Procedures Guide

The Procedures guide allows entrepreneurs and decision-makers to have a reliable, precise and up to date overview of legal procedures and measures concerning commercial formalities to be undertaken. It is broken down into 6 sections in which you can find information and documentation required for formalities with Registry Offices at the Commercial Courts.

Request for opening of receivership proceedings

Receivership is aimed at allowing the pursuit of the business activity of a company, maintenance of employment and repayment of liabilities.

Its purpose is the development of a recovery plan, at the end of a comment period of a maximum duration of 10 years (Articles L. 626-12 and L. 631-19 I al. 1 of the Commercial Code) setting the terms of reimbursement of liabilities.

The recovery plan includes, if necessary, an addition or transfer of one or more activities (Art. L. 626-1 al. 2 and L. 631-19 I al. 1 of said Code).

As opposed to protection where only the business owner may request the opening of the procedure in a court, the latter can also consider a request for a receivership proceeding by:

  • the head of the business,
  • creditor assignment,
  • request of the District Attorney (procureur de la République).

The opening of this proceeding must be requested by the head of the business within 45 days from the cessation of payments if not during this period requesting opening a conciliation proceeding.

As a safeguard, the opening judgement freezes previous liabilities, opens a comment period towards restructuring the company, reconstitutes finances and proceeds with verification of indebtedness declared by the creditors handled by the judicial representative, who acts in the name and collective interest of the creditors (his principal role are verification and definitive establishment of the state of the indebtedness; possibility of appointment of several at the request of the public ministry and after having collected the comments of the debtor: Art. L. 621-4 al. 3 and L. 631-9 al. 1 Com. C.).

The administrator, for his part, has a role as set by the court (other than the powers conferred on him by law). The court makes the administrator(s) responsible (together or separately) to assist the debtor with legal instruments relating to management or certain among them, or to ensure alone, entirely or partially, the administration of the company (Art. L. 631-12 Com. C.). The court may, on the other hand, make the administrator responsible to carry out the actions necessary for implementation of the plan, that he determines (Art. L. 626-24 al. 1, L. 631-21 al. 1, R. 626-38 al. 1 and R. 631-35 al. 1 Com. C.).

In the event of possible full or partial transfer, the administrator is responsible for proceeding with all actions necessary for the preparation of such transfer and, if applicable, to its realisation (Art. L. 631-21-1 Com. C.). Once the plan is stopped, he remains in place to carry out all actions necessary for the realisation of the transfer (Art. L. 631-22 al. 2 Com. C.). The appointment of an administrator is mandatory when total or partial transfer of the company is possible (Art. L. 631-21-1 Com. C.), however its appointment is optional if the company has less than 20 employees as of the date of the request for opening of the proceeding and having turnover of less than 3 million euros, before tax.

Note the possibility, anticipated by the provisions of Order No. 2014-326 of 12 March 2014 and Decree No. 2014-736 of 30 June 2014 for its implementation, of the appointment of a common administrator and judicial representative (coordinating administrator and coordinating judicial representative) when several courts are hearing the proceedings concerning companies of the same group (Art. L. 662-8; R. 662-18 through R. 662-21 Com. C.).

Receivership comes to an end by the disinterest during the proceeding of all creditors (Art. L. 631-16 and R. 631-26 Com. C.).

Another outcome is the total or partial transfer of the company, at the request of the administrator, if the plan(s) proposed seem clearly unlikely to allow recovery or in the absence of such plans (Art. L. 631-22 al. 1 Com.C.).

The court pronounces mandatory liquidation if recovery is clearly impossible (Art. L. 631-15 II, R. 631-24 and, when applicable, R. 631-3 or R. 631-4 Com. C.). It can hear it, in this event.

During the total or partial transfer of a company, the court pronounces mandatory liquidation if the order of a recovery plan cannot be obtained (Art. L. 631-22 al. 3 Com. C.).

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