BANKRUPTCY: a POOR event, a RICH experienceBenno Groosmanwww.groosman.infoFounder & former CEO of Salusion B.V.www.salusion.com

Outline

• The products and successes of Salusion

• Financial structure

• The bankruptcy: a poor event

• Lessons learned related to the bankruptcy

• The aftermath: a rich experience

The products and successes of Salusion

Fact

Over 30% of replacements of

incontinency diapers in nursing homes

is not at the right moment.

This leads to leakages and

unnecessary replacements.

The solution for nursing homes: Sensotive

Sensotive in use

The solution for home and disabled care:Sensotive Home

Validated product and business case:Salusion’s customers

Validated product and business case:some of Salusion’s awards

Financial structure

Funding structure (new to old, in 1000’s €)

600 Government guaranteed bank loan

75 Subordinated bank loan

450 Ministry of Health development contract

20 Subordinated loan

20 Award money

45 Government grants

100 Soft preseed loan

10 Founders

Funding structure (new to old, in 1000’s €)

600 Government guaranteed bank loan

75 Subordinated bank loan

450 Ministry of Health development contract

20 Subordinated loan

20 Award money TOTAL FUNDING

45 Government grants € 1,320,000

100 Soft preseed loan

10 Founders

Major bank loan (details, in 1000’s €)

600 Total loan

Banks don’t like risks, so the loans was covered by:

100 Corporate guarantee manufacturer

130 Personal surety founders

360 Guarantee Dutch government (estimated)

+ Intellectual property, inventories and debtors

The bankruptcy: a poor event

What happened?• Bank loan has option for 24 month

suspension of repayments, founders opted for 6 months suspension. Bank agrees for even 12 months, but needs extension of corporate guarantee.

• Bank and manufacturer agreed on end date (12-31-2013) for the corporate guarantee, this is not part of the loan contract Salusion has with the bank.

• Salusion keeps in conversation with manufacturer and follows manufacturer’s suggestions, e.g. to reduce number of employees to cut down costs. Yet, still no extended corporate guarantee.

• Bank freezes Salusion’s accounts: employees don’t get salary. Escalation with manufacturer. No time to arrange other guarantees.

• Founders are obligated to file for bankruptcy before the end of 2013, to secure the bank’s rights (corporate guarantee and others).

Founders file for

bankruptcy

Suspend repayment bank loan

Unexpected end date corporate guarantee

Manufacturer doesn’t

extend guarantee

Bank freezing accounts and credit

Lessons directly related to the bankruptcy

Lessons learned related to the bankruptcy

How might this bankruptcy have been prevented?• Make contract about corporate guarantee

(bank/manufacturer) part of loan contract (bank/Salusion) to not have surprises

• Combine bank loan with an external investor• Better position owner’s equity• No corporate guarantee needed (or investor could’ve

replaced the manufactures corporate guarantee later)• Stronger position in negotiations with bank

• Less dependency on and better relationship with manufacturer

Lessons from the bankruptcy period (1/2)

• Always get legal advice (accountant, lawyer)*

• Keep all the key players involved and informed: take the lead in informing them

• Be honest to your employees and they will even help you

• Actively stay in touch with the curator: take your responsibilities, but set some boundaries

* My thanks go to EY, Den Haag & Arthur’s Legal, Amsterdam for helping me even while they knew Salusion couldn’t pay anymore

Lessons from the bankruptcy period (2/2)

• Get ready for 2 months fulltime (unpaid) work after filing for the bankruptcy (legal issues, administration, helping curator)

• If you have personal liabilities/debts: don’t hide, start cleaning the mess, communication is key

• Prepare to do it alone: your former partner(s) in the company might run away from (previously shared) responsibilities

Why am I a RICHER person now?The aftermath: a rich experience

A selection of what I learned

• Look for the best team, with high-skilled professionals and people that always challenge you

• Pay attention to your gut feeling or intuition: building your venture is not always a hard science

• Identify showstoppers in your venture and work on them weekly

• Entrepreneurship is about reducing risks, current success can be a false indicator

• Work with a clear mission statement and big goal, don’t be distracted by day-to-day opportunities and problems: focus!

Some of the things I experienced

• Bankruptcy is not the end, it’s a new opportunity to do things better

• Be open about the bankruptcy and people will respect you as a professional and as a person

• The time after the bankruptcy is great for personal reflection

• New opportunities and startup ideas arise quickly!

BANKRUPTCY: a POOR event, a RICH experience

Get in touch with me to share opportunities and updates:

Twitter: www.twitter.com/benno_groosmanLinkedIn: www.linkedin.com/in/groosmanwww.groosman.info

Image credits

• http://www.hdwallpapersimages.com/success-quotes-bill-gates/25006/

• http://www.pehub.com/wp-content/uploads/2013/04/success-road-to-shutterstock_100931980.jpg

• http://www.salusion.com

• http://www.hrelements.com/wp-content/uploads/2014/03/Finance-Accounts.jpg

• http://automobilein.com/wp-content/uploads/2014/05/Dark-Clouds-Background.jpg

• http://www.scenicreflections.com/files/LIGHT_AT_THE_END_OF_A_TUNNEL_Wallpaper_27ix5.jpg

• http://mkalty.org/desert-tree/