It becomes more difficult to reorganize a company with going concern issues through a takeover.

A European judgment states that an acquirer must take over all the staff with full rights, making it more difficult to remedy a company in difficulty through a takeover.

The Law on the Continuity of Enterprises (WCO), the WCO 3 construction, was created a decade ago. Thanks to this legislation, part of the activities and the associated staff could be transferred to a new owner. The rest remained with the ailing company, which usually went bankrupt.

According to the European Court of Justice, this directive conflicts with that which protects the rights of employees when transferring an enterprise. The acquirer must take over all staff.

This is problematic since the employees now remain employed by a company that goes bankrupt, and then the employees lose their acquired rights anyway. As a result, this interpretation of the European Court could have a reverse effect on a directive intended to safeguard workers' rights.

Source : Knack.be

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