Among the measures offered to companies in difficulty, there is the receivership procedure aimed at guaranteeing the continuation of the activity, the maintenance of employment and the settlement of liabilities.
Companies that are in cessation of payments, i.e. unable to pay their debts with their assets, can initiate receivership proceedings. What exactly is this procedure? How to set it up? All the answers.
The receivership is a collective procedure allowing the continuation of the activity of the company, the maintenance of employment and the clearance of liabilities. It should not be confused with backup which is an optional procedure.
The debtor in a state of cessation of payments must declare it within 45 days by requesting the opening of a receivership procedure. Since this procedure is mandatory, the referral can also be the work of the public prosecutor or a creditor.
The receivership procedure can be requested by:
The company concerned must be in a state of cessation of payments but without its situation being definitively compromised.
The Commercial Code specifies that only the cessation of payments, a situation in which a company can no longer meet the liabilities due with its available assets, can justify the opening of receivership proceedings.
In this case, the available asset is the short-term one. It includes cash and immediately realizable securities. Current liabilities include all debts due on the day the assessment is made. It consists only of certain debts.
This procedure can be broken down into 4 main steps:
The opening of the receivership procedure must be requested within 45 days of the cessation of payments by the debtor. The manager who fails to make this request within the prescribed time incurs a ban on directing, managing, administering or controlling his business.
If this initiative is not taken by the business manager and there is no conciliation procedure in progress, a creditor can go to court to request the establishment of receivership. The public prosecutor can also make this request.
Concretely, to request the opening of this procedure, it is necessary to complete a declaration of cessation of payments and to provide certain information including:the identification of the applicant and the company in difficulty, the state of liabilities and assets, the list employees, the formulation of the request for judicial redress. This document must be filed with the Commercial Court or the High Court depending on the activity carried out. The competent court is that of the place where the company's registered office is located.
The court, after having studied the situation of the company, will render the judgment opening the receivership procedure. By this judgment, he will determine the date of cessation of payments, appoint the procedural bodies (judicial representative, judicial administrator), set the duration of the observation period.
You should know that the manager, or the creditor who requested the opening of the procedure, has a period of 10 days to appeal this judgment.
The receivership procedure starts with an observation period of 6 months maximum, renewable without being able to exceed 18 months. During this period, an economic and social assessment of the company is carried out in order to consider whether or not the establishment of a receivership plan.
This procedure can have 4 different outcomes depending on the company's situation:
When the company has a real chance of continuity of its activity, the procedure leads to the implementation of a receivership plan. This plan may provide for layoffs or be subject to the departure of the company's manager. Its maximum duration is 10 years, during which the company can repay its debts while continuing its activity.
If it appears that the company has sufficient sums to settle the creditors, settle the costs and debts related to the procedure, the receivership ends.
The receivership procedure may result in the total or partial cessation of the business to a buyer. In this case, the court will appoint an administrator to carry out all the acts necessary for the preparation of the assignment.
If, during the observation period, the financial situation of the company deteriorates and the conditions for liquidation are met, the court may order compulsory liquidation.
The opening of this procedure has consequences for several actors:
Finally, it is important to specify that if the debtor does not fulfill his commitments within the period set by the plan, his resolution may be pronounced by the court. The payment terms granted until then will therefore be abolished.