Selling a distressed manufacturing business through a court process

The situation

The plan, when Mihaela and Alina first came to us, was ordinary. They had built a specialty components manufacturer in Paris over eleven years, growing it into a business worth somewhere in the five to eight million dollar range on a good valuation, and they had found a buyer, Sylvain, who wanted to acquire it outright. Mihaela kept her day job as a technology executive throughout, treating the business as a serious side investment; Alina, a specialist physician, did the same. Neither needed the sale to fund their next chapter, but both wanted out cleanly, and Sylvain's offer looked like a straightforward private transaction: an asset purchase agreement, a closing date a few months out, lawyers on both sides handling the usual due diligence.

The plan broke when their own accountant flagged, during preparation for the sale, that the business carried more supplier and lender debt than either partner had been tracking closely. Neither Mihaela nor Alina managed day-to-day finances; a controller had handled that, and the controller had let several supplier accounts run further behind than either partner realized. The company's equipment and inventory were also pledged to a secured lender for an amount close to what Sylvain was prepared to pay for the business outright, which meant paying the lender out in full at closing would leave little, if anything, for Mihaela and Alina.

Sylvain's own advisors made this clear quickly: he would not proceed on the original terms once the debt and security picture came out. The deal was not dead, but it could no longer be a simple private sale. The lender's security would follow the equipment and inventory through an ordinary sale unless it was formally discharged. Selling the assets privately while the company was insolvent also carried a real risk of the sale being unwound later, but only if the company subsequently went into bankruptcy or another insolvency proceeding, and only if the price turned out not to be fair market value or Sylvain turned out not to be dealing at arm's length. A defensible price paid by an unrelated buyer is hard to attack after the fact; the lender's unresolved security was the harder problem, since no private sale could clear it on its own. The path that gave Sylvain the strongest protection on both fronts was a sale conducted through a formal insolvency process, where a court order would vest the purchased assets in his hands free of the lender's security and push any creditor claims onto the sale proceeds instead.

For Mihaela and Alina, this was unfamiliar and unsettling territory. Neither had been through anything like it, and their first question to us was not about price. It was about how long it would take, what it would cost in professional fees, and whether the process itself could be controlled, or whether they were now at the mercy of a court timeline neither of them understood. Both had spent their careers in fields where process is predictable, a hospital operating list, a product release schedule, and the idea of an outcome depending on a judge's discretion, on a specific hearing date, unsettled them more than the prospect of a lower sale price ever did.

The risk we had to size

The core legal risk was straightforward to describe and harder to manage: no private mechanism could clear the lender's security from the assets or guarantee the sale itself would stand once it closed, and both risks needed a real answer before Sylvain would sign anything. A court-supervised sale, structured properly, could produce an approval and vesting order clearing the lender's security from the purchased assets and pushing creditors' recourse onto the sale proceeds rather than the assets he had bought, which is the strongest protection a buyer in Sylvain's position can get. It would not give Sylvain absolute certainty: the court still had to be persuaded to grant the order on those terms, and an order of that kind can be appealed within the proceeding.

That solved Sylvain's exposure problem, but it introduced a different risk for Mihaela and Alina: process risk. A court-supervised sale is not simply a paperwork exercise. It requires an insolvency professional to run the sale process, court approval of the sale terms, notice to creditors, and a hearing where a judge has to be satisfied the sale is fair and the price is reasonable. Any of those steps could add delay, generate objections from a creditor who felt shortchanged, or, worst case, see the court decline to approve the sale on the terms negotiated.

We had to size two things for the partners honestly. First, the financial risk: what portion of the sale proceeds would go to professional fees and creditor claims before either partner saw a dollar, since a court-supervised sale process carries meaningfully higher administrative cost than a private closing. Second, the timeline risk: realistic ranges for how long court approval typically takes once a sale process is properly organized, understanding that a contested hearing could extend it well beyond that.

Their stated priority, repeated in nearly every meeting, was that predictability mattered as much as the final number. Both had full careers outside the business and neither wanted an open-ended process hanging over them for a year or more while creditors circled. That priority shaped every recommendation that followed: we were not optimizing purely for maximum sale price, we were optimizing for a process both partners could see the end of.

We also had to size a reputational and relationship risk that mattered to them in a way it might not have to a purely financial investor. Several of the company's suppliers were people Mihaela and Alina had worked with personally for over a decade, and a court process that felt adversarial or punitive to those creditors risked damaging relationships neither partner wanted to burn, even as they exited the business. That meant part of sizing the risk correctly was thinking through how the process would look to the people on the other side of it, not only how it would resolve on paper.

What we did

1. Retained an insolvency professional early to run the formal sale process, since a court-supervised transaction of this kind requires a licensed proposal trustee or receiver to oversee notice to creditors and report to the court, rather than counsel alone conducting the sale; getting that professional engaged before terms were finalized meant the sale structure was built around what a court would actually accept, not retrofitted afterward.
2. Built a realistic budget for professional costs before committing to the process, so Mihaela and Alina could see, in advance, roughly what portion of expected sale proceeds would go toward trustee fees, legal costs on both sides, and any shortfall to unsecured creditors, giving them a number to plan around rather than an open-ended estimate that could grow as the file did.
3. Negotiated the asset purchase agreement with Sylvain's counsel to be court-ready from the outset, meaning the price, closing conditions and allocation of assets were settled between the parties before the process went before a judge, which shortened the eventual hearing considerably compared to negotiating terms in front of the court and reduced the chance of a contested adjournment.
4. Coordinated the creditor notice process with the insolvency professional to make sure every known creditor, down to smaller suppliers Mihaela and Alina knew personally, received proper notice of the proposed sale and the deadline to object, since a defective notice process is one of the most common reasons a court declines to approve a sale on the first attempt.
5. Communicated directly with a handful of long-standing suppliers before the formal notice went out, at the partners' request, so those relationships heard about the process from Mihaela and Alina rather than reading a formal court notice cold. This step was not legally required, but it protected relationships the partners had built over a decade and reduced the odds that a blindsided supplier turned a manageable claim into a formal objection later, even though it added a step to an already tight schedule and required careful coordination with the insolvency professional.
6. Prepared the partners for the approval hearing in plain terms, walking them through what the judge would actually be looking for: that the process had been fair to creditors, that the price was reasonable given the circumstances, and that no better alternative had been left unexplored. Neither partner had ever appeared in a courtroom before, and knowing what to expect in advance meant neither was blindsided by the formality of the proceeding, its pace, or the kinds of questions the judge might raise from the bench.
7. Responded to a lender's objection that arose a week before the hearing, when the secured lender argued the proposed price undervalued certain equipment. Rather than let the objection push the hearing back, we worked with the trustee to produce a short independent valuation opinion supporting the negotiated price, which gave the court a concrete basis to overrule the objection. That resolved the dispute without adjourning the hearing or reopening terms Sylvain had already agreed to, keeping the file on the timeline the partners had been promised.
8. Managed the closing mechanics once the court order was granted, coordinating the transfer of assets, employees and the lease with Sylvain's counsel on the fixed date the order itself specified. Working from a court-ordered date rather than a negotiated one removed the usual back-and-forth over timing, and gave the partners a concrete closing to work toward rather than an indefinite wait after months of uncertainty about when, or whether, the file would actually conclude.

The outcome

The court approved the sale roughly four months after the process began, close to the middle of the range we had given Mihaela and Alina at the outset, and inside what both had said they could tolerate. Sylvain acquired the business's assets free of the old creditor claims, which is what made the deal possible at all once the debt picture had come to light. Mihaela and Alina received proceeds meaningfully below what the original private-sale price would have delivered, once professional fees and the shortfall paid to unsecured creditors were accounted for; the gap was real, and both partners understood going in that it would be.

What the partners valued most, based on their own account afterward, was not the final number but the fact that the process behaved the way we told them it would. There were no surprise delays beyond the lender objection, which was resolved within the existing timeline rather than pushing the hearing back, and the fee budget held close to what had been estimated at the outset. For two people with full careers who had never been through an insolvency process, that predictability was the outcome they had asked for from the beginning.

The company continued operating under Sylvain's ownership without interruption to its production schedule, since the court order took effect on a fixed closing date rather than leaving a gap in operations. Employees kept their jobs through the transition, and several of the suppliers Mihaela and Alina had reached out to personally continued doing business with the company under its new ownership, a relationship outcome that mattered to them as much as any figure in the final accounting.

For Mihaela and Alina, the file closed as a genuine compromise: less money than they had once expected, but a clean exit from a business whose debt position had grown beyond what either of them, working full time elsewhere, could have managed on their own. Looking back, both said the outcome they valued most was not the price at all, but the fact that the process ran on the schedule and the budget we had set out for them at the start, with no surprise beyond the one objection that was resolved without derailing the hearing.

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