In France, there are two legal processes : the recovery judiciary and the dissolution judicial. The primary purpose of insolvency proceedings is to help a company in financial difficulty to overcome these difficulties (redress). In the event that this objective cannot be achieved, the procedure ends with the withdrawal of the company from the legal registers (dissolution). Here is what there is to know on each collective procedure : definition, characteristics et operation.
Definition of collective procedure
A collective procedure is a legal procedure intended to assist a company to overcome financial difficulties which she faces. Of the organs are appointed by the court to carry out specific missions, in particular representing creditors, inventorying the situation of the company, verifying claims and paying suppliers.
This procedure applies to companies in a state of payment default. Two types of procedure are then possible: recovery and liquidation judicial. Each of these procedures will lead either to the continuation of the activity, or to its definitive and irreversible cessation.
When the situation is recoverable, the court decides on a plan to be followed by the company. In case of impossible recovery, the liquidation is pronounced. The company then ceases its activities and reimburses its creditors with the available funds, to then disappear.
Insolvency proceedings: reorganization and judicial liquidation
Recovery
A business can request a legal redress within 45 days after entry into a state of cessation of payments, the judgment then fixing the precise date and observation duration. Lawsuits and interests are suspended and bodies are studying the rescue possibilities, the judges then deciding whether a recovery is possible and stopping a repayment plan or if a liquidation.
The legal representative can carry out his duties and is assisted or replaced by a judicial representative and possibly a judicial administrator, the supervising judge being responsible for overseeing the procedure.
Liquidation
When the state of health is irreparably degraded and the company can no longer pay its debts, it is necessary to carry out a judicial liquidation for remove from the commercial register. The leader is then relieved of his duties and it is the judicial liquidator who manages the company and proceeds with the sale of assets, dismissals, disinterestedness of creditors, etc.
The activity stops, except authorization, and the judge-commissioner takes care to protect the interests of the parts. Once the procedure is completed, the judges pronounce the close of liquidation and the company disappears. It is written off if the debts are repaid, or because ofinsufficient assets.
It should be noted : for some companies, a simplified version of compulsory liquidation can be implemented. It is less expensive and faster than an amicable liquidation, which corresponds to a voluntary dissolution healthy businesses.
Preventive measures preceding legal proceedings
Before having to face a difficult situation, companies can benefit from preventive mechanisms. We then speak of methods of preventing difficulties. There is for example the conciliation and ad hoc mandate. These methods can only be initiated by the manager and the company must not yet be in a situation of insolvency.
There is also the procedure of safeguard, which is between prevention methods and legal proceedings, since it can be granted to companies in a state of insolvency, but only for a period of less than 45 days. However, unlike other devices, the backup is not confidential: it is public insurance.
With the backup, the company gets back in order to maintain its activities and pay off its debts. The procedure also begins with an observation period. The manager then retains his functions. If the company does not comply with the commitments made in the safeguard plan, the court may impose a receivership/liquidation procedure on it.
What is the definition of a collective procedure?
Réponse:
A collective procedure is a legal procedure that allows a company in financial difficulty to reorganize its debts and continue its activity by paying its creditors at a reduced rate or by exchanging assets for debts.
What type of collective procedure is most often used?
Réponse:
Most often, the most used collective procedure is the safeguard, which provides a period of time for the company and its creditors to negotiate a restructuring plan.
