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Any business can be subject to difficulties, whether financial or otherwise, at some point in its existence. In this case, it is sometimes preferable that she undergo a legal redress. The turnaround will allow the company to survive and settle its liabilities. However, when it no longer has the possibility of settling its debts following the pronouncement of its dissolution, it may be subject to a judicial liquidation.

The company is then said to be in a state of insolvency, because of its payable liabilities, which cannot be covered by its available assets. Current liabilities designate all debts specific to the legal person, that is to say the company, while the available assets include all assets relating to the latter. 

What is a company in compulsory liquidation?

Judicial liquidation is the last option the court offers to a company in difficulty, after receivership. It indicates the real end of all activity of the company, and the dismemberment of all its assets. To recognize a company in receivership, there are several points to consider. First, you could look at the financial state of the business in question. 

Indeed, the state of insolvency makes it possible to testify to the judicial state of a company. It is undeniable that the company is obliged to carry out compulsory liquidation if it is bankrupt, or if it can no longer meet its liabilities. Second, as has been pointed out, liquidation takes place after a reorganization plan has failed. As a result, there is therefore a recovery plan for the company. 

Finally, an entity in compulsory liquidation can be taken over by third parties. So you may find that a business is in compulsory liquidation if you can take control of it. But you have to be very vigilant when takeover of a company in compulsory liquidation, since there is no guarantee that a change of ownership will suffice to rectify the situation.

How to buy a business in receivership?

A company in liquidation undergoes a liquidation of all its assets to reimburse its creditors. To do this, the court appoints a liquidator to manage all the assets relating to the business. The goods can be sold separately or in whole. The liquidator will set a deadline for the filing of the takeover offer file, as indicated in article L621-85 of the French Commercial Code. If you want to buy a company in receivership, you will have to respect the defined deadline, otherwise your file will not be considered. 

In the event that your offer is deemed serious and convincing, the court terminates the sale of the company. It is possible to completely buy the business, which is to say that you will take over the entire company. You could thus acquire the management of the company in receivership concerned. But if you have made a partial purchase, you only benefit from certain assets, that is, one or more of its lines of business. 

It should be noted that a company in compulsory liquidation can be taken over by a natural or legal person other than the manager, his relatives or his family. The judicial liquidator will submit all the files to the clerk of the court. The selection is based on the prospects for the most effective development to restart the activities of the company.

How to make a judicial liquidation?

Judicial liquidation is a step that can apply to natural or legal persons who have failed in the reorganization plan. In order for companies to go into compulsory liquidation, they must be declared insolvent. Different steps must be followed in order to carry out a compulsory liquidation. For a liquidation to be initiated, the manager must prove that his entity is really in a state of financial crisis, making it unable to pay the due liabilities.

The opening of the procedure requires several documents: a declaration form of insolvency, documents justifying the last annual accounts, the statement of debts due and available liabilities, the financial statement of the company during the last months, clearly displaying debits and credits, documents showing the identity and number of all employees, a list of all persons who take care of the business of the company, such as representatives of the works council , among others. The court can initiate a simplified liquidation procedure if the number of employees is less than 5, and the duty-free turnover is below 750,000 euros.

How to make a judicial liquidation of SARL?

The SARL or Limited Liability Company is a company made up of at least 2 partners. The judicial liquidation of an LLC is the same as that of a company. When the available assets no longer cover the payable liabilities, the state of insolvency is declared, and the judicial liquidation procedure is launched. 

On the other hand, an LLC can be dissolved following the decision of the partners. In this case, the state of default is not mandatory. To achieve the dissolution of the LLC, a report must be made by the partners in order to appoint a liquidator. It is this liquidator who will replace the manager, and certify the accounts. The dissolution of the LLC will involve the liquidation in order to transform the assets into cash. With the sum obtained by the liquidation, all the debts of the company will be paid, and the remainder will be shared between the partners.

In summary

It is not difficult to recognize a company in receivership by examining its financial statement. The company is in a state of insolvency and can be taken over by a third party.

You can make a partial or total purchase of a company in receivership. You must fill out the form with innovative ideas for the company, and above all, respect the deadline for submitting the request for the trade-in offer.

Following an ineffective reorganization plan, the company must go into compulsory liquidation. For that, you should complete a procedure opening. The liquidator takes charge of the management of the company in compulsory liquidation.

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