case:
some of Salusion’s awards

11. Financial structure

12. Funding structure (new to old, in 1000’s €)
600 Government guaranteed bank loan
75 Subordinated bank loan
450 Ministry of Health development contract
20 Subordinated loan
20 Award money
45 Government grants
100 Soft preseed loan
10 Founders

13. Funding structure (new to old, in 1000’s €)
600 Government guaranteed bank loan
75 Subordinated bank loan
450 Ministry of Health development contract
20 Subordinated loan
20 Award money TOTAL FUNDING
45 Government grants € 1,320,000
100 Soft preseed loan
10 Founders

14. Major bank loan (details, in 1000’s €)
600 Total loan
Banks don’t like risks, so the loans was covered by:
100 Corporate guarantee manufacturer
130 Personal surety founders
360 Guarantee Dutch government (estimated)
+ Intellectual property, inventories and debtors

15. The bankruptcy: a poor event

16. What happened?
• Bank loan has option for 24 month suspension
of repayments, founders opted for 6 months
suspension. Bank agrees for even 12 months,
but needs extension of corporate guarantee.
• Bank and manufacturer agreed on end date
(12-31-2013) for the corporate guarantee, this is
not part of the loan contract Salusion has with
the bank.
• Salusion keeps in conversation with
manufacturer and follows manufacturer’s
suggestions, e.g. to reduce number of
employees to cut down costs. Yet, still no
extended corporate guarantee.
• Bank freezes Salusion’s accounts: employees
don’t get salary. Escalation with manufacturer.
No time to arrange other guarantees.
• Founders are obligated to file for bankruptcy
before the end of 2013, to secure the bank’s
rights (corporate guarantee and others).
Suspend
repayment
bank loan
Founders
file for
bankruptcy
Unexpected
end date
corporate
guarantee
Manufacturer
doesn’t
extend
guarantee
Bank
freezing
accounts and
credit

18. Lessons Lessons ldeiraercntlyerdelarteeldattoethde tboantkhruep tbcyankruptcy

19. How might this bankruptcy
have been prevented?
• Make contract about corporate guarantee (bank/manufacturer)
part of loan contract (bank/Salusion) to not have surprises
• Combine bank loan with an external investor
• Better position owner’s equity
• No corporate guarantee needed (or investor could’ve
replaced the manufactures corporate guarantee later)
• Stronger position in negotiations with bank
• Less dependency on and better relationship with manufacturer

20. Lessons from the bankruptcy period (1/2)
• Always get legal advice (accountant, lawyer)*
• Keep all the key players involved and informed:
take the lead in informing them
• Be honest to your employees and they will even help you
• Actively stay in touch with the curator:
take your responsibilities, but set some boundaries
* My thanks go to EY, Den Haag & Arthur’s Legal, Amsterdam for helping me even while they knew Salusion couldn’t pay anymore 

21. Lessons from the bankruptcy period (2/2)
• Get ready for 2 months fulltime (unpaid) work after filing for
the bankruptcy (legal issues, administration, helping curator)
• If you have personal liabilities/debts:
don’t hide, start cleaning the mess, communication is key
• Prepare to do it alone: your former partner(s) in the company
might run away from (previously shared) responsibilities

22. WhTyhaem aI aft ReIrCmHEaR tphe:r sao nr nicohw ?experience

23. A selection of what I learned
• Look for the best team, with high-skilled professionals and people
that always challenge you
• Pay attention to your gut feeling or intuition:
building your venture is not always a hard science
• Identify showstoppers in your venture and work on them weekly
• Entrepreneurship is about reducing risks,
current success can be a false indicator
• Work with a clear mission statement and big goal,
don’t be distracted by day-to-day opportunities and problems:
focus!

24. Some of the things I experienced
• Bankruptcy is not the end,
it’s a new opportunity to do things better
• Be open about the bankruptcy and people will respect you as a
professional and as a person
• The time after the bankruptcy is great for personal reflection
• New opportunities and startup ideas arise quickly!

25. BANKRUPTCY:
a POOR event, a
RICH experience
Get in touch with me to share opportunities and updates:
Twitter: www.twitter.com/benno_groosman
LinkedIn: www.linkedin.com/in/groosman
www.groosman.info

26. Image credits
• http://www.hdwallpapersimages.com/success-quotes-bill-gates/25006/
• http://www.pehub.com/wp-content/uploads/2013/04/success-road-to-shutterstock_100931980.jpg
• http://www.salusion.com
• http://www.hrelements.com/wp-content/uploads/2014/03/Finance-Accounts.jpg
• http://automobilein.com/wp-content/uploads/2014/05/Dark-Clouds-Background.jpg
• http://www.scenicreflections.com/files/LIGHT_AT_THE_END_OF_A_TUNNEL_Wallpaper_27ix5.jpg
• http://mkalty.org/desert-tree/