The law of companies in difficulty is both procedural (it is based on the opening of different types of proceedings, which are intended to provide, each in its own right, a framework for dealing with the debtor's difficulties) and material (it sets out principles or rules, of public order, which modify the regime of the debtor's relations with third parties, for the achievement of the objectives set by the law of companies in difficulty). Knowing how to navigate between these procedures is the first step.
General Organization
The law of procedures for dealing with business difficulties:
1) Currently based on six main procedures, which are the procedures for:
- Ad-hoc mandate
- Conciliation
- Backup (divided into Accelerated Backup and Accelerated Financial Backup)
- Legal redress
- Judicial liquidation
- Professional recovery (not shown here)
2) Articulates around the notion of a state of cessation of payments, which is defined as the impossibility for the debtor to meet his payable liabilities with his available assets.
Articulation of collective procedures
plan
The ad hoc mandate
| Phase 1 | Phase 2 | Phase 3 | Stage 4 |
| Filing of a request by the debtor with the president of the court for the purpose of appointing an ad hoc representative (chosen by the debtor) | Ordinance appointing an ad hoc representative and setting his mission | Progress of the ad hoc mandate (negotiations with the company's partners to try to reach an agreement with them to put an end to the company's difficulties) | Obtaining agreements with all or part of the partners |
| Order refusing to appoint an ad hoc agent | Absence of agreements with all or part of the partners |
The ad hoc mandate:
- Is a preventive procedure, which is intended to be opened when the debtor is not in a state of cessation of payments
- Can last as long as the debtor is not in a state of insolvency and negotiations continue to find agreements with the participants
- erga omnes effects (with regard to all), third parties retain all their rights and actions against the debtor
Conciliation
| Phase 1 | Phase 2 | Phase 3 | Stage 4 | Stage 5 |
| Filing of a request by the debtor with the president of the court for the purpose of opening a conciliation procedure and appointing a conciliator (chosen by the debtor) | Order opening conciliation proceedings | Progress of the conciliation procedure (negotiations with the partners of the company to try to reach an agreement with them to put an end to the difficulties of the company or search for buyers | Obtaining agreements with all or part of the partners | Acknowledgment of the conciliation agreement by the president of the court |
| Order refusing to initiate conciliation proceedings | Absence of agreements with all or part of the partners | Approval of the conciliation agreement by the court | ||
| Maximum duration of 5 months | ||||
Conciliation :
- Is a preventive procedure, which is intended to be opened when the debtor has not been in a state of cessation of payments for more than forty-five days
- erga omnes effects (with regard to all), third parties retain all their rights and actions against the debtor
- Can also be used to prepare the sale of the company, which will take place within the framework of a judicial reorganization procedure opened following the conciliation
The backup procedure
| Phase 1 | Phase 2 | Phase 3 | Stage 4 |
| Request for the opening of a safeguard procedure made by the debtor justifying difficulties that he cannot overcome and which are likely to lead him to a state of cessation of payments | Judgment opening safeguard proceedings | Sequence of the backup procedure | Judgment establishing a safeguard plan for a maximum period of ten years |
| Judgment refusing the opening of safeguard proceedings | Stopping the backup procedure | ||
| Conversion into receivership | Judgment not stopping a backup plan | ||
| Conversion into judicial liquidation | |||
| Observation period: Maximum duration of 18 months | |||
The backup :
- Is a collective procedure, which is intended to be opened when the debtor is not in a state of cessation of payments
- erga omnes effects (with regard to all), the previous claims of third parties being frozen
- Tends mainly to the adoption of a safeguard plan (the purpose of which is to organize the clearance of claims declared and admitted to liabilities
The receivership procedure
| Phase 1 | Phase 2 | Phase 3 | Stage 4 |
| Declaration of cessation of payments by the debtor | Judgment opening receivership proceedings | Course of the receivership procedure | Judgment approving a continuation plan for a maximum period of ten years |
| Referral to court by the public prosecutor | |||
| Request to convert a backup procedure | Judgment refusing the opening of receivership proceedings | Termination of the receivership proceedings | |
| Summons at the start of receivership proceedings | Conversion into judicial liquidation | Judgment stopping a transfer plan | |
| Observation period: Maximum duration of 18 months | |||
The receivership:
- Is a collective procedure, which is intended to be opened when the debtor is in a state of cessation of payments and can hope for a recovery of his situation
- erga omnes effects (with regard to all), the previous claims of third parties being frozen
- Tends mainly to the adoption of a continuation plan (the purpose of which is to organize the clearance of claims declared and accepted as liabilities) and, secondarily, a plan for the sale of the company to a buyer
Judicial liquidation
| Phase 1 | Phase 2 | Phase 3 | Stage 4 | |
| Declaration of cessation of payments by the debtor | Judgment opening judicial liquidation proceedings | Progress of the judicial liquidation procedure (realization of assets / clearance of liabilities | Closing judgment for settlement of liabilities | |
| Referral to court by the public prosecutor | ||||
| Summons at the opening of judicial liquidation proceedings | Judgment refusing the opening of judicial liquidation proceedings | Disposal plan | Disposal of isolated assets | |
| Application for conversion of safeguard or receivership proceedings | Closing judgment for insufficient assets | |||
|
Continuation of activity: Maximum duration of 6 months |
||||
Judicial liquidation:
- Is a collective procedure, which is intended to be opened when the debtor is in a state of cessation of payments and that his situation is irremediably compromised or that his activity has ceased
- erga omnes effects (with regard to all), the previous claims of third parties being frozen
- Tends mainly to the realization of the assets of the debtor to allow the discharge of the claims declared and admitted to the liabilities
