Keywords: Supply chain, Financial distress,
insolvency, Operational Support
In many industries, the supply chain includes multiple companies
providing production material. At the same time, it is not unusual
for a supplier within the supply chain to encounter financial
distress or even declare insolvency. This can have a significant
impact on the company if its business depends on a distressed
If the company relying on deliveries cannot replace the
distressed supplier with an alternative one that is able to supply
the company in a timely manner with products of the same quality
and quantity, this can cause interruption of the company's
ongoing production and longer delivery lead times. This is likely
to be the case when the relevant products are not commodities but
rather customized products. Especially in just-in-time industries,
such as the automotive industry, supply interruptions can
dramatically affect business operations within a very short
Our White Paper summarizes efficient approaches to reduce these
risks if the agreement is properly tailored in advance.
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This Mayer Brown article provides information and comments
on legal issues and developments of interest. The foregoing is not
a comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
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