Your business is in trouble and you wonder what strategies to adopt ? Here are some avenues for reflection in order to turn around a business in crisis.
Business in difficulty, what to do? We will introduce you to the methods of business preservation by gradation: from the least serious situation to the most dramatic. We will start with the ad hoc mandate, then we will continue with the safeguard, then the conciliation to finally arrive at the receivership.
The ad hoc mandate
It is important to trigger at the first warning signs a ad hoc mandate. This is the first preventive measure to safeguard a business. So if you start to have your accounts in the red to the point where you are having difficulty paying your suppliers, it is time to question yourself on certain points. Is it due to temporary cash flow problems (a customer who is slow to settle a large debt, for example) or is this a warning sign of a lasting deterioration in your business?
It is in this second case that the ad hoc mandate should be triggered. The court will then appoint an independent person from outside the company who will be in charge of helping you analyze your situation in order to implement remedial solutions. The condition sine qua non is that your business is not already in default. This is why it is important to act quickly and not let the situation escalate.
This judiciary process is aimed at companies on the banks of the suspension of payments. As with the ad hoc mandate, in order to benefit from this measure, your company must not be in default of payment. The safeguard procedure is aimed at companies experiencing difficulties such that they require a fundamental restructuring or even the shutdown of one or more poles of activity.
The safeguard procedure makes it possible, in collaboration with the employees, to create a reorganization plan for the company in order to allow it to continue its activity. This safeguard procedure is one in the sense legal of the term since it requires publicity.
Therefore, the use of the safeguard must be made when we are cornered and that we can no longer hide the situation. In order to help you, the commercial court involves at least three people (a judge-commissioner, a judicial administrator and a judicial representative).
For companies with a turnover exceeding 20 million euros and / or having more than 150 employees, the representation of creditors is made by two committees. The first groups together credit institutions, the second the main suppliers of goods and services.
Conciliation replaces amicable settlement. In this case, you have reached the suspension of payments in any case for less than 45 days. This is a solution that avoids filing for bankruptcy.
Again, you need to open a file with the court. Your request must include a complete statement of your financial situation (statement of debts, receivables, a statement of collateral, commitments, annual accounts for the last three years, analysis of difficulties and financing needs as well as your first avenues for reflection). If your request is accepted, the judge appoints a conciliator. This procedure has a time limited, it is set at a maximum of 4 months.
The balance sheet has been filed and thecompany has exceeded 45 days of suspension of payments. It is important to ask for the legal redress within this period of 45 days, under penalty of being ordered to cover the social liabilities on your private assets. If the court accepts your request, the observation period begins. She does not exceed 6 months but can be renewed (on condition of not to exceed 18 months).
Once again, external people are in charge of analyzing the problems encountered by the company (legal representative, judge-commissioner, etc.). In the event that the company is able to emerge from the crisis, one can adopt a continuation plan. Otherwise, it will be a disposal plan. The continuation plan can then last up to 10 years. It essentially consists of granting you a moratorium to settle your creditors, or even debt forgiveness. But, also know, that such a plan can also be accompanied by asset disposals, a reduction in the wage bill, the contribution of new equity capital ...
So, with this talk, we were able to answer the question: business in difficulty, what to do?