Definition - State of suspension of payments
As soon as a state of cease of payment exists, any company, individual or company, must imperatively declare this situation to the court within 45 days of its occurrence (with the exception of a conciliation procedure). It is therefore fundamental to define very precisely what means "" a state of Cessation of payments" .
What is Cessation of Payments?
From a purely technical point of view, l'state of cessation of payments refers to the situation of a company in difficulty which is unable to cope with the liabilities due with his active available.
It is therefore necessary to appreciate and know the "Payable liabilities" on the one hand and "The available asset" on the other hand. The comparison of these two concepts makes it possible to determine whether the company is in a balanced accounting and financial situation. If this is not the case, the state of suspension of payments is established.
The available assets include only part of the elements appearing on the assets side of the balance sheet, that is to say:
- liquid assets, which mainly correspond to sums on hand, provisional credit balances of sight bank accounts, sight bills, credit reserves or moratoriums granted (and not only envisaged or simply promised) by creditors;
- and the asset that can be realized (that is to say convertible into money) immediately, which corresponds, as soon as their easy and rapid disposal can be envisaged, for example, to discountable commercial bills, to quickly realizable listed securities.
On the other hand, assets that cannot be sold in the short term, such as the amount of work carried out on the premises of the company, the value of the stock of goods, the purchase price of a fund, are excluded from the available assets. trade and real estate assets.
The current liability also includes only a portion of the balance sheet liabilities relating to debts whose payment is required immediately. The current liabilities therefore relate, in principle, to the debts of the company, whatever their civil or commercial nature, as long as they are:
- Some (whose current existence is indisputable),
- Liquids (the value of which is determined or determinable),
- And payable (whose term has expired even if the third party creditors have not claimed anything).
Conversely, the payable liabilities automatically exclude the disputed claims of third parties, that is to say their claims in the course of legal dispute and those of which it is proven that they are deprived of at least one of these three. criteria.
Cessation of payments or "simple" difficulties?
It should be noted that the state of suspension of payments is to be distinguished from other difficulties encountered by the company. You should also know that these difficulties that the company cannot overcome on its own are identified and have been legally defined.
These are the following cases:
- Situation irreparably compromised
- Momentary discomfort
- Continued loss-making operation
The existence of such difficulties within a company may offer the right to request to benefit from the safeguard procedure. On the contrary, when a insolvency status is established, it is mandatory to request the opening of bankruptcy proceedings, as the case may be, either legal redress, either judicial liquidation.
Companies that may be subject to suspension of payments
The following people may be subject to suspension of payments:
- any natural person exercising an activity either commercial (trader registered or not with the RCS; self-employed person carrying out this type of activity), or artisan (craftsman registered or not in the register of trades; self-employed person carrying out this type of activity), either liberal or agricultural;
- any natural person having the status of individual entrepreneur with limited liability (EIRL);
- any legal person governed by private law, mainly including: commercial companies (one-person or multi-person), civil companies, economic interest groups, credit institutions.
The suspension of payments cannot be applied to the following persons:
- individuals in the process of over-indebtedness;
- natural persons domiciled in Alsace and Moselle;
- credit institutions;
- the persons affected by the extension of a collective procedure already opened vis-à-vis a company, in the event of confusion of their assets with that of this company: - one or more companies of the same group in the event of safeguard, reorganization or judicial liquidation proceedings already affecting a company of the same group, - the partner having confused his assets with that of a company which is already the subject of a safeguard, reorganization or judicial liquidation procedure, - the manager of a company which is already the subject of a safeguard, reorganization or judicial liquidation
Consequences of the declaration of suspension of payments
The declaration of suspension of payments has for consequence to obtain the placement of the company in difficulty, by judgment known as “opening”, in procedure either of receivership, or of judicial liquidation (or more rarely of conciliation). It is also necessary in order to put in light the real situation of the company and to take, if necessary, immediate measures to preserve the companyIndeed, this approach allows the court to determine a period known as " suspicious ". The objective is to ensure that, during this period, any abnormal acts were not committed by the manager (management fault) or by third parties. Thus, the declaration of cessation of payments may lead to the reconstitution of all or part of the assets of the company, in particular through the cancellation of abnormal acts detected during the period " suspicious ". The declaration can also lead the court to have to exclude the manager, author of these faults, from the company and subsequently, to institute proceedings to prohibit the manager from exercising to manage, to own a company or to take stakes. in any type of society.
The declaration of suspension of payments thus automatically generates the opening of a collective procedure the nature of which depends on the situation of the company:
- The opening of the procedure legal redress is conditioned on being able to prove that the future of the company is not compromised. This procedure aims to allow, under judicial supervision, the continuation of the exploitation of the activity of the company, the clearance of the liabilities, and thus the disinterestedness of the creditors (in other words, the reimbursement of these creditors) , while maintaining employment there.
- The opening of the procedure judicial liquidation is linked to the demonstration by the company that its recovery is manifestly impossible. This procedure aims to make it possible, still under judicial supervision, to put an end to the activity and the company or to realize (convert into money) its assets by a global or separate transfer of its rights and assets.
- The opening of the conciliation, the only procedure for preventing difficulties, still remains accessible to the company in suspension of payments, as long as the seniority of this state does not exceed forty-five days.
It is imperative for a leader to know whether or not his company is in a " state of suspension of payments'. Where applicable, it is essential to take the appropriate steps with the commercial court and to take the necessary steps to obtain the opening of the collective proceedings of your choice. And, for better efficiency, it is strongly recommended to be accompanied by professionals and experts such as the firm PHENIX EXPERTISE who will be able to contribute their knowledge and skills in this very specific field.
In addition to this, you need to know more about it.Do you think you are in a state of suspension of payments? Contact us today! The first assessment and diagnosis is free and without obligation!
During the hearing in the Board of Directors' chambers, the manager must explain the company's situation and highlight the prospects for recovery. PHENIX EXPERTISE will be at your side to help you defend your arguments and support your request for judicial reorganization. At the end of the hearing, the magistrates rule and their decision is pronounced at the public hearing. Attention, it is possible that the court pronounces a judgment of compulsory liquidation if the reorganization is manifestly impossible! It is therefore essential to be accompanied by an expert, who like the manager of PHENIX EXPERTISE, knows these procedures perfectly. The stakes are high, don't stay alone!
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