Filing claims & Covid-19: how to manage deadlines

Filing a proof of claim is a very important step for the creditor. Its completion has been complicated by the Covid-19 pandemic. The purpose of this communication is to raise awareness of this complication and the calculations that must be performed on a case-by-case basis, as well as the three key factors to consider:

• End date of the state of health emergency (as it stands: May 24 at midnight)
• End date of the legally protected period (as it stands: May 24 + 1 month, i.e., June 24 at midnight)
• Expiry date of the initial deadline (example: 2 months in principle for the declaration of claim)

Law No. 2020-290 of March 23, 2020, concerning emergency measures to address the Covid-19 epidemic, established a state of health emergency and authorized the Government to adopt, by decree, emergency measures related to the Coronavirus-Covid-19 crisis.
In this context, two decrees were adopted:

An order no. 2020-306 of March 25, 2020 relating to the extension of deadlines that expired during the health emergency period and to the adaptation of procedures during this same period;

Ordinance No. 2020-341 of March 27, 2020 , adapting the rules relating to the difficulties of businesses and agricultural operations to the health emergency and amending certain provisions of criminal procedure, temporarily adjusts the procedures applicable to these entities to take into account their implementation during the state of health emergency and the months following its end. It is this first ordinance that should be consulted to determine how a creditor must file their claim against the debtor during the health emergency period.

What is provided for under common law (art. L622-24 of the Commercial Code)

Scope of the declaration

A proof of claim is a procedural act by which a creditor expresses their intention to be paid in the debtor's insolvency proceedings. The obligation for creditors to file a proof of claim is the counterpart to the prohibition on payments.

• Only claims in the form of sums of money must be declared;
• It doesn't matter whether the debt is merely contingent or conditional.

Declaration procedures

• It can be done by the creditor or by any employee or agent of his or her choice;
• It must be addressed in writing to the judicial representative or the judicial liquidator;
• It must be carried out within two months (*) following the publication of the judgment opening the proceedings in the BODACC.

What is stipulated in Ordinance No. 2020-306 of March 25, 2020

Article 2 of Ordinance 2020-306 stipulates that:

“Any act, appeal, legal action, formality, registration, declaration, notification or publication prescribed by law or regulation under penalty of nullity, sanction, lapse, preclusion, prescription, unenforceability, inadmissibility, expiry, automatic withdrawal, application of a special regime, invalidity or forfeiture of any right whatsoever and which should have been carried out during the period mentioned in Article 1 shall be deemed to have been done in time if it was carried out within a period which may not exceed, from the end of this period, the legally prescribed period for taking any act, appeal, legal action, formality, within the limit of two months […]”

In practice: Unless otherwise specified, this article applies to all deadlines that expired or will expire between March 12, 2020, and one month after the end of the state of health emergency declared under Article 4 of the Emergency Law of March 23, 2020, which is currently June 24, 2020. (May 24, 2020 + 1 month = "legally protected period" )

Acts prescribed by law or regulation and which were to be carried out during this period may be carried out within two months after this period.

Application of the provisions to the declaration of claim

The deadline for filing a claim falls within the scope of Article 2 of Ordinance No. 2020-306, since the two-month period (see below for possible extensions) following the publication of the judgment opening the proceedings in the BODACC (Official Bulletin of Civil and Commercial Announcements) granted to the creditor is mandatory and must be completed within the prescribed time limit. (Articles L.622-24 and R.622-24 of the French Commercial Code)

If this period expires between March 12, 2020 and the expiry of the "legally protected period", the creditor may validly declare his claim within two months following the expiry of this period, that is to say within three months following the expiry of the state of health emergency and this without having to request to be relieved of the forfeiture.

On the other hand, if the time limit for filing a claim starts to run during the protection period and expires after, the creditor will not benefit from any suspension or interruption of the time limits.

Concrete examples (taking into account the end date of the state of health emergency as May 24, 2020 at midnight)

Example #1:

Opening judgment published on February 1, 2020

Deadline expiring on March 31, 2020, extended to August 24, 2020 (May 24 + 1 month + 2 months)

Example #2:

Opening judgment rendered on March 10, 2020, published on March 20, 2020

Deadline expiring on May 20, 2020, extended to August 24, 2020 (same)

Example #3:

Opening judgment rendered on March 14, 2020, published on March 28, 2020

Deadline expiring on May 28, 2020, extended to August 24, 2020 (same)

Example #4:

Opening judgment rendered on March 20, 2020, published on May 2, 2020

Deadline expiring on July 2, 2020, and not extended

Example #5:

Opening judgment rendered on June 14, 2020, published on June 28, 2020

Deadline expiring on August 28, 2020, and not extended

Be aware of the extended reporting deadlines

Article R.622-24 of the Commercial Code provides:

"When proceedings are initiated by a court located in metropolitan France, the filing deadline is extended by two months for creditors who do not reside in metropolitan France." "When proceedings are initiated by a court located in an overseas department or territory, the filing deadline is extended by two months for creditors who do not reside in that department or territory.".

Consequence

The aforementioned calculations may need to take into account the expiry date of the declaration period resulting from these increases in the two-month period (which may lead to less favorable treatment for their beneficiaries than for creditors who must make their declaration within the normal two-month period)

Vigilance is required

In addition to the precautions that must be taken when drafting the declaration (and regarding its submission to ensure proper receipt in the current context), which must not only be unambiguous but also indicate the amount of the debt, including, where applicable, penalties and interest, and any security interests held, the creditor must be particularly attentive to respecting deadlines, otherwise their declared claim may be unenforceable against the insolvency proceedings. The creditor should therefore be especially vigilant, even though relief from forfeiture can be requested under certain conditions. While it is feared that many companies will request the opening of insolvency proceedings in their favor at the end of the state of health emergency, such proceedings can be initiated during this period, as was the case a few days ago for the André shoe retailer.