File : Judicial administration
Decision to open judicial administration
The judicial administration proceedings can only be started by legal decision in the form of the ruling for initiating proceedings.
Prerequisites to the ruling initiating proceedings
The court does not begin judicial administration before competence has been verified, as well as observance of conditions as the substance and form (mandatory status of the debtor, statement of suspension of payments, documents attached to the dossier) and after having heard the debtor, as well as any person whose statements may be mandatory where applicable (especially the public prosecutor, the works council representatives, or failing which, workforce delegates, representatives of the professional order or competent authority under which the debtor falls, member of a regulated profession) or if not mandatory, simply deemed to be useful. Before handing down its decision, the tribunal may decide upon an investigation for further information.
Content of ruling initiating proceedings
The ruling in favour of initiating judicial administration proceedings comprises the following:
– It temporarily sets the date of suspension of payments. In the event of the ruling not doing so, the date shall be deemed to be that of the ruling. This date may be subsequently modified, but not beyond 18 months from the date of the ruling. In the event of conciliation proceedings, the date shall not fall before the ruling of the court that authorised an amicable agreement.
The date of suspension of payments opens the period known as suspect (this period ends upon the date of the ruling). During the suspect period, certain deeds shall be null and void as of right, or subject to cancellation. This may apply to certain actions on the part of the debtor, such as instituting his own insolvency proceedings.
– It determines the duration of the observation period and designates the procedure authorities, mainly:
- the insolvency judge or judges in charge of overseeing rapid sequencing of the procedure and protecting the interests of those involved. The judges possess powers to collect information and carry out investigations; these powers are reinforced by the obligation on the part of certain bodies to inform them under the proceedings; they inform the court and also verify those intervening in the proceedings.
the judicial administrator (presence optional in cases where the debtor has less than 20 co-workers and a turnover before tax of less than three million euros; the debtor and the public prosecutor may propose an administrator of their choice), whose duties are mainly to decide whether current contracts should be maintained, and to inform the insolvency judge and public prosecutor of the procedure; he also draws up the company's economic, social and environmental balance sheet and proposes to the court that the company continue its activities on the basis of a judicial administration plan; in addition he possesses attributions, depending on the debtor's situation, that may lead him to assist the director in performing management functions (or part of them; more often he will leave management of the company to the director, subject to keeping the judiciary administrator regularly informed); or to administrate all or part of the company (in this case,the director does not intervene, and is totally relieved of his management duties);
Good to know: in the absence a judiciary administrator, the debtor (physical person or legal representative of a legal entity) retains full possession of their rights.
the judiciary representative who is in charge of defending the interests of all the creditors (and not the interests of only one or some of them). This takes the form mainly of collecting statements of claims, verifying them, and consulting with the persons holding them.
the co-workers' representative is designated inside the company within ten days of the ruling. In the ruling, the court invites the co-workers, in the absence of the works council or workforce delegates, to appoint their representative. This person's main remit is to verify the statement of receivables (submitted by the judiciary representative) resulting from the work contracts. He also assists the co-workers with the judicial representative in drawing up their claims, as well as the Conseil des Prud'hommes (industrial tribunal) should the statement be contested.
The appointment of one or more experts is mandatory with a view to assisting the judicial administrator when both the following conditions are fulfilled: where the latter is appointed to administer the company alone; and where the debtor employs at least 20 co-workers or has a turnover greater than or equal to three million euros. However this appointment may be optional in the event of an investigation being decided by the court, independently of any assistance provided to the judicial administrator.
Effects of the ruling initiating proceedings
The ruling is enforceable as of right even before expiry of the time limit for exercising a right of appeal. However, enforcement may be suspended if there is an appeal, by the First President of the Court of Appeal.
The debtor is notified of the ruling by the court clerk, within 8 the days of it being handed down.
A copy is immediately sent by the court clerk to the administrator and to the appointed judicial representatives, to the public prosecutor, and to the Paymaster general of the Department in which are located the debtor's main head offices or establishment.
Within 15 days of its issue date, the ruling, under the responsibility of the clerk, is mentioned in the debtor's registry or the trade register, mainly:
- in the Trade and Companies Register (RCS), if the debtor is a trader or a legal entity registered their (this also applies to any secondary registrations);
- in the directory of trades, if the debtor is a craft business;
- in the special register maintained by the tribunal of grand instance, in cases where the debtor is not inscribed in the above-mentioned registers.
Within the same time frame, and under the responsibility of the clerk of the court, the ruling is also published in the official Gazette of civil and commercial announcements (BODACC) and in a journal authorised to make legal announcements.