My vineyard is no longer breaking even: 5 levers to pull before filing for bankruptcy

However, several solutions exist to support a wine-growing operation in difficulty before considering filing for bankruptcy: bank negotiation, treatment of MSA and tax debts, amicable agricultural settlement or conciliation depending on the legal structure of the operation, safeguard and, when the cessation of payments is already characterized, judicial reorganization.

The law therefore offers real tools. However, their effectiveness depends largely on when they are used. Here are five levers to know, from the most flexible to the most restrictive.

• 1. How can you tell if a struggling vineyard is insolvent?

This is the first question to ask, because the answer determines which procedures the operation can still access.

Cessation of payments corresponds to the inability to meet liabilities as they fall due with available assets.

In other words, the question is not whether the business has more assets than debts, but whether it currently has sufficient immediately available resources to settle its maturing debts.

This distinction is particularly important in the wine industry.

A stock of wine in tanks or bottles can represent significant accounting or commercial value without necessarily constituting an immediately available asset. A winery can therefore possess substantial assets while simultaneously experiencing a severely deteriorated cash flow situation.

Conversely, tight cash flow does not automatically mean that the business is insolvent. It is still necessary to determine which debts are actually due, which resources can be immediately mobilized, and what payment terms may have been granted by creditors.

This qualification has nothing to do with academia.

When a debtor is deemed insolvent, they must, in principle, request a declaration of insolvency within 45 days, unless conciliation proceedings are initiated within that period. The procedures for this declaration are outlined on the official page dedicated to the declaration of insolvency.

Most importantly, some solutions are only accessible before payments cease. This is particularly true of backups.

Determining this date precisely, based on cash flow, bank schedules, MSA debts, tax and supplier debts, is therefore the first task to be carried out.

• 2. How to renegotiate bank loans for a struggling vineyard?

When difficulties are anticipated early enough, several solutions can be discussed with banking partners: extending the duration of loans, deferring payments, temporary capital deferral, restructuring of the campaign loan or more global restructuring of debt.

Two points are essential.

First, the negotiation must be prepared.

A file including the latest accounts, an operating forecast and above all a month-by-month cash flow plan makes it possible to demonstrate that the difficulties have been identified, but also that a realistic solution exists.

An oral request addressed to the bank advisor explaining that "the next campaign should be better" obviously does not carry the same weight as a quantified request demonstrating cash flow needs and future repayment capacity.

Furthermore, it is better to open this discussion before payment incidents multiply and the bank reduces or terminates its support.

The balance of power is not the same when the business proactively requests an adjustment to its payment deadlines and when it negotiates after several missed payments.

When bank financing is abruptly terminated, it is also necessary to verify the conditions under which this termination occurred and, in particular, compliance with the rules applicable to the reduction or termination of bank financing.

• 3. Winegrowing operation in difficulty: what to do about MSA and tax debts?

When cash flow becomes tight, social security contributions or certain tax deadlines are sometimes among the first expenses whose payment is deferred.

This solution can provide a few weeks of respite. It becomes much more problematic when the delay sets in.

Payment extensions can be requested from the MSA.

Depending on the nature of the debts and the business's situation, the Commission of Heads of Financial Services and Social Security and Unemployment Insurance Organizations (CCSF) can also facilitate the coordinated processing of certain tax and social security debts. This confidential procedure and the conditions for requesting a payment plan are detailed on the official Entreprendre.Service-Public.fr.

However, the objective should not be to obtain just any timeline.

A delay is only useful if the business is able to simultaneously pay its new current expenses and the installments corresponding to its old liabilities.

Accepting a repayment plan that is impossible to maintain usually only postpones the difficulty for a few months.

Before any important negotiations with social or tax bodies, it is therefore necessary to establish a realistic forecast including operating expenses, bank deadlines and marketing prospects.

When debts to the MSA (French agricultural social security system), taxes, banks, and suppliers begin to accumulate simultaneously, negotiating separately with each creditor reaches its limits. It then becomes necessary to consider whether the difficulties should be addressed more comprehensively.

• 4. Amicable agricultural settlement for a struggling vineyard

For farms falling within its scope, the amicable agricultural settlement procedure, provided for in Articles L. 351-1 et seq. of the Rural and Maritime Fishing Code, is a particularly valuable and still insufficiently known tool. The Court of Cassation clarified the scope of this mechanism in a decision dated October 2, 2024.

Its objective is simple: to intervene early enough to allow for organized negotiations with the main creditors of the business.

The procedure can be initiated when the business encounters foreseeable financial difficulties or as soon as they appear.

A conciliator is appointed under the authority of the president of the judicial court to facilitate the conclusion of an agreement with the main creditors: payment deadlines, rescheduling of deadlines or, when the creditors accept it, discounts.

The procedure has several advantages.

Discretionis paramount. Amicable settlements allow difficulties to be addressed in a setting that avoids the publicity associated with initiating insolvency proceedings.

For a wine estate where relationships with traders, suppliers, banking or commercial partners are essential, this aspect can be decisive.

Flexibilityis key. The goal is to find a negotiated solution tailored to the specific situation of the farm.

A reprieveat last. The president of the court may, under the conditions provided for by law, order a provisional suspension of proceedings for a maximum period of two months, renewable once for the same period.

However, an important point must be made: not all structures engaged in agricultural activity necessarily fall under the amicable agricultural settlement.

Commercial companies engaged in agricultural activity remain subject in particular to the preventive procedures of the Commercial Code.

It is therefore necessary to begin by precisely identifying the legal form of the operation before determining whether it falls under the amicable agricultural settlement or, in particular, the conciliation of the Commercial Code.

• 5. When should you request the safeguarding of a struggling vineyard?

When difficulties have become too great to be dealt with by simple negotiation, but the business is not yet insolvent, safeguard proceedings can constitute a genuine restructuring solution.

The opening of the procedure makes it possible in particular to organise the collective processing of prior claims and to interrupt or prohibit, under the conditions provided for by law, individual proceedings relating to these claims.

Meanwhile, the farm continues its operations.

For a wine estate, this means that it can continue to cultivate its vines, harvest, vinify and market its production, provided of course that it has the necessary cash flow to finance current operations.

The next objective is to establish a plan to gradually clear the liabilities.

In agricultural matters, the duration of the plan can, under the conditions provided for by law, reach fifteen years.

This is a subject that needs to be examined very early on.

In the wine sector, it is common for the operator, manager or partners to have personally guaranteed the loans taken out to finance the acquisition of the estate, the land, the equipment, the plantings or the work carried out in the cellars.

It is therefore insufficient to examine only the debt of the operation: it is also necessary to establish a map of the personal guarantees given by the operator or the partners.

It is precisely for this reason that the period preceding the cessation of payments should not be allowed to pass without having studied the opportunity of a safeguard.

When the cessation of payments is already established, the safeguard is no longer accessible.

This does not mean that the estate must be liquidated.

The judicial reorganization aims precisely to allow the continuation of the activity, the maintenance of employment and the settlement of liabilities when the recovery of the operation remains possible.

The opening of a receivership does not therefore mean the cessation of activity.

During the observation period, the estate can continue to cultivate the vines, harvest the grapes, make wine and market its production.

However, for a wine-growing operation, preparing for this period is essential.

It is necessary to anticipate the cash flow required to continue the operating cycle, the upcoming harvest, winemaking, the marketing of stocks, current contracts, rural leases, bank financing and the situation of guarantees.

The prior liabilities are dealt with as part of the procedure, but the business must be able to finance its new activity.

Insolvency proceedings do not, therefore, make a structurally loss-making business viable. However, they can allow an economically viable business to gradually address debt that it is no longer able to absorb immediately.

Winegrowing operations in difficulty in the Médoc: why is it necessary to anticipate?

The financial difficulties of a wine estate cannot be analyzed in the same way as those of any other business.

In the Médoc, they must in particular be assessed with regard to the size and value of stocks, the pace of marketing of vintages, relations with the trade or cooperative cellars, the weight of land and loans, rural leases, investments made in vineyards, cellars or equipment and personal guarantees given by the operator or partners.

In addition to this, there is the particular seasonality of the activity.

A cash flow problem at a given moment does not necessarily mean that the business is no longer viable.

However, it requires a rapid diagnosis to distinguish between a temporary tension and a situation requiring a deeper restructuring of debt.

The earlier a problem is identified, the greater the number of solutions available.

Conversely, the accumulation of unpaid bills, the termination of bank loans, formal notices or the first recovery measures gradually reduce the operating margin.

When should you seek help for a struggling vineyard?

It is not necessary to wait for a non-payment, a formal notice or a summons to have the situation of the business analyzed.

On the contrary, the earlier the difficulties are identified, the more numerous the solutions available: negotiation with banking institutions and creditors, treatment of social and tax debts, amicable procedure or, when necessary, opening of a safeguard or judicial reorganization procedure.

An initial diagnosis based on the latest accounts, the state of debts, upcoming deadlines and available cash makes it possible to determine whether the business is in a state of insolvency and, above all, to identify the solutions that are still available to it.