When a licence survives insolvency, or does not: what it costs to be wrong
A licence does not automatically die when a party goes insolvent, and it does not automatically survive either. The outcome depends on the type of right, the wording of the contract, and the national insolvency regime that applies to the insolvent party. Getting this wrong costs a production line, a product name, or a software stack overnight.
What the law protects, and what it does not
The licensed right is defined by a specific EU instrument. A trade mark licence sits under Regulation (EU) 2017/1001 (EUTMR); the mark and its recordal in the Union register exist because of that Regulation. A licence over a computer program sits under Directive 2009/24/EC. A licence over a database's sui generis right sits under Directive 96/9/EC. A licence over a unitary patent sits under Regulation (EU) No 1257/2012.
None of these four instruments decides whether a licence survives its owner's insolvency. That question sits in the national insolvency regime of the state where the proceeding is opened, not in EU trade mark, software, database or patent law.
Two outcomes recur across the regimes we see. Either the licence continues on its existing terms, as an asset the estate must honour, or the insolvency administrator can disclaim it as an onerous contract. Which one applies depends on the contract wording, on whether the licence was recorded in a public register, and on the rules of the forum handling the case.
What changes in your deadlines and risk
If the licensor becomes insolvent, the licence can be disclaimed before you are notified. You are then left, at best, with an unsecured claim for damages, not a right to keep using the IP. If the licensee becomes insolvent, an administrator may keep using the licensed right without paying, while a moratorium can block you from terminating for non-payment. Both situations run on short clocks: proof-of-claim deadlines, moratorium periods, and windows to object to a disclaimer are typically measured in weeks.
What to do, in order
- Confirm which right is licensed and which EU instrument defines it — trade mark, software, database, or patent.
- Pull the licence contract and check for an insolvency termination clause, a continuation clause, and any step-in right.
- Check whether the licence, or a security interest over it, is recorded in the relevant public register.
- File a proof of claim with the insolvency administrator before the deadline set in the proceeding, or instruct counsel to file it.
- Request written confirmation from the administrator on whether the licence continues or is disclaimed.
- If the administrator disputes continuation, escalate to the insolvency court through counsel without delay.
Who decides
| Scenario | Decision-maker | Forum | What is checked |
|---|---|---|---|
| Licensor insolvent | Administrator, then the court on dispute | Insolvency proceeding at the licensor's home state | Whether the contract is onerous, and whether a registered right protects continuation |
| Licensee insolvent | Administrator, then the court on dispute | Insolvency proceeding at the licensee's home state | Whether payments are current, and whether a moratorium applies |
| Registered EU right | Registry office records the recordal; the court decides survival | Insolvency court, with the register entry as evidence | Whether the licence was recorded before the proceeding opened |
Three forks worth checking before you assume the answer
If the licensed right is an EU trade mark and the licence was recorded in the Union register, that recordal is evidence in the insolvency proceeding, though it does not by itself guarantee continuation. If the insolvent party keeps selling marked stock without authority after a disclaimer, that is now unauthorised use, and enforcement can move to the border: When customs stops counterfeit goods in detail.
If the licensed work originated from a contractor rather than an employee, ownership can be unsettled before insolvency ever becomes relevant, and unsettled ownership is the first thing an administrator will test: When a designer reuses a template from an earlier.
If the licence contract is silent on insolvency and also silent on what happens when the licensed technology changes, treat both gaps the same way, as a clause to fix now rather than to litigate later: When the contract has no upgrade path in practice.
What this page does not decide
This page does not decide the outcome of a specific insolvency case. It does not replace an assessment of the insolvency code of the state where the proceeding is open. It does not cover the tax consequences of an assignment made to pre-empt a disclaimer.
Related situations
A licence can also be pulled into a wider corporate move before insolvency is even on the table: A group restructuring moves the rights IP licence what.
Verified
This page draws only on the EU instruments named above: Regulation (EU) 2017/1001, Directive 2009/24/EC, Directive 96/9/EC, and Regulation (EU) No 1257/2012, checked against their official texts. National insolvency provisions are not part of this registry and are not cited here; where a national insolvency code matters to your case, it is checked separately. Our method for collecting and dating sources is set out here: Methodology: collection, cross-checking and dating explained.
FAQ
What is the first step when a licence survives insolvency, or does not?
Identify which EU instrument defines the licensed right, then pull the licence contract and check its insolvency clause. That tells you whether you face a continuation question or a disclaimer risk.
Which deadline is already running?
The proof-of-claim deadline set by the insolvency proceeding starts on the date the proceeding opens, not on the date you notice it. Missing it can turn a live licence into an unsecured claim.
Who decides, and on what evidence?
The insolvency administrator decides first, based on the contract and any public register recordal. The insolvency court decides on dispute, based on the same evidence plus the administrator's reasoning.
A licence dispute inside an insolvency proceeding runs on short clocks. Write to us and a partner responds within minutes during business hours; a quote follows within one working day.