Associated files

Obligation to file annual accounts

Filing annual accounts and their associated documents with the registry office of the Commercial court is compulsory for several categories of companies.

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Judicial administration

The main reason for the legislation behind judicial administration proceedings is to allow a business in difficulty to continue its activity in the framework of legal processing, while at the same time allowing it to repay its debts and maintain its jobs.

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Practical file on the recovery of credits before the Commercial Court

Where a client fails to pay an invoice at the due date, following verification of the well-founded nature of the credit, the situation of the debtor and several friendly reminders remaining without remedy, it is often time for the creditor to being credit recovery proceedings. This then leads to the entitlement to one of the three major techniques for recovery of credits, namely: an order for payment, a referral provision and summons in substance.

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File : Notice to pay, a credit recovery procedure

Part 4

Reactions by the debtor to the order for payment

Reactions by the debtor to the order for payment

Opposition by the debtor to the order or lack of action thereof are decisive for the future of the credit and payment thereof Depending on the case, the existence of a credit is likely to either be questioned, or never contested

Lack of response by the debtor to the order

Once the order for payment is served, the creditor may request that the registry office at the court having served the order, by way of a declaration deposited against receipt or by way of a simple letter, that said decision become enforceable, namely it allows the creditor to continue with enforcement, by using, where necessary, assistance of the public authorities.

The creditor may only perform this request known as an "affixation of the enforceable indication" if, depending on the case:

  • the debtor has not formed any opposition to the order, within one month following the date of service of the deed by the bailiff of the creditor;
  • the debtor, after opposing the order, then withdrew: in this case, in practice, withdrawal should be requested by the debtor to the court having handed down the initial order for payment.

Following the first term of one month (the deadline for opposition) or withdrawal of the debtor, the creditor has, so as to make a request to affix the "enforceable indication", a new deadline of one month. In practice, the date of withdrawal corresponds to the date of service by the bailiff (at the request of either party) of the ruling observing withdrawal of the debtor and pronouncing, consequently, withdrawal of the court.

The order is invalid (null and void) if the request for the "enforceable indication" is not presented by the creditor within the new term of one month.

However, once the order is received with the enforceable indication, this then confers the order, as well as being enforceable, "the status of res judicata", in other words it has the same effects as a definitive ruling, not subject to appeal. Appeal before the Court of Cassation is then the only redress against the order and it is only possible to do so in the event of any lack of legality in the enforceable indication.

The creditor can finally contact a bailiff so as to serve on the debtor the enforceable order where applicable, and undertake forced measures to obtain payment of amounts due, for instance by requesting the garnishment and sale of moveable assets of the debtor.

 

Objection by the debtor to the order

The debtor may wish to contest either the well-founded nature of the credit (by claiming, for instance: the defective nature of a delivery; the excessive amount of the sales price, etc.), or the regularity of the procedure (by arguing, for instance, the lack of jurisdictional competence of the judge). To do this, it should form opposition.

Terms and conditions for opposition before the court.

Opposition is formed by way of a declaration on blank paper, duly dated and signed, directly by the debtor or a freely selected representative: lawyer, bailiff or any other person with a special power of attorney if not a lawyer. It should be filed against receipt or sent by way of a recorded delivery letter with acknowledgement of receipt (in this instance, the date of opposition is that appearing in the receipt of issue), to the registry office where the judge or presiding judge has received the order for payment.

Opposition is received without any fees to be paid by the clerk. The latter then immediately invites the applicant of the order for payment, in other words the creditor, by way of recorded delivery letter with acknowledgement of receipt, to pay the fees for objection to the registry office, within fifteen days, subject to invalidity of the application of the order for payment.

To form objection, the debtor has one month following the date of service "in person" of the order by bailiff on the creditor.

  • For a physical person, the date of service shall be understood as the date of physical issue of the order to the person.
  • For a legal entity, the date of service shall be understood as the date of physical issue of the deed to a legal representative, or a representative thereof, or any other person duly empowered for these purposes.

Whether a service notified to a physical person or a legal entity, service to a person is considered as regular insofar as the person receiving the deed declares to be the recipient of the deed or empowered to receive the latter.

If the debtor has not formed any objection within one month following service of the order, the creditor may request that the registry office affix the "enforceable indication" on the order. Consequently, the only redress of the debtor against the order consists of an appeal before the Court of Cassation, exclusively for any default in regularity of this indication.

Good to know: the deadline for objection is suspended by any application for legal aid by the debtor, with a view to payment by the State of all or a portion of the legal fees, bailiff fees or expert costs.. in the event of insufficient means or an insufficient income of the debtor, duly justified by the latter, thanks to production of the copy of the receipt of deposit at the legal aid office of the file corresponding to the declaration of objection.


Content of the objection.

Concerning information pertaining to the parties (the debtor, objecting to the order for payment and the creditor, applying for the order), the declaration of objection should include: 

  • for debtors who are physical persons, their full name, profession, residence, nationality, date and place of birth;
  • for debtors who are legal entities: their legal form, name, registered office address, legal representative body, Trade and Companies Register (RCS) incorporation number (all in line, where applicable, with the following formula: Limited Company, X, having its registered office at ...... entered on the Paris Trade and Companies Register (RCS) under number ...., represented by Mr....... manager);
    Good to know: if debtors have representatives, indication should be made, where the latters are physical persons, of their full name, profession (in the case of legal auxiliaries: lawyers or bailiffs), address; where representatives are legal entities, their legal form, name, registered office, legal representative body (aside for where the representative is a legal auxiliary: lawyer or bailiff) Trade and Companies Register (RCS) incorporation number (all following, for instance, the following formula: "Limited Company, X, having its registered office at ...... entered on the Paris Trade and Companies Register (RCS) under number ...., represented by Mr....... manager").
  • for creditors who are physical persons, their full name, profession (if known), residence, and if known, nationality, date and place of birth;
  • for creditors who are legal entities: their legal form, name, registered office address, legal representative body (if known), Trade and Companies Register (RCS) incorporation number (if known) (all in line, where applicable, with the following formula: "Limited Company, X, having its registered office at ...... entered on the Paris Trade and Companies Register (RCS) under number ...., represented by Mr....... manager").

Concerning the primary characteristics of the dispute, the declaration of objection should primarily provide the following information:

  • the object of objection with the precise references of the matter appearing in the order for payment (all, where applicable, following the formula: "I hereby form objection to the order for payment served on me by a bailiff's deed by Maître ........, bailiff in........, on......, by virtue of an order for payment of......., certified by the registry office at ....... court, under number..........., at the request of Mr........., applicant for the order for payment.......") and/or the copy of the order;
  • the total amount of the credit disputed.

Good to know: the debtor forming objection is not bound to justify the declaration of objection but subject, of course, to justifying the basis thereof by the latest as at the date of the hearing. Indeed, in principle the procedure is oral, unless the debtor notifies the judge that it is referring to its declaration if motivated and in this instance under the condition that the opposing party has been able to read this prior to the hearing. In practice, and by caution, it is preferable that the debtor henceforth outlines in the declaration of objection the arguments for defence, namely the basis of its objection and attaches all supporting documents. The debtor may, where applicable, complete its objection with any potential claim(s) against the creditor (for instance, compensation for prejudice suffered due to improper performance of the contract).

In such instance as objection is formed and/or deposited by any other representative than a legal auxiliary (lawyer or bailiff), the declaration of objection should be supported by an original copy of the power of attorney specially drafted for the representative and issued in due form (notably dated and signed by the principal and representative).

 

Power of attorney template

Consequences of objection by the debtor to the order

Receipt of the declaration of objection by the registry office of the court having handed down the order for payment triggered by the summons , by recorded delivery letter with acknowledgement of receipt by the clerk for all parties to the hearing (including, if there are multiple debtors, those who did not object).
Subject to being invalid, the summons should indicate that, the party making the objection, if absent at the hearing, risks a ruling being handed down against it based solely on the information provided by the opposing party. The summons should additionally indicate the terms and conditions in line with which the parties may be assisted or represented.
If the summons is issued by the registry office of the District Court, it should notify the creditor that it will constitute legal counsel within fifteen days following the summons to appear in court. It should also provide a copy of the declaration of objection by the debtor.

After the summons, the procedure is in principle adversarial , which means, for the most part, by the fundamental right of each party to understand all means of defence - facts, arguments of law and proof - of the other party.
In principle, the proceedings are oral, namely, the facts are outlined verbally, in other words the pleadings of each party shall prevail over the written documents. Exceptionally, either party may request that the judge solely refers to written documents. The judge may also dispense the party making a request from the obligation of attending the hearing if the request is validly justified.
The procedure does not impose compulsory assistance or representation of the parties by a lawyer, aside for before the district court. Insofar as a party chooses to be assisted by a representative, the latter, if not a lawyer, should hold a power of attorney and justify this in the hearing to the judge by presentation of the original copy in due form.

Objection leads to referral before the judge of all aspects of the dispute, namely the payment request of the presumed creditor and defence of the presumed debtor(s) and its (their) potential claims for a sentence (for instance compensation for any prejudice suffered) against the applicant of the order for payment. However, the judge may, immediately, refer the dispute to the jurisdiction with competence if it is deemed as falling outside its remit, of if the applicant for the order for payment makes a claim in this regard in the application.
Ceteris paribus, any party wishing to claim the lack of jurisdictional competence of the judge should do so, in first instance, prior to presentation of any argument in substance.

Good to know: absence at the hearing should be legitimate, and previously and duly justified. In all other instances, absence by the parties shall have the following consequences:
- In the event of absence of the parties the judge observes invalidity of proceedings. Consequently, the order is invalid and "null and void".
- If the debtor (in other words, the defendant) is absent, a ruling shall however be handed down in substance by the judge based solely on that information provided by the creditor. In this instance, the judge shall accept the creditor in its application, if admissible and well founded.
- However, if the defaulting party is the creditor (applicant for the order for payment), the debtor may request a ruling in substance which will be definitive, unless the judge uses the option of referring the matter to a subsequent hearing. The judge may also, even immediately, declare the order invalid.

The ruling handed down on the objection to an order for payment shall replace the order for payment.

In the event of any ruling which is favourable, in whole or in part, the person concerned (potentially the creditor if the ruling is favourable) may serve said ruling on the debtor by way of a bailiff.

Within one month following service by a bailiff, the ruling may be contested by the person concerned (potentially, the debtor if the ruling is not favourable thereunto).
- before the court of appeal, if the amount of the initial claim is in excess of 4,000 euros (in such instance as the ruling is handed down "in first instance");
- before the court of Cassation, if the amount of the initial claim is equal to or lower than 4,000 euros (in such instance as the ruling is handed down "in last instance");

Good to know: The judge may grant, upon request by the debtor acting in good faith, a payment deadline extension within the limit of twenty four months.

Finally, beyond this deadline, which is one month following the date of service by bailiff of the ruling, and without response by the losing party, the person concerned (creditor, if the ruling is favourable) may enforce the ruling in line with the rules of law, for instance, by requesting property garnishment of the other party (the debtor, if the ruling was handed down against the latter).