Focus on decrees no. 2021-1354 and 2021-1355 of October 16, 2021
Preliminary reminders
The crisis exit procedure was created by article 13 of law no. 2021-689 of May 31, 2021.
This is a simplified collective procedure for small businesses aimed at enabling their recovery through debt restructuring.
Although this law applies in principle to proceedings opened since June 2, 2021, decrees 2021-1354 and 2021-1355 now allow its effective application since they provide a number of much-anticipated clarifications.
The companies concerned
The companies concerned are the same as those that can be subject to a "classic" , provided they meet several cumulative conditions.
This is how the debtor:
- Must have fewer than 20 employees on the date of the application to open;
- Must be able to justify a total balance sheet of less than 3 million euros of declared liabilities (assessed at the closing date of the last accounting period);
- Must be able to present accounts that appear regular, sincere and capable of giving a true and fair view of the company's financial situation;
- Must continue its activity;
- Must be in a state of insolvency while having the funds to pay their wage debts;
- Must demonstrate that it is able, within three months , to develop a draft plan aimed at ensuring the sustainability of the company.
The opening of the procedure
- It can only be opened at the request of the manager;
- The documents attached to the application for opening are listed in Article 1 of Decree 2021-1354;
- If the debtor was involved in a conciliation procedure, the court decides on the opening of the procedure after a report from the conciliator;
- A court-appointed representative is designated by the court with the mission of monitoring the management of the company director and acting in the name and in the collective interest of the creditors;
- The appointment of controllers is possible.
Course of the observation period
- It is limited to three months;
- Within a maximum period of two months , the court orders the continuation of the observation period if it appears that the debtor has sufficient financing capabilities at a hearing whose date is set in the opening judgment;
- During this period, the procedure may be terminated by the court at the request of the debtor, the court-appointed representative or the public prosecutor;
- The system for existing contracts is partially neutralized;
- The regime of restitution and claims is not applicable.
Determination of liabilities
- There is no procedure for filing a claim or for verifying claims;
- The list of each creditor's claims is drawn up by the debtor within 10 days of the opening judgment .
- The conformity of this list with the company's accounting documents is verified by the agent;
- The creditors concerned may send their request for update or dispute to the judicial representative within one month from either the publication of the judgment in the BODACC, or if later, from the communication by the judicial representative of the information held by the debtor ;
- The appointed agent informs the jointly obligated persons or those who have given a personal guarantee or who have pledged an asset as security, whose existence has been brought to his attention (by the debtor or by any means), of the opening of the proceedings.
- When a claim has not been mentioned on the list and is brought to his attention, the appointed agent informs the creditor and invites him to specify the characteristics of his claim;
- The supervising judge, who will only intervene if the creditor disputes the existence or amount of the claim appearing on the list, may admit the claim, reject it, note that it is the subject of ongoing proceedings or note that he is incompetent to decide the dispute;
- The decision of the supervising judge will only have effects between the debtor, the creditor and the judicial representative;
- The commitments for the settlement of liabilities that will appear in the plan can be established on the basis of this list provided that the claims are not disputed.
Liability Treatment Plan
The debtor prepares the draft plan with the assistance of the appointed agent, then presents it to the court, which is seized at any time to rule on the said plan.
The procedures for adopting the plan are those currently prescribed for a safeguard plan, subject to the following reservations:
- The plan cannot include provisions relating to employment that the debtor could not finance immediately;
- It is not forbidden to plan for layoffs, but their financial consequences must be borne by the debtor, as the AGS does not intervene;
- The amount of the annuities provided for in the plan from the 3rd year onwards cannot be less than 8% of the liabilities established by the debtor;
- The plan can only affect the debts mentioned on the list established by the debtor, which arose prior to the opening judgment;
- The plan cannot have an impact on claims arising from an employment contract, maintenance claims, claims of tortious origin, claims below a certain amount, post-petition claims.
The consequences of not stopping a plan
- If a plan is not agreed upon within three months of the opening judgment, the court, upon application, opens, at the request of the debtor, the appointed representative or the public prosecutor, a reorganization or liquidation procedure, if the conditions are met;
- This decision, notified to the debtor within eight days of its pronouncement , brings to an end the crisis exit treatment procedure.
- Therefore, there is no conversion of procedure but rather the opening of a new procedure which will allow the time limits which are normally intended to run during the observation period to start.
Legal recourse
- Judgments and orders issued in matters of crisis exit treatment procedures are enforceable by right on a provisional basis (except those issued pursuant to Articles L.622-8 and L.626-22 of the Commercial Code);
- The provisional enforcement may be suspended by the first president when the grounds supporting the appeal appear serious;
- In the event of an appeal by the public prosecutor against a judgment opening the proceedings or approving the plan, the provisional enforcement is automatically suspended from the day of that appeal;
- The First President of the Court of Appeal may, at the request of the Attorney General, take any precautionary measure for the duration of the appeal proceedings;
- The parties have ten days from the date of notification of the decisions to appeal
- The opposition and third-party opposition are made by declaration to the registry within ten days from the pronouncement of the decision, or from the publication of the decision in the BODACC, or from the day of publication, where applicable, of the insertion in a legal notice medium;
Miscellaneous provisions
- Unless otherwise stipulated, the rules of the Code of Civil Procedure shall apply;
- The notifications made by the clerk are sent by registered letter with acknowledgment of receipt;
- The date of service is that of the signature of the acknowledgement of receipt, failing that, that of presentation of the registered letter;
- The court's judgments are delivered in public hearings, with the exception of those rejecting the request to open the crisis exit treatment procedure;
- Certain decisions made in the crisis exit procedures are automatically recorded in the RCS;
- The aforementioned entries are automatically removed when the procedure has been terminated due to the debtor's inability to present a plan within three months, when the completion of the execution of the agreed plan has been noted, or when the plan is still in progress at the expiry of a period of one year from its agreement.
