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Kahn & Associés FailCon Paris September 22, 2011
Preparing For Bankruptcy by Daniel P. Kahn Founder/Partner and Gilles Grinal Partner
Kahn & Associés <ul><li>A law firm </li></ul><ul><li>Created in 1988 </li></ul><ul><li>Full service business law firm </li...
<ul><li>Structuring and conducting your project </li></ul><ul><li>What to do when difficulties arise </li></ul><ul><li>Con...
<ul><li>I. What is to be done when you structure and conduct your project? </li></ul>Preparing for bankruptcy
<ul><li>When you structure </li></ul><ul><li>Mature your project </li></ul><ul><li>Launch only when initial necessary fina...
<ul><li>When you conduct your project </li></ul><ul><li>Behave well, reputation is everything </li></ul><ul><li>Get good a...
<ul><li>II. What to do when difficulties arise?  </li></ul>Preparing for Bankruptcy
<ul><li>Most important test </li></ul><ul><li>Cessation of payments is when you cannot pay due debts with available assets...
<ul><li>When difficulties arise </li></ul><ul><li>A . If you know that you will be in cessation of payments in the future ...
<ul><li>B . If you are already in cessation of payments </li></ul><ul><li>Then, no choice, file for bankruptcy: </li></ul>...
<ul><li>Structure the business well </li></ul><ul><li>Monitor your cash situation and forecast </li></ul><ul><li>Anticipat...
Thank you for your attention «  Shoot for the moon, even if you miss you will land among the stars » Les Brown If you have...
Main office 51 rue Dumont D ’ Urville 75116 Paris, France Tel.: +33 (0)1 45 01 45 01 Fax: +33 (0)1 45 01 45 00 Côte d ’ Az...
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On Bankrupcy

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Daniel Kahn and Gilles Grinal share the ins and outs of startup bankrupcy in France.

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On Bankrupcy

  1. 1. Kahn & Associés FailCon Paris September 22, 2011
  2. 2. Preparing For Bankruptcy by Daniel P. Kahn Founder/Partner and Gilles Grinal Partner
  3. 3. Kahn & Associés <ul><li>A law firm </li></ul><ul><li>Created in 1988 </li></ul><ul><li>Full service business law firm </li></ul><ul><li>International law firm, with relationship with firms around the world </li></ul><ul><li>Focused on Technologies/Internet/Telecom/Life Sciences/Media/Clean-green tech companies </li></ul><ul><li>35 lawyers in Paris, of which 10 partners </li></ul><ul><li>Practical and business oriented practice </li></ul><ul><li>350 recurring clients (from the start up to the multinational companies) </li></ul><ul><li>Offices in Paris, Shanghai and Sophia-Antipolis </li></ul><ul><li>Works with its clients for the long term in day to day matters and transactions </li></ul><ul><li>Has obtained many awards (in technology, private equity, M&A….) </li></ul>
  4. 4. <ul><li>Structuring and conducting your project </li></ul><ul><li>What to do when difficulties arise </li></ul><ul><li>Conclusion - practical advice </li></ul>Preparing for bankruptcy
  5. 5. <ul><li>I. What is to be done when you structure and conduct your project? </li></ul>Preparing for bankruptcy
  6. 6. <ul><li>When you structure </li></ul><ul><li>Mature your project </li></ul><ul><li>Launch only when initial necessary financing is secured or can be secured </li></ul><ul><li>Select your partners with greatest care </li></ul><ul><li>Limited liability company only </li></ul><ul><li>No personal guaranty </li></ul><ul><li>Get insurance (D&O) </li></ul><ul><li>Employment Agreement/officer position </li></ul>
  7. 7. <ul><li>When you conduct your project </li></ul><ul><li>Behave well, reputation is everything </li></ul><ul><li>Get good advisors (BoD, BoA, professionnals) </li></ul><ul><li>Do not take commitments you cannot satisfy </li></ul><ul><li>Keep those around informed (banks, bus partners…) </li></ul><ul><li>Avoid management mistakes </li></ul><ul><li>Do not be afraid to change model or restructure </li></ul><ul><li>Manage your board </li></ul><ul><li>Most important anticipate financial difficulties in monitoring your cash position and 3 and 6 months forecast </li></ul>
  8. 8. <ul><li>II. What to do when difficulties arise? </li></ul>Preparing for Bankruptcy
  9. 9. <ul><li>Most important test </li></ul><ul><li>Cessation of payments is when you cannot pay due debts with available assets ( impossibilité de payer le passif exigible avec l ’ actif disponible ) </li></ul>
  10. 10. <ul><li>When difficulties arise </li></ul><ul><li>A . If you know that you will be in cessation of payments in the future (but not yet): </li></ul><ul><li>Re negotiate with private and public creditors (Codechef), possibly with court appointed trustee ( mandataire ad hoc , or conciliateur ). This will not be known to third parties ; </li></ul><ul><li>Go into a procédure de sauvegarde ; debts are frozen. This is known to third parties. </li></ul>
  11. 11. <ul><li>B . If you are already in cessation of payments </li></ul><ul><li>Then, no choice, file for bankruptcy: </li></ul><ul><li>required by law; </li></ul><ul><li>do it on due time and do not delay to avoid personal liability; </li></ul><ul><li>prepare the filing before. </li></ul><ul><li>Court opens an observation period in order to decide if there is a future for the company: </li></ul><ul><li>If there is still cash and business can be run profitably, after restructuring, redressement judiciaire . Debts frozen, while business is restructured. At end of observation period, court decision either to continue business ( plan de continuation ); </li></ul><ul><li>If no cash, and if business is viable, court may decide to sell it as a global concern( plan de cession ); </li></ul><ul><li>If business is not viable, liquidation (business closed and assets sold separately). </li></ul>
  12. 12. <ul><li>Structure the business well </li></ul><ul><li>Monitor your cash situation and forecast </li></ul><ul><li>Anticipate difficulties </li></ul><ul><li>Take the appropriate measures on time </li></ul><ul><li>Chose the best advisors </li></ul><ul><li>If you anticipate difficulties, define and execute a strategy where you will be calling the shots and not lose total control </li></ul><ul><li>Behave well in all cases, be frank and open with your partners, creditors… if you want to rebound! </li></ul>Conclusion - Practical advice
  13. 13. Thank you for your attention «  Shoot for the moon, even if you miss you will land among the stars » Les Brown If you have any question: [email_address]
  14. 14. Main office 51 rue Dumont D ’ Urville 75116 Paris, France Tel.: +33 (0)1 45 01 45 01 Fax: +33 (0)1 45 01 45 00 Côte d ’ Azur Office 2229, route des Crêtes 06560 Sophia Antipolis, France Tel.: +33 (0)4 92 94 20 40 Shanghai Office 1901, HuaxiaBankMansion, No 256 Pudong(S) Road, Pudong New Area Shanghai 200120, P.R. China Tel.: + 86-21-68866598

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