What are the key things I need to know before buying IP assets from insolvent companies?
When buying assets from financially distressed or insolvent companies, it’s important to bear in mind a few key pieces of information:
- There is likely to be limited information due to the context of an insolvency, and potential purchasers should take this into account when bidding for the assets
- No warranties or indemnities will be provided by the seller in the legal documentation
- Distressed asset purchases can be conducted at a competitive price for potential purchasers
- Potential purchasers should carry out due diligence as they see appropriate before submitting their offer
- Insolvent scenarios also present the opportunity for positive PR for you and your new assets
Buying from insolvent companies or in distressed scenarios can mean the ability to buy a wide range of IP assets that can deliver competitive advantages to you and your business.
Will I assume any liabilities after the sale as a potential purchaser of insolvent IP assets?
No, unless otherwise stated, buying assets from an insolvent company means that you will be buying them clear from any liabilities. Asset sales of this nature don’t come with the liabilities of the company that currently owns the assets, and so any potential purchaser can walk away with the assets to use how they see fit and to generate revenue.
What warranties and indemnification will the potential purchaser receive in relation to IP assets?
Buying assets from an insolvent company means that unfortunately no warranties or indemnification can be provided. This should be factored into the risk of purchasing the IP assets, and offers should be adjusted accordingly.
How much should I offer for the IP assets?
A potential purchaser should carefully consider their offer level, and nominal offers are not appropriate. It’s important to note that for an insolvency practitioner, the offer for the IP assets has to reach an acceptable level and justify transactional costs before selling. Insolvency practitioners typically prefer clean offers, rather than deferred payments. There can be many factors that will be considered in reaching an agreed price, but you should always put forward your best offer to be in the best possible position for obtaining the assets.
What type of information could I receive on the IP assets?
We will always provide as much information as possible on IP assets, but please remember that the company’s affairs are likely to be disordered due to the nature of insolvency. The insolvency practitioner is likely to have limited information on the company, and each insolvency case is different.
How do I submit an offer for an IP asset sale?
Offers can be submitted via email to matthew@metispartners.com, or alternatively, a sample offer letter can be provided upon request.
Is there stock?
We are an intellectual property valuation firm, and so do not sell physical assets, but in certain asset sales there may be an opportunity to acquire stock. Please contact us for further information.
What happens once my offer is accepted?
After the signing of legal documents and payment of the consideration funds, the assets can then be transferred to the purchaser. In practice, this may mean transferring the server if this has been purchased, the files with the software source code, or the passwords to domain names. In addition, the purchaser will now be the legal owner of the assets and may need to make arrangements to contact the trademark/patent agents and IP registers to change ownership on official records.
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