The legal redress is a legal procedure to which any company can be subjected regardless of its size and legal form. This procedure occurs when the company is in cease of payment, that is to say when it becomes unable to pay its debts.
The placement of a company in receivership is done with the aim that it can maintain its activity. For this, he is granted a recovery plan. He must organize the repayment of the company's creditors and in some cases its sale. In short, the recovery plan is designed to maintain jobs and purify the liabilities of the company.
The judicial reorganization plan
Beforehand, a social and economic assessment of the company is drawn up. The origin, nature and extent of the company's difficulties are analyzed. This assessment is carried out by the receiver with the help of the debtor. If there is no administrator, this report is not required.
On this basis, the recovery plan is drawn up. This is a document designed either by the business manager assisted by his collaborators, or by the judicial administrator (s) appointed by the court.
This recovery plan is then presented and validated in court before its application.
All debts contracted by thecompany in receivership will be verified and analyzed in order to create this plan. The company's repayment capacity per year will also be taken into account in order to estimate the period over which the receivership plan should extend.
It is thus possible to make repayment proposals with a staggering taking into account any discounts that the creditors may have granted. However, it should be noted that a recovery plan can never exceed 10 years. Likewise, it is clearly stipulated in the law that the first repayment must be made within a few years following the judgment stopping the plan.
The draft plan also includes the level and prospects of employment as well as the conditions envisaged for the continuation of the activity.
Its implementation
Since the purpose of the procedure is a financial consolidation, it allows thecompany in receivership to reorganize and maintain its existence. Reorganization is also a cumbersome procedure to set up and close. Moreover, as it is public and published, it can also cause bad publicity and disadvantage the company which then seeks to regain the trust of its partners. Indeed, the judgment adopting the recovery plan is mentioned in the Trade and Companies Register (RCS).
The procedure does not involve the end of current contracts, unless the receiver considers that they could make the situation worse. You should also know that it is forbidden to settle any debt prior to the opening judgment. However, this type of debt will be declared to the creditors' representative. Likewise, loans not considered as debt contracts for the company in receivership will suffer the same effect.
Conversely, the company can always contract new debts; on the condition, however, that these are settled when due.
The business manager is no longer the only master on board
Even in case ofcompany placed in receivership, the entrepreneur may remain the sole manager, unless he is prohibited from managing or administering. However, in the event of dismissal, the sale of real estate assets or the continuation of a contract, the manager may have to refer the matter, if necessary, to the receiver.
The freezing of company accounts
During this procedure, thecompany in receivership sees his accounts blocked. However, a new account is opened for credit balances of blocked accounts. If no director has been appointed, only the manager of the company is authorized to carry out transactions on this bank account.
The salary of the entrepreneur
The remuneration of the manager is also another consequence of the placement of thecompany in receivership. In fact, the payment of his salary is subject to an order of the judge-commissioner. This remuneration is then generally fixed according to the personal situation of the entrepreneur.
What happens if no plan is adopted?
It may happen that the company is not able to present a recovery plan, that it is refused by the court or that it is unable to comply with it. In these situations, three outcomes are possible.
The end of the difficulties encountered
The termination of the reorganization procedure may be ordered if the the company's financial situation has improved.
The cases are rare but it can also that the procedure is closed by extinction of the liabilities. This situation arises when the debtor, during the observation period, is able to discharge the debts with sufficient funds. In this case, you can propose a recovery plan but with a single deadline and request the end of the procedure with the payment of the various debts.
The sale of the business
From the opening of the placement procedure of thecompany in receivership, third parties may submit company takeover offers. These offers can be total or partial. This possibility is interesting insofar as the court can grant the takeover of the company if it is not able to pay its debts.
If redemption is chosen, the purchaser is not obliged to assume the liabilities. Also generally only the activity of the company is taken over; as for the company itself, it is subsequently the subject of a judicial liquidation.
The last possible consequence: judicial liquidation
In cases where the company cannot present a reorganization plan, if it has been sold or if the takeover offers are absent or insufficient, the court can then order the judicial liquidation of the company ; or, at least, its partial cession.
What assessment?
The consequences for a company in receivership are therefore numerous. They start from the observation period with the various measures that are put in place and end with the end of these.
