Bankrupt Legal Manufacturer and Its Products

[missjenny]

Hello,

If the legal manufacturer of a medical device declares for bankruptcy, is their CE certificate still valid or does it become obsolete?

In this situation, could the contract manufacturer, who actually makes the product, continue manufacturing the product and ship them out to the existing distributors in the EU as they had done in the past or would this be viewed as illegal or against directives/regulations in the EU?

This would not be something that would be continued for years, but just for three or four months as payment has already been received for the production of a certain quantity of the products.

It would be great if you could share your opinions based on experience or common sense or even better if you could point me to a section of a guideline or directive, that would be great.

 

[somashekar]

The contract and obligations within the contract which is set with the NB, will be guiding on these matters. The CE mark is the property of the NB always. The best way forward is an open discussion with your NB. If by chance both NB are the same, it makes matters easy.

 

[Ronen E]

Hello,

If the legal manufacturer of a medical device declares for bankruptcy, is their CE certificate still valid or does it become obsolete?

In this situation, could the contract manufacturer, who actually makes the product, continue manufacturing the product and ship them out to the existing distributors in the EU as they had done in the past or would this be viewed as illegal or against directives/regulations in the EU?

This would not be something that would be continued for years, but just for three or four months as payment has already been received for the production of a certain quantity of the products.

It would be great if you could share your opinions based on experience or common sense or even better if you could point me to a section of a guideline or directive, that would be great.

Who will be regulatorily responsible for the devices after the bankruptcy? Will the legal manufacturer's operation cease to exist altogether, or will it take another form?

From a legal standpoint, I think it would be best to consult with a lawyer spcialising in consumer goods and knowledgeable about CE marking. I believe that it makes a difference when the actual transaction legally took (or takes) place and when "placing on the market" occurs / occurred, but I'm not a legal practitioner.

 

[Sarah Stec]

If the legal manufacturer of a medical device declares for bankruptcy, is their CE certificate still valid or does it become obsolete?

In this situation, could the contract manufacturer, who actually makes the product, continue manufacturing the product and ship them out to the existing distributors in the EU as they had done in the past or would this be viewed as illegal or against directives/regulations in the EU?

This would not be something that would be continued for years, but just for three or four months as payment has already been received for the production of a certain quantity of the products.

First, just because a company is bankrupt doesn't mean it closes.

Second, I agree that you should consult with your attorney about this. If the contract manufacturer doesn't ship product for which they have already been paid, that may be a breach of contract and may preclude any further payments that you may have received as a result of the bankruptcy. And then there are the regulatory issues. So talk to your lawyer.

 

[missjenny]

The contract and obligations within the contract which is set with the NB, will be guiding on these matters. The CE mark is the property of the NB always. The best way forward is an open discussion with your NB. If by chance both NB are the same, it makes matters easy.

It is my understanding that the NB of the bankrupt legal manufacturer has not been very cooperative with the contract manufacturer or their NB. With that said, it is helpful to understand that the CE Certificate is the NB's property. So, perhaps, if the NB continues to be uncooperative, the best/fastest way forward may be getting a new CE Certificate with a new NB.

 

[missjenny]

Who will be regulatorily responsible for the devices after the bankruptcy? Will the legal manufacturer's operation cease to exist altogether, or will it take another form?

From a legal standpoint, I think it would be best to consult with a lawyer epcialising on consumer goods and knowledgeable regarding CE narking. I believe that it makes a difference when the actual transaction legally took (or takes) place and when "placing on the market" occurs / occurred, but I'm not a legal practitioner.

As far as I am aware, the issue of regulatory responsibility was not resolved before the bankruptcy and the manufacturer's operation will not be taking another form. What remains is their local distributors in Europe who are still very much willing to continue marketing the devices and the contract manufacturer.

So, I suppose this is a two-part question. If the contract manufacturer were to continue manufacturing, who would be responsible for the products previously placed on the market and the new ones placed there after the fact.

Appreciate your input as always.

 

[missjenny]

First, just because a company is bankrupt doesn't mean it closes.

Second, I agree that you should consult with your attorney about this. If the contract manufacturer doesn't ship product for which they have already been paid, that may be a breach of contract and may preclude any further payments that you may have received as a result of the bankruptcy. And then there are the regulatory issues. So talk to your lawyer.

Yes, you are absolutely right in that they are not the same thing although they are in this case. Just wanted your inputs from the regulatory perspective before going to the lawyers.

Thank you.

 

[Ronen E]

As far as I am aware, the issue of regulatory responsibility was not resolved before the bankruptcy and the manufacturer's operation will not be taking another form. What remains is their local distributors in Europe who are still very much willing to continue marketing the devices and the contract manufacturer.

So, I suppose this is a two-part question. If the contract manufacturer were to continue manufacturing, who would be responsible for the products previously placed on the market and the new ones placed there after the fact.

Appreciate your input as always.

I'm not sure who's going to be regulatorily responsible for devices made/traded before the bankruptcy, if the legal manufacturer ceased to exist altogether. I would have said, ask their NB, but you already mentioned that they're not cooperative... I'm quite sure that there's a relevant clause somewhere in the vast array of EU product liability / post-market legislation, but where exactly to look exceeds my immediate knowledge. The quick way to find out would be again to ask a lawyer, or you could cull your way through, maybe starting with Regulation 765/2008 on Accrediattion and Market Surveillance (the name is not too informative, it's a general framework for what happens post-marketing), or simply searching the web for an entry point.

For devices made after the bankruptcy the answer is way simpler. Assuming that the rights for the design are sorted, the contract manufacturer will need to clear the devices under its own name (either getting an EC certificate or self-certifying, depending on class) and take full regulatory responsibility. The labeling will have to be amended too, of course.

 

[Sarah Stec]

As far as I am aware, the issue of regulatory responsibility was not resolved before the bankruptcy and the manufacturer's operation will not be taking another form. What remains is their local distributors in Europe who are still very much willing to continue marketing the devices and the contract manufacturer.

So, I suppose this is a two-part question. If the contract manufacturer were to continue manufacturing, who would be responsible for the products previously placed on the market and the new ones placed there after the fact.

In my experience, if a company were to close, their CE certificates are rendered invalid. Generally, if there's no company, there is no compliant quality system, there's nothing to certify. Likewise, I would agree that if you would want to continue marketing the device it would need to be under someone else's name and quality system, maybe your own, maybe the distributor's (and this would be an initial certification). Otherwise, it may look very much like placing on the market an unapproved device.

For the devices that are already on the market, the bankrupt company or their successor may retain regulatory responsibility over the devices. Each jurisdiction is different and it's been a while since I slept through my bankruptcy classes, but the devices (the IP, the regulatory clearance) may be considered to be property that is disposed of in the bankruptcy. However, this is for a jurisdiction-specific bankruptcy attorney to figure out.

What all this means for you, however, is that it's a really complicated situation. You really should get on the phone with counsel to talk it through and see what your options are.

Do you know when the company is closing for good?