What are collective proceedings?
The aim of collective proceedings is to help companies in difficulty to return to a sustainable situation, or to halt the debtor's indebtedness, thereby enabling creditors to be paid.
It is called "collective" because creditors can no longer act individually to collect their debts.
During the observation period, the company is no longer required to pay debts incurred prior to the opening of the insolvency proceedings. These debts may be settled under a plan drawn up by the court.
The aim is to enable the company to rebuild its cash flow. The conditions for initiating insolvency proceedings depend essentially on whether or not the company is in a state of suspension of payments.
What is suspension of payments?
Suspension of payments occurs when a company's available assets are no longer sufficient to meet its current liabilities, i.e. when it no longer has enough cash to pay its immediate debts.
Once a company has been declared insolvent, it can no longer use a preventive procedure (before insolvency) such as the safeguard procedure. It will then be subject to receivership or compulsory liquidation.
Who can file for bankruptcy?
The main parties involved in collective proceedings are :
The official receiver :
- The judgment always appoints a juge-commissaire, sometimes with a deputy, who is a member of the court.
- His responsibility is to supervise the procedure and make day-to-day decisions through orders.
- Managers may meet with the juge-commissaire at hearings or on request.
- He can authorize legal representatives and meet with other interested parties, as required.
Legal representatives :
- Depending on the type of proceedings, the court appoints one or more professional legal representatives, such as a judicial administrator, a mandataire judiciaire or a liquidator.
- The mandataires de justice are the main contacts for the parties involved, providing reports to the juge-commissaire, the court and the public prosecutor.
What are the different types of collective proceedings?
Safeguard procedure :
The sauvegarde procedure applies to companies or individual debtors who, although not in a situation of cessation of payments, are encountering difficulties which they cannot overcome and which are likely to lead them to this situation (inability to meet their current debts with available assets).
Receivership:
The aim is to enable the business to continue despite the cessation of payments, by drawing up a recovery plan or selling the company. Recovery must be deemed manifestly possible. If this is not the case, liquidation proceedings are initiated.
Judicial liquidation :
The aim of this process is to bring the company's business to an orderly close, while honoring its debts as far as possible. Under the aegis of a court-appointed liquidator, the company's assets are realized in the best possible way. Creditors are paid in a legally established order, and the funds recovered are deposited with the Caisse des Dépôts et Consignations. Employees are dismissed, and their compensation is covered by the Fonds National de Garantie des Salaires (FNGS).
How can I check if there are any collective proceedings underway?
Information about a company in receivership is public and is distributed by the commercial court clerk's office. There are several ways to check whether a company is in receivership:
- Consult the BODACC or the legal notices in the newspapers. This involves contacting the institution in charge of the region where the debtor's head office is located.
- Contact the clerk's office of the competent court: information is available from the court where the company is registered.
- Opt for Ellipro
