Merger & Acquisition: Liability of Absorbing Company

Extract

[...] Furthermore, this obligation for the guarantor company arose from the moment when its subsidiary concluded a loan contract that would trigger the guarantee, namely June a date prior to the merger. Thus, and according to the principle of universal transmission of assets, the guarantee deed will be transmitted to the absorbing company. If the subsidiary of the absorbed company is unable to meet its commitments (repayment of the loan concluded on June 24, 2016), the absorbing company (Autorepair Company) will have to meet this obligation. [...]

[...] The merger is recordedand. During the merger project, the manager of the absorbing company is not aware of the legal proceedings against the absorbed companyand. Two months after the merger, the absorbing company is sentenced to a fine for involuntary manslaughter. The manager of the absorbing company wonders whether the absorbing company should be liable for the offenses committed by the absorbed companyand. In 2015, Réparauto subscribed a guarantee contract with a bank, a contract intended to guarantee all loans that its subsidiary might conclude in the future. [...]

[...] Furthermore, the Commercial Chamber of the Court of Cassation in a ruling dated 25 October 2016 does not recognize the criminal liability of the absorbing company even though the individuals making up the two companies were identical. Thus, even in the event that the directors of the absorbing company were aware of the legal proceedings against the absorbed company, they could not be held criminally liable. In this case, the director of the absorbing company was not aware of the legal proceedings against the absorbed company at the time of the merger. [...]

[...] It is debtor of this obligation. In order to understand the consequences of a merger-absorption on the surety contract, it is necessary to distinguish whether the absorbed company is a debtor of the loan obligation or not.debtor ofof the repayment obligation resulting from the loan contract, creditor of this or simple surety. According to the jurisprudence of the courtcommercial hunger of the Court of Cassation dated 8 November 2005, if the the creditor company of the obligation is absorbed by way of merger-absorption, the creditor is then no longer the same legal person, releasing the guarantor of sit is obligations. [...]

[...] Thus, the merger has the automatic effect of transmitting the universal heritage of the absorbed company to the absorbing company. By principle, the absorbing company sees the entire debt and assets of the absorbed company transferred to it.e. Concerning guarantee contracts, the commercial chamber of the Court of Cassation's jurisprudence specifies that the guarantee given by a merged company only covers debts that arose prior to the mergerCourt of Cassation, commercial January 2014 even when the absorbed company has become a guarantor of all the commitments, present or future, of the company being absorbeddebtorCourt of Cassation, commercial February 2018. [...]