Company Succession: How to avoid it?

sucesion de empresas compra activos

If we buy a portfolio of customers or a brand , Is there a possibility that has been considered business succession?

If it is accepted that there business succession, the new owner shall assume all debts of the company which purchased certain assets.

This is a problem that occurs in both company acquisitions Pure and insolvency situations, in which you try to get a solution for creditors, selling the insolvent or any of its production units.

The most problematic issues are labor obligations and tax obligations.

Labor obligations

In the workplace, Article 44 Workers Statute, states that there business succession when a change in ownership occurs, of a workplace or a production unit. It requires that the unit has functional autonomy and that is continued activity. Then, assignor and assignee are jointly liable for 3 years of labor claims which arose prior to the succession.

If it were a purchase of a insolvent company or a production unit of insolvent, Article 149 of the Bankruptcy Act provides that Judge Mercantile, may agree that the purchaser is not subrogated in the share of wages or pay outstanding claims prior to the sale to be assumed by the Fogasa. Also, they may conclude collective agreements to modify working conditions, but approval will be required by the judge.

Tax obligations

The Tax Code, in his article 42.1.c) establishes several liability for the debts of the acquired company, also including withholding. If the acquisition occurs within a bankruptcy proceeding is exempt. The Bankruptcy Act is silent on the obligations to Social Security but the doctrine means that the treatment is the same as the tax obligations.

In any case it is recommended that insolvency situations Judge requested an explicit authorization, with explicit statement about the lack of business succession and the absence of subrogation of labor obligations, tax, social security, Fogasa with the creditors.

Concealment of assets

Occasionally, you can give even a situation of fraudulent business succession, when the debtor transferred its assets to a new company, mounted by a family member on a figurehead, making it difficult for creditors to collect debt. But this is a subject for other entries.

How to avoid business succession?

It is generally considered that there is business succession when using any type of operation is producing a change in the employer but continues with the same activity.

According to the Judgment of the Supreme Court of 29 May 2008, "It must also occurred transmission"the assets that make up the basic infrastructure or organization of the farm business”.

Namely, for Supreme Court, assessing business succession be transmitted as both template assets. Considered evidence of business succession following:

  • Coincidence in the economic activity of the new company acquired .
  • Transmission of essential assets of the acquired company.
  • Match the registered office or activity.
  • Uninterrupted continuation of the activity
  • Matching customers.
  • Shareholders agreement between partners or members of the board.
  • Matching all or part of the workforce of the acquired business.

This doctrine gives us clues about possible solutions to the problem of business succession:

Pareto's Law applies especially in companies: sure there 20 % of company resources that generate 80% value: these are often the client, Brand, and industrial know-how or knowledge. If the acquiring company acquires only some of them such as, customer base or brand, and no transfer of staff, or the same facilities are used, nor is there agreement on the people who are the shareholders or the board of directors, the risk that is deemed to be business succession with the consequent obligation is subrogated to work obligations, fiscal or business debts for which an asset purchase is remote.

Now, sale of such assets should be done in a scrupulously fair and transparent way, due to the advice of a attorney experienced in commercial.

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