In the case of a company acquisition as an asset deal, contractually existing obligations not to act do not transfer to the purchaser, according to a judgment of the Cologne District Court from September 26, 2022 (Case No. 14 O 225/21).
In a company acquisition within the framework of an asset deal, assets and economic goods, including legal relationships, are sold. However, this does not mean that a cease-and-desist declaration with penalty obligations, which was issued by the company before the sale, automatically transfers to the purchaser, explains attorney Michael Rainer, a contact for business law at MTR Rechtsanwälte.
In the case before the Cologne District Court, the company had previously unlawfully used a plaintiff’s photo and advertised with it. For this copyright infringement, the company had issued a cease-and-desist declaration with penalty obligations and committed to paying a contractual penalty in the event of violations. Later, the company was acquired by the defendant within an asset deal.
The creator of the photo then discovered that his photo was again unlawfully published. Based on the cease-and-desist declaration with penalty obligations, he now demanded the payment of the contractual penalty from the purchaser of the company.
However, his lawsuit was unsuccessful at the Cologne District Court. The court made it clear that the defendant purchaser of the company had neither become a party to the cease-and-desist contract nor was obliged to pay the contractual penalty for any other reason. The defendant had acquired certain assets via an asset deal but was undeniably not identical with the company that had committed to the cease-and-desist. This company had been absorbed into another entity, as the Cologne District Court explained.
The acquisition of certain legal positions within the framework of the asset deal did not result in the defendant becoming a universal successor. Neither did it become a universal successor through general succession nor specifically through special provisions of the Reorganization Act (UmwG). Additionally, there was no continued business operation of the sold company. The defendant was also not passively legitimized.
Therefore, the Cologne District Court decided that the defendant company does not have to pay the contractual penalty. However, the plaintiff can still file a cease-and-desist claim against the company.
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