The receivership procedure is initiated when a company is in suspension of payments. Its recovery must be deemed possible. As a result, this procedure mainly concerns companies in serious difficulty.
When should receivership proceedings be initiated?
When a company is declared insolvent and unable to pay its debts, it can be placed in receivership by the court. The purpose of this procedure is to help the company director reorganize the company. It is thus implementing an action plan. This offers him a number of opportunities. It can continue to operate and safeguard the jobs of its employees, while paying off its debts.
Within 45 days of the declaration of cessation of payments, the company’s director has the right to apply for a court-ordered reorganization. The creditor can also apply for this procedure by submitting the matter to the President of the Court. He can also submit a request to the public prosecutor.
The court is the sole decision-maker when it comes to initiating receivership proceedings. It is up to him to decide whether the application is accepted or rejected. This request is not possible if conciliation proceedings are in progress.
How do receivership proceedings work?
If the debtor is a trader or craftsman, receivership proceedings will be initiated before the Commercial Court. On the other hand, for a company involved in another activity, jurisdiction lies with the Tribunal de Grande Instance.
The appointments of the mandataire judiciaire, the commissaire-auctionur and the juge commissaire are made at the first hearing. The company’s manager is called upon to analyze the management of his business. He must therefore be assisted by his lawyer during this process.
The court sets the date for closing the receivership proceedings at the end of this hearing.. Typically, a normal procedure can take two years or more. Nevertheless, a simple procedure can take up to a year.
All in all, we can see that the receivership procedure is an effective solution for indebted companies. However, the company may be bought out if a solution cannot be found to the advantage of all parties involved in the proceedings. In any case, a lawyer who is familiar with the laws concerning receivables and debt collection will be able to help you with the steps to take in your company’s receivership.
