Associated files

Notice to pay, a credit recovery procedure

The order for payment procedure, through a legal formality and at less cost, allows a creditor of a sum of money to order the debtor to make payment, in a unilateral and rapid manner (on average, in under two months).

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The minutes of general meetings for approval of the annual accounts of commercial companies

Once a year, the annual accounts for the last financial year, i.e., the balance sheet, the profit and loss statement and the notes, must be approved of the Annual General Meeting. More specifically, in most commercial companies (SA, SAS, SNC, SCS, SA, SARL etc. ), the members of the executive bodies are liable to heavy criminal and civil sanctions for management error, if they breach the obligation to submit annual accounts for approval by the partners or shareholders. For this reason, the members of these executive bodies must demonstrate that they have indeed submitted the company's annual accounts for the preceding financial year for approval by the partners or shareholders, who generally meet in Annual General Meeting, by drawing up minutes of the general meeting. The approval of the annual accounts is therefore strictly regulated. By approving these annual accounts, these partners or shareholders implicitly demonstrate that the documents concerned contain data that has been prepared on a true and sincere basis. They also presume that, as of the closing date of each financial year, these annual accounts reflect a faithful picture of the assets, the financial position and the book profit (or loss) for the companies' business. More generally, the approval of the annual accounts represent the indispensable tool to provide a minimum of information on the main accounting parameters, financial management and operations of commercial companies. They are therefore an essential decision making tool aiding the diverse interests of any interested person (directors; shareholders; investors; government authorities; creditors, such as bankers, suppliers; customers; competitors; commercial courts and potentially other judicial authorities, responsible for preventing and dealing with companies in difficulty) near or far, through access to the company's business data as well as by their financial, accounting and management position. For all these reasons, it is vital that the annual accounts must be approved in strict compliance with the statutory requirements.

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File : Practical file on the recovery of credits before the Commercial Court

Part 1

Order for payment

Order for payment

Representation by a lawyer is not compulsory

Relatively quick procedure (on average two months)

Cost = 39 euros + bailiff costs

Overview

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.
The choice by the creditor of any of these three methods is primarily governed by the degree of solidity of the foundation of the liability, the cost of the procedure, the rapidity and simplicity of processing.

 

What checks should be made prior to applying for the order for payment?

1°) Ensuring that the liability cannot be contested, namely verifying that:
- the amount of the liability is calculated or can be calculated;
- its date of payment is due.

It is also necessary as follows:
- to collate all documents likely to contribute towards proving the liability: contracts, orders, invoices, exchanges of letters (letters, emails), notices to pay sent to the debtor;
- to prepare a copy of these documents with a view to annexing these to the application for the order for payment.

2°) To ensure that the liability is not excluded from the order for payment procedure
This involves verification as follows:
- that the liability to be claimed does not, for instance correspond to compensation due as a result of default in performance of a contract;
- or that this liability, outside of any agreement, does not result from the liability of any third party for any prejudice caused on the creditor (such as liability resulting from an accident).

3°) To ensure that the situation of the debtor is not excluded from the order for payment procedure
This involves the following:
- identification of whether the debtor is a private person, physical person or legal entity ; in other words a sole trader or, for instance, a company, EIG, cooperative, association, and not a public legal entity (local authorities, State);
- to determine whether the debtor has in France, a residence or any offices, in other words for instance, a flat or office;
- to prove that the debtor has refused to make payment. Consequently, the creditor will ensure that it produces the copy of the notice (sent either by recorded delivery letter or bailiff's deed) of the creditor to the debtor to perform the obligation of payment within a precise deadline. Of course, it is necessary to understand that the refusal to pay results either from silence of the debtor during the deadline allocated by the order, or express refusal issued by the debtor during this term;
- to seek from the Commercial court registry office information as to whether the debtor has already been the object of insolvency proceedings, for instance judicial liquidation or administration.

Cf. subject-specific dossier concerning the order for payment
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How to apply for an order for payment?

1°) Verify that the Commercial court holds jurisdictional competence in substance to rule on the application
This involves checking whether the credit is commercial, namely, primarily, where it came from professional relations between private persons, whether physical persons or legal entities, traders or results from a commercial deed deemed as such by law, such as for instance, a bill of exchange or any banking transaction.

2°) Verifying that the Commercial court holds jurisdictional competence, which involves checking that the court to which the application for an order for payment is to be referred is that within whose remit the debtor has its residence, for a physical person, or one of its offices for a legal entity.

To search for a registry office, click here.

3°) To complete the electronic application or complete the downloadable application form
Online application for an order for payment before the Commercial court

Download the application form for an order for payment from the Infogreffe website before printing.

- indicate the identity of the parties and any representative;
- summarise the object of the application, its basis (the primary facts and the reason(s) for the liability), a breakdown of the liability;
- do not forget to request payment by the debtor of recovery fees (notably stamp duty, registry office fees, bailiff service fees and, where applicable, lawyer's fees);
- annex a copy of all supporting documents in support of the application;
- be sure to certify copies of supporting documents as true and certified (by affixing to the first page the indication "true and certified copy of the original", followed by the signature of the creditor);
- annex the power of attorney issued to a representative.

4°) Send the form with all necessary documents to the registry office of the Court with jurisdictional competence either by post or by deposit with the registry office of the downloaded form, or electronic issue of the electronic form.

5°) Pay the registry office fees (39.00 including tax) or, where applicable, obtain legal aid after depositing a file with the legal aid office (in which case, it is recommended to await the decision granting legal aid prior to initiating any application for an order for payment).

 

What does the judge decide and how are people informed?

1°) The creditor receives from the registry office the ruling by the presiding judge at the court, handed down in the form of an ordinance. This ordinance rules either on an order for payment or a total or partial dismissal of the application.

2°) If the ordinance accepts the creditor in whole, the latter should have this served by a bailiff as soon as possible on the debtor and, in all instances, within six months following the date of issue of the order for payment.

Cf. subject-specific dossier concerning the order for payment

What to decide after total or partial dismissal of the order for payment?

1°) If the application is dismissed in full, the creditor should decide whether or not it wishes to take legal action or not against the debtor for payment, using an ordinary legal channel.
If this channel is selected, the creditor should opt for between the two following legal channels before the Commercial court:
- referral provision;
- the summons for payment "in substance".

2°) If the application is dismissed in part, the creditor should decide whether or not to continue with the order for payment procedure for the part accepted by the judge, or whether to abandon the order for payment procedure:

- If the creditor decides to continue the order for payment procedure, it should have a bailiff serve on the debtor, within six months following the date of the ordinance for an order to pay, the ordinance.

- If the creditor decides to abandon the order for payment procedure, it should refrain from signing the ordinance. In this latter instance, the creditor must then decide whether it wishes to take legal action against the debtor for payment. If so, the creditor should opt for between the two following legal channels before the Commercial court:
- referral provision;
- the summons for payment "in substance".

 

When to request enforcement of the ordinance by the debtor?

1°) Above all, the creditor should ensure that the debtor is not opposed to the order for payment during the objection period, namely within one month following the date of service of this ordinance by a bailiff.

2°) If the debtor has not objected within one month issued to do so, the creditor then has one month to request that the registry office at the Commercial court affix an enforceable notice on the ordinance.

Good to know: In such instance as the debtor, after having issued objection within the deadline, withdraws its objection, the creditor should ask the registry office to make the enforceable notice within one month following said withdrawal. In this instance, the starting point of the one month term following withdrawal corresponds to the date of service by a bailiff of the ruling observing withdrawal by the debtor.

3°) To have the bailiff serve on the debtor the enforceable ordinance and request pure and simple performance thereof and, where applicable, forced enforcement.

 

What is the reaction from a debtor objecting to the order?

1°) Why make objection?

There is reason for the debtor to make objection insofar as the latter believes the credit to have been claimed and/or the regularity of the procedure to be unfounded in whole or in part.

2°) How to make objection?

- The debtor or its representative (lawyer, bailiff or any other person with a special power of attorney) should issue, on a blank sheet of paper duly dated and signed, objection to the order for payment.

- The debtor should indicate in its objection the main information that follows:
o    indicate the identity, details and potentially characteristics of the parties (for instance if one of them is a company: its form, company name, incorporation number on the Trade and Companies Register (RCS), registered office) and identity, the details and characteristics of the representative of the debtor,
o    clearly indicate whether there is objection to the order,
o    indicate the precise references of the matter, appearing on the order for payment, for instance as follows: "I hereby object to the order for payment which was served on me by Maître....., bailiff at........, on......., following the order for payment of.... , certified by the registry office at the .... Commercial court, under number.... , at the request of Mr...., applicant for the order for payment. ".
o    summarise the object of the objection, namely: the amount of the contested credit; if possible the basis for objection (even if the reason for objection is not obligatory, the debtor may indicate the main facts and or supposed reason(s) for the total or partial objection to the claimed credit).
o    where applicable, outline the potential requests (for instance in compensation for prejudice suffered due to improper performance of the contract) of the debtor against the creditor by summarising the foundation of these claims,
o    do not forget to request payment by the debtor of recovery fees, notably stamp duty, registry office fees, bailiff service fees and, where applicable, lawyer's fees of the debtor,
o    annex a copy of all supporting documents for objection and potential claims by the debtor,
o    be sure to certify copies of supporting documents as true and certified (by affixing to the first page the indication "true and certified copy of the original", followed by the signature of the debtor);
o   annex the power of attorney issued to a representative.

- Subsequently, the debtor should, within one month following service by bailiff of the order, notify its objection by recorded delivery letter with acknowledgement of receipt or deposit this against receipt with the Commercial court registry office from which court the presiding judge handed down the order for payment.

Good to know: In the event of objection, it is incumbent upon the creditor to make an advance payment to the registry office for corresponding fees, equating to the amount of 97.19 euros including tax. It is however only possible if the debtor loses its objection for these fees to be made payable thereupon by the presiding judge of the court, as well as all fees in whole or in part borne by the creditor for which the latter requested that the presiding judge order it to pay.

Cf. subject-specific dossier concerning the order for payment