Under what insolvency-related conditions can a party immediately terminate the C3 Wellness Spa agreement?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
- 6.05. Insolvency. A Party may immediately terminate this Agreement upon notice if the other Party: (a) becomes insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts as they become due; (b) generally is not paying its debts as such debts become due; (c) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially all of its assets, either in a proceeding brought by it or in a proceeding brought against it and such appointment is not discharged or such possession is not terminated within 60 days or it consents to or acquiesces in such appointment or possession; or (d) files a petition for relief under present or future federal or state insolvency, bankruptcy, or similar laws or an involuntary petition for relief is filed against it under any such laws and such involuntary petition is not dismissed within 60 days after filing, or an order for relief naming it is entered under any such law, or any composition, rearrangement, extension, reorganization or other relief of debtors now or later existing is requested or consented to by it.
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
According to C3 Wellness Spa's 2024 Franchise Disclosure Document, either party can immediately terminate the agreement if the other party experiences certain insolvency-related events. These events include becoming insolvent, making a fraudulent transfer to avoid creditors, or assigning assets for the benefit of creditors. Additionally, a party can terminate the agreement if the other party admits in writing their inability to pay debts as they become due, or is generally not paying debts as they become due.
Further, the agreement can be terminated immediately if a receiver, trustee, or custodian is appointed to take possession of all or substantially all of the party's assets, whether initiated by the party itself or by others, and such appointment or possession is not terminated within 60 days. Consent to or acquiescence in such an appointment also constitutes grounds for immediate termination.
Finally, filing a petition for relief under federal or state insolvency, bankruptcy, or similar laws allows for immediate termination. This includes both voluntary filings by the party and involuntary petitions filed against them, provided the involuntary petition is not dismissed within 60 days. An order for relief under such laws, or any request for or consent to composition, rearrangement, extension, reorganization, or other relief of debtors, also provides grounds for immediate termination.