When a licence survives insolvency, or does not: what to do first
A licence does not automatically survive when either party becomes insolvent. Continuation, rejection or renegotiation is decided under the national insolvency regime that applies to the insolvent party. The outcome turns on the right's nature, its recordal status and how fast you act. Treat the first days after an insolvency filing as the window that matters.
What actually governs the right you licensed
Insolvency law decides whether the licence continues. The identity of the underlying IP right decides where you look for registers and recordal rules. The table below keeps the two questions apart, because mixing them is the usual source of wasted time.
| Right licensed | Governing EU act | What the act defines |
|---|---|---|
| EU trade mark | Regulation (EU) 2017/1001 (EUTMR) | The mark, its register, and licence recordal |
| European unitary patent | Regulation (EU) No 1257/2012 | The unitary patent and its register |
| Computer program copyright | Directive 2009/24/EC | The rights in the software as such |
| Database right | Directive 96/9/EC | The sui generis right in the database |
None of these acts decides whether a licence survives insolvency. That question sits entirely inside the insolvency regime applying to the insolvent party, wherever that party is established. What the acts above do give you is a centralised register for some rights, and a recordal that can be checked and, if missing, corrected before the estate acts. A right that has no such register, or a licence over an unregistered design or a trade secret, leaves you with only the contract itself, so its wording carries more weight.
What changes in practice once insolvency opens
If the licensor becomes insolvent, an administrator usually gains the power to continue, assign or reject contracts that are not yet fully performed by either side. A licence that is still being paid for and still generating value for the estate is a strong candidate for continuation. A licence the estate sees only as a cost is a candidate for rejection.
If the licensee becomes insolvent, the exposure runs the other way. Royalty payments may stop while the administrator decides what to do with the licensee's business. An exclusive licence without a registered recordal is harder to defend once a buyer emerges for the underlying right, because that buyer may take free of an unrecorded interest.
Cross-border proceedings add a further layer. Where the insolvent party operates through group entities in more than one country, the licence may sit inside main proceedings in one state and be affected by secondary proceedings in another, under the applicable cross-border insolvency framework. Deadlines run from the moment proceedings open, not from the moment you learn about them.
Three factors make a licence more fragile in this setting: it is exclusive rather than non-exclusive, it depends on continued performance by the insolvent party rather than a one-off grant, and it was never recorded on any register that exists for the right in question.
What to do, in order
- Confirm which party is insolvent and in which jurisdiction the proceedings were opened.
- Identify the appointed administrator or insolvency practitioner and their contact route.
- Check recordal status on any relevant EU-wide register before contacting anyone.
- Pull the licence agreement's own continuation, termination and assignment clauses.
- List every sublicence or dependent contract that rests on this licence.
- Calculate what continued performance is worth to you against what rejection would cost.
- Take advice before responding to any notice proposing rejection or assignment.
Who decides, and where
In first instance, the administrator or insolvency practitioner decides whether to continue, assign or reject the licence, subject to the supervision of the insolvency court that opened the proceedings. A dispute over that decision is heard by the same court, not by the body that maintains the underlying IP register. A dispute over recordal itself — for example, whether a licence was validly entered on the register before the insolvency filing — is a separate matter for the relevant IP office or court.
Where main and secondary proceedings run in different states, the administrator with authority over the licence may not be the one you first contact. Confirming which proceeding controls the contract is a preliminary question, not a detail to leave for later.
Several situations that change the answer
If you hold an exclusive trade mark licence and the licensor is insolvent, verify the recordal first. Third parties who later acquire the mark from the estate may not be bound by an unrecorded licence, and the question of enforcing against lookalike goods can arise before insolvency is resolved — see Customs stops counterfeit goods trade mark.
If the licensed right's own chain of title is unclear — a software licence resting on a training corpus whose provenance was never documented, for instance — the administrator will treat the licence as a lower-priority asset until provenance is settled. That is a separate front to close before insolvency terms are negotiated — see When the training corpus has no provenance: what to.
If the licence is represented through a token rather than a direct registered assignment, insolvency exposes the gap between the token and the right it claims to carry immediately, and the estate will look past the token to the register — see When the token refers to an unregistered right explained.
If neither party is insolvent yet but the risk is visible — falling payments, a missed royalty, a public restructuring announcement — the same recordal checks and the same review of continuation clauses are worth doing before a filing forces the pace.
What this page does not settle
This page does not state which national insolvency statute applies to your counterparty, because that depends on where the insolvent party is established and which proceedings were opened. It does not value the licence or predict whether an administrator will choose continuation over rejection. It does not replace a reading of the specific licence agreement by counsel who can see the continuation and assignment clauses in full.
A related situation
Insolvency is one of several events that move rights without a clean assignment. A group restructuring is another — see A group restructuring moves the rights IP licence.
Verified
Checked against the acts named above: Regulation (EU) 2017/1001 (EUTMR), Regulation (EU) No 1257/2012, Directive 2009/24/EC and Directive 96/9/EC. These acts are stable and low-volatility; none carries a figure requiring a currency date. These pages are kept by the team described in The people behind the reports in detail.
FAQ
What is the first step when a licence survives insolvency, or does not?
Confirm which party is insolvent, in which jurisdiction, and check your own recordal status on any relevant register before you contact the administrator. Doing this before you make contact keeps you from disclosing weaknesses you have not yet checked yourself.
Which deadline is already running?
The window opened by the insolvency filing itself, not by any notice sent to you. It runs from the date proceedings opened, and administrators are not obliged to wait for a licensee or licensor to catch up before deciding.
Who decides, and on what evidence?
The administrator decides first, based on the licence agreement, the payment history under it, and the estate's interest in continuing or ending it. The insolvency court that opened the proceedings reviews that decision if it is challenged, and a separate register dispute goes to the relevant IP office or court instead.
Send the licence agreement and the insolvency notice together, in that order, so the review starts from the same documents you are relying on.