Obligations of a company going out of business

Weeder

Involved In Discussions
#1
If a manufacturer of a Class II medical device decides to stop operation, or goes bankrupt, what are its obligations concerning maintaining the devices in the market?

Will the company still have to maintain a Quality System?

How does the lifetime of a product come into play?

Will appreciate any guidance on this matter.
 
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Wes Bucey

Quite Involved in Discussions
#2
If a manufacturer of a Class II medical device decides to stop operation, or goes bankrupt, what are its obligations concerning maintaining the devices in the market?

Will the company still have to maintain a Quality System?

How does the lifetime of a product come into play?

Will appreciate any guidance on this matter.
You posit two entirely different situations. Actually, three, if you consider there are two broad types of bankruptcy - (1) REORGANIZATION AND (2) LIQUIDATION.

If an organization decides to stop making ANY product (for any reason which may be a whim or a financial reorganization), but continues to do business, then it faces statutory and contractual hurdles in whether it provides for a successor, safety stock, recall, fire sale, whatever. A lot depends on whether the product is a proprietary one or a commodity.

A company that ceases doing business (liquidation) has no legal obligation in regard to disposition of inventory (finished goods or work in process), designs, process equipment, or personnel. Consider the analogy (a poor one) of some man made or natural disaster completely obliterating the organization, its premises, its designs, its intellectual property, its personnel. The dead folks (personnel and executives) of the organization are literally just as dead in a liquidation, so they can no longer be held responsible for anything.

If you have a specific question or fear, it is probably best to take it up with an attorney familiar with you or with the organization and who has access to information about contracts and statutory obligations.

On a more cynical note, unless you are in the top tier of managers of an organization undergoing such change, your primary worry should be "What happens to me?" not, "What do we owe the customer?" because the ramifications for the customers will rarely affect you as a regular worker.

Added in edit: If you ARE in the top tier of managers in an organization contemplating this change, consider hiring a qualified consultant to help you sort through all this with the least amount of personal grief to yourself and family.
 

somashekar

Staff member
Super Moderator
#3
If a manufacturer of a Class II medical device decides to stop operation, or goes bankrupt, what are its obligations concerning maintaining the devices in the market?

Will the company still have to maintain a Quality System?

How does the lifetime of a product come into play?

Will appreciate any guidance on this matter.
Simple. FDA gives the guidance ~~~
See where you belong 10, 11 or 12 below...
10. What if someone else buys my business?

If you go out of business and a new person or entity acquires the right to manufacture or distribute the tracked devices, then these other persons or entities become responsible for continuing the tracking responsibilities.

11. What if I just stop distributing tracked devices but stay in business?

If you stop distribution of a tracked device but continue to do other business, then you remain responsible for the tracking of devices that you previously distributed.

12. What if I go out of business completely and no one takes ownership of my manufacturing rights?

A manufacturer or distributor that goes out of business is required to notify FDA at the same time that it notifies of the business shutdown to any government agency, court, or supplier. With the notification to FDA, the manufacturer or distributor must provide FDA with a complete set of its tracking records and information.
This is from HERE the Medical Device Tracking - Guidance for Industry and Food and Drug Administration Staff.

This is a question about US FDA requirements. There may be other business and legal stuff that needs different attention.
 
#6
No, you don't have to maintain the quality system, but you have to keep your quality documentation and records for the period specified in your record retention procedure.

The manufacturer remains legally responsible for any devices made available to the market and used as intended for the lifetime of those devices.
 
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