What happens if ZynexGroup cannot pay?

One of the most justified questions from a CFO or owner-manager is rarely the one a supplier brings up first: what actually happens if the counterparty can no longer pay? In our model, the customer buys an industrial BESS plant (Battery Energy Storage System) and in return receives a fixed monthly payment for allowing us to commercially optimise the plant's flexibility for six years. The payment runs over time, so it is fair to ask what protects the customer if that payment one day fails to arrive.

This article explains that openly. It covers what "cannot pay" means in the agreement, which process then starts, and where the customer's real security lies. The main point is not a guarantee from a third party. It is ownership of the plant itself. We think it is more honest to explain exactly why than to gloss over the reality.

What "cannot pay" means in the agreement

The fixed payment is called a fixed contractual availability payment. It is calculated as the calculation basis divided by 72, that is, 1/72 of the calculation basis each month. If the agreement runs for the full period without suspension, reduction, or termination, the customer receives total payment equal to 100% of the calculation basis excluding VAT, spread over 72 months. The payment is consideration for our right to dispose of the plant's flexibility, not interest or an investment return.

When we say that ZynexGroup "cannot pay," we mean the situation where we materially default on precisely this payment obligation. That is a different situation from ordinary market fluctuations. If earnings from the commercial optimisation move up or down, that does not in itself change the customer's fixed payment; we carry that risk. The question here is narrower: what happens if the fixed payment actually fails to arrive.

It is worth keeping in mind that a contract partner's continued ability to pay is always a real risk in commercial relationships, not a hypothetical one. Company bankruptcies are recorded on an ongoing basis as part of official business statistics in Denmark, regardless of sector. That is why it is a sensible question to put to any supplier you commit to over several years.

Step by step: from missed payment to termination

The agreement describes a sequence in clear steps, so the customer is not left in uncertainty if a payment fails to arrive.

First step, written demand: In the event of material payment default, the customer must first give us a written demand with a deadline of 20 banking days to pay the amounts that are due and undisputed. The deadline is counted in banking days, not calendar days. The step gives a clear, documentable start to the process and a reasonable opportunity to remedy.

Second step, transition process: If we do not pay within the deadline, the customer can require the parties to start a transition process without delay. The purpose is to find a concrete solution, and the agreement mentions several possible outcomes: remediation, an agreed payment plan, a temporary suspension, a transfer to a new BRP (balance responsible party, the entity that balances and settles electricity for a portfolio in the Danish market) or trading partner, or termination of our exclusive optimisation right. The point is that there is a structured path, not a vacuum.

Third step, termination of our exclusive right: If the parties have not agreed a solution within 20 banking days of the start of the transition process, the customer can terminate our exclusive optimisation right with 10 banking days' written notice. If we pay all due, undisputed arrears before the final termination date, the right is generally restored, unless there is repeated or serious default. The customer is therefore not locked in: ultimately, the customer can end our right to dispose of the plant.

Once the exclusive optimisation right has ended, the plant is free. The customer can let another party take over commercial operation, use the plant for its own purposes under further agreement, or leave it idle. Ownership does not change along the way.

The customer owns the plant throughout

The central point is that the customer buys and owns the physical BESS plant under the agreed payment and transfer terms. Ownership is not conditional on our continuing to pay or continuing to operate the plant. If our optimisation right ends, the physical hardware remains the customer's property.

That also applies in the most serious situation. If ZynexGroup goes bankrupt or ceases to be able to perform the agreement, the customer keeps ownership of the plant and can freely choose a new BRP, trading partner, aggregator, or technical partner. To the extent possible, we must ensure that the customer has access to the necessary technical documentation, manufacturer documentation, warranty certificates, service history, login credentials, and metering data, so a new partner can take over.

What the customer owns is the physical hardware and the agreed technical components. What is not transferred is our software logic, algorithms, trading strategies, optimisation models, and know-how. Those may belong to ZynexGroup or our relevant partners. The distinction is practical: the customer owns the asset, while the commercial engine behind the optimisation follows whoever runs it.

Because the customer owns a physical asset, ownership also has value in a financing discussion. The customer may pledge the plant as part of ordinary financing, provided a pledgee respects our rights during the agreement period, and any pledge must be discussed with us first. That is not a promise of bank approval, but a consequence of there being an owned asset behind the arrangement.

What ZynexGroup owes after a termination, and what we do not owe

Here it matters to be precise, including where the wording is not the most sales-friendly. On termination of our exclusive optimisation right, we must pay all due, undisputed amounts plus proportionate payment up to the termination date.

We do not, however, automatically owe the remaining fixed availability payments for the period after the termination date. That applies unless the parties agree otherwise in writing, or unless something else follows from mandatory law. In other words: the customer receives what has been earned up to termination, but not automatically the full remaining amount that a completed six-year agreement would otherwise have produced. Writing anything else would be promising more than the agreement covers.

In return, the customer is not left with nothing. The customer is left with a plant the customer owns, and with the freedom to let another party create value from it going forward. That is the difference between holding a payment promise and holding an asset.

Why the security lies in ownership, not in a bank guarantee

This is the article's most important point, and we want to state it clearly. The customer's security in our model rests first and foremost in the fact that the customer owns the physical hardware. It does not rest in a bank guarantee. We do not provide a bank guarantee, a parent-company guarantee, an escrow account, or other external security for the fixed payment, and we think it is more honest to say that directly than to imply a comfort that is not there.

The reason ownership is a strong position lies in ordinary Danish bankruptcy law. The party that owns a specific asset is, in bankruptcy-law terms, a separatist and is therefore not bound by the so-called bankruptcy ranking order (the statutory order that ranks how an insolvent estate's funds are distributed among creditors). In practice, that means an asset belonging to someone other than the bankrupt party generally cannot be pulled into the bankruptcy estate, but must be handed over to the entitled party. The framework for this entire distribution is found in the Danish Bankruptcy Act.

Compare that with the position of someone who only has a money claim against a bankrupt party. In a bankruptcy, the estate's assets are distributed among the creditors, and a claim without security is covered only with a dividend of what remains. A pure money claim is generally recognised only as an ordinary unsecured claim and does not give the same standing as ownership of a specific asset. The difference is real: an owner can take out their own asset, while an ordinary unsecured creditor must share whatever may be left with all other unsecured creditors.

That is precisely why our model is built on the customer owning the plant. If the comfort rested only on a promise of payment, the customer would, in an extreme situation, stand as an ordinary unsecured creditor. Because the customer instead owns a physical asset, the customer's position is tied to something the customer can actually control, regardless of how the commercial optimisation goes.

Limitations and assumptions

This walkthrough describes a general principle and an agreed process, not a guarantee of a particular financial outcome in every conceivable case. A few caveats belong with it.

First, the whole process concerns amounts that are due and undisputed. If there is a genuine disagreement about whether an amount is due, that must be resolved under the agreement's ordinary rules before the default process is relevant.

Second, the bankruptcy-law protection of an owner is a general starting point. In a concrete dispute, the outcome can depend on the detailed circumstances, including whether ownership is clear and documented. A first condition for the whole model is therefore that ownership of the plant is unambiguous under the agreed terms.

Third, external bankruptcy law says nothing about ZynexGroup's current finances, and bankruptcy statistics say nothing about our own situation. They support only the general point that it is stronger to own an asset than to hold a payment promise. We mention that because it is the honest basis for the customer's comfort, not because we are making statements about probabilities.

ZynexGroup's approach to plant assessment

In an initial assessment, we focus on making these points transparent before anything is signed. We walk through the ownership terms, the payment structure, and the default process, so a CFO, a board, or an auditor can see where the risk lies and what protects the customer. We offer an actual 6-year payback guarantee on BESS plants, and it is described in the same measured way as the rest of the model: as a contractual term with the assumptions that apply, not as a promise of a particular return.

Our starting point is that a model that can withstand being explained openly is also the model that builds lasting trust. That is why we would rather explain the less flattering part, such as that we do not automatically owe the full remaining amount after a termination, than leave it unclear.

Overall perspective

If ZynexGroup materially defaults on the payment obligation, the agreement follows a clear sequence: a written demand with 20 banking days, then a transition process, and ultimately the customer's ability to terminate our exclusive optimisation right. Throughout, the customer owns the physical hardware. We owe what has been earned up to any termination, but not automatically the remaining payments thereafter.

The real security therefore does not lie in an external guarantee, but in ownership of the plant, because an owner under Danish bankruptcy law stands stronger than a party that only has a money claim. It is a less spectacular, but more durable, form of comfort, and it is the one we build the model on.

Have the potential for your facility assessed

If you want ownership, payment structure, and default terms reviewed for your specific facility, you can contact us for an initial assessment. For a first, data-based conversation, we typically look at your grid connection, consumption profile, and relevant historical data, so we can assess together whether there is a match before the next step is taken.