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It happens in the life of a business that it is unable to meet the payment of its debts. This results in the opening of judicial liquidation proceedings. Do you know the simplified version? What is a simplified judicial liquidation? Who is concerned ? How to make a simplified judicial declaration? How does the procedure take place ? You will find answers to all these questions by reading the information below.

What is a simplified judicial liquidation?

From a legal point of view, judicial liquidation means a collective procedure following an action by one or more creditors of a company, after finding a lack of cash to honor all the debts. Judicial liquidation, simplified by definition, is an integral part of this procedure. However, it differs in particular by a less cumbersome formalism and a faster processing time. It is primarily intended for very small businesses.

The simplified judicial liquidation procedure can be used by the judge under certain conditions. It should also not be confused with amicable or voluntary liquidations which are triggered on the sole initiative of the partners of the company.

In practice, three types of simplified judicial liquidation exist:

  • Short: the debtor's assets are then sold by public auction within four months. The procedure must be closed at the most twelve months after its opening.
  • Lightened: the verification of bad debts by the debtor is abandoned in order to free up additional time for the processing of other debts.
  • Formalist: it is then up to the judicial liquidator to establish a distribution project. This is then filed with the registry with notice publicity in the Official Bulletin of Civil and Commercial Announcements (Bodacc).

Finally, as for the more traditional system, the simplified judicial liquidation procedure remains a judicial administration measure which cannot give rise to a possible appeal. To be clearer, such a decision cannot therefore be contested.

The process of the simplified judicial liquidation

First of all, it should be ensured that the preconditions for opening this type of procedure are met. The company concerned will then have to meet three criteria:

  • No ownership of real estate
  • A workforce not exceeding one employee
  • A turnover excluding tax less than or equal to 300,000 euros.

The legislator has also taken the decision to relax the conditions precedent to the opening of such a procedure. It thus becomes accessible to companies employing a maximum of five employees and having a turnover excluding tax of more than 300,000 euros with a ceiling set at 750,000 euros.

In all cases, it is up to the court to put an end to this simplified liquidation procedure if it notices during its investigations that one of these criteria is not met by the company concerned.

Once this verification step is completed, the simplified procedure is faster, less cumbersome in its operation and ultimately less expensive than traditional liquidation. However, both produce similar effects. They thus give rise to the appointment of a judicial representative who will be responsible for implementing the liquidation operations. It will also be up to him to ensure the good management of the company in replacement of its manager. At the same time, bankruptcy proceedings will be launched against the company's creditors (whether it is a supplier, a customer or the state). By joining it, they will thus demonstrate their real desire to do everything possible to settle their debt. Please note, depending on the quality of the creditors, priority orders for payment are defined by law.

The duration of the simplified judicial liquidation

The duration of the simplified judicial liquidation should not, in principle, be more than six months (from the date chosen for the opening of the procedure) for companies whose workforce does not exceed one employee. For the others (and on condition that the turnover excluding tax for the past year is greater than 300,000 euros), this maximum period is extended to twelve months.

However, these are purely theoretical duration limitations. Indeed, in practice, a three-month extension remains possible depending on the files. In addition, the judge also has the possibility of switching from a simplified procedure to traditional liquidation if the circumstances so require. This modification can also be carried out if the deadlines for closing the simplified procedure have been exceeded. It will then be compulsory to summon all debtors to the Commercial Court hearing.

Frequently Asked Questions

Is the simplified judicial liquidation for a EURL possible?

Simplified judicial liquidation for a sole proprietorship (links to the specific page) (whether it is a EURL, a SASU, a SELARL or a SELAS) is quite feasible. It is even a procedure tailored to these “small” companies. The legislator has also considered extending this principle to other types of structures. You will understand then that it is also allowed to apply the simplified judicial liquidation to an LLC.

Simplified judicial liquidation and the declaration of debt?

Simplified judicial liquidation for an LLC does not modify the declaration of claims. As a reminder, this is the act carried out by the creditor of a company concerned by a safeguard, reorganization or judicial liquidation procedure. By this action, the creditor confirms his intention to participate actively in the conduct of the procedure in question.

Simplified judicial liquidation and RSI?

This is a question that comes up frequently. How do simplified judicial liquidation and RSI “coexist”? Should you fulfill your obligations to the RSI when your company is affected by such a procedure? The answer is no ! Indeed, the debts of the RSI are no longer considered as personal but as professional. Therefore, they are automatically extinguished upon liquidation, like other types of debts in the company.

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