Key contact: Franck Nathoo (Legal counsel)
The earlier a struggling company acts, the more options it has. Negotiation with creditors, confidential out-of-court proceedings, safeguard or receivership: MOSAIK helps directors choose the right path, and defends creditors who need to enforce their rights.
The firm appears before the competent economic activities court (tribunal des activités économiques) or commercial court, alongside directors, shareholders and creditors, at every stage: before difficulties arise, during the proceedings and after the judgment.
Anticipate: negotiate before it is too late
The first signs of difficulty (tight cash flow, mounting social security or tax debts, rent arrears) call for a swift response. At this stage, many situations can still be resolved through negotiation:
- payment schedules negotiated with URSSAF and the tax authorities, in particular before the CCSF, the committee of heads of public financial services;
- referral to the CODEFI, the departmental committee that examines business financing problems;
- discussions with banks, suppliers and the landlord to obtain extra time or a rescheduling.
When a company is summoned to court by an unpaid creditor seeking its receivership or liquidation, MOSAIK defends its position at the hearing and negotiates a payment plan with the creditor so that the petition is withdrawn.
Out-of-court proceedings and safeguard
Without waiting for a cessation of payments, the director may ask the president of the court to appoint a mandataire ad hoc or to open a conciliation. These proceedings are confidential: a professional appointed by the court brings together the main creditors and helps them reach an agreement, without the company's business partners being informed.
When negotiation is not enough, safeguard proceedings, available to companies that have not ceased payments, stay individual enforcement actions by creditors and, as a rule, stop interest from accruing. The company then has an observation period to build a plan to repay its liabilities while continuing to trade.
Cessation of payments: receivership or liquidation
A company is in cessation of payments when it can no longer meet its debts as they fall due with its available assets, a situation formerly referred to in France as "filing the balance sheet". The director must then file for proceedings within forty-five days.
MOSAIK prepares the filing with the director, based on the viability of the business and their objectives: judicial receivership if the company can be saved, judicial liquidation otherwise. Throughout the proceedings, the firm:
- represents the company and its director before the court, the supervising judge, the court-appointed administrator and the creditors' representative;
- reviews and challenges the claims filed;
- applies for extensions of the observation period when they serve the company;
- prepares the recovery plan or supports a takeover bid under a sale plan;
- defends the director's and shareholders' own interests, in particular regarding the date of cessation of payments and transactions made during the suspect period.
Taking over a company in receivership or liquidation: the takeover bid
A company in insolvency proceedings can be an opportunity: taking over a business, a customer base, employees and contracts without the liabilities. But a court-supervised takeover follows strict rules and a tight timetable set by the court.
The bid must be in writing and specify the assets, rights and contracts taken over, the business and financing forecasts, the price and its terms, the completion date, the number of jobs preserved, the performance guarantees and the duration of the bidder's commitments. Once submitted, it can be neither withdrawn nor amended, except to make it more favourable, and binds its author until the judgment.
MOSAIK assists bidders: review of the file with the administrator or the liquidator, choice of scope, drafting of the bid, hearing before the court, then the transfer deeds. The firm also assists directors and employees who wish to put forward a takeover project, first checking that they are eligible: the director, their close relatives and the creditor controllers may not, as a rule, be buyers.
Director liability
A company's failure can turn against its director. The officers of the proceedings or the public prosecutor may bring against them:
- an action for liability for the shortfall in assets, seeking to make them bear all or part of the company's debts;
- professional sanctions: personal bankruptcy or a ban from managing a company;
- criminal proceedings, in particular for fraudulent bankruptcy (banqueroute).
MOSAIK defends directors in these proceedings, and against the bank when it seeks to call on a personal guarantee given to secure the company's debts.
Creditors: enforcing your rights
When a customer or business partner enters insolvency proceedings, deadlines are short and the slightest oversight can cost you your claim. The firm assists creditors to:
- file their claim on time, and defend it if it is challenged;
- apply for relief from the time bar when the filing deadline has been missed;
- reclaim goods they still own, in particular under a retention of title clause;
- enforce their security interests;
- be appointed as a creditor controller, to closely monitor the proceedings.
Frequently asked questions
When must insolvency proceedings be opened?
Under French law, the director of a company that has ceased payments must file for receivership or liquidation within forty-five days, unless a conciliation has been requested within that period. It is better to seek advice beforehand: as long as the company has not ceased payments, mandat ad hoc, conciliation and safeguard proceedings remain available.
Are out-of-court proceedings really confidential?
Yes. Mandat ad hoc and conciliation take place under the supervision of the president of the court, without any publicity: customers, suppliers and competitors are not informed. This is what makes it possible to negotiate with creditors without undermining the confidence of business partners.
Can a director be held personally liable for the company's debts?
In some cases. In a judicial liquidation, the court may order the director to bear all or part of the shortfall in assets if a management fault contributed to it, mere negligence being excluded. A director who has personally guaranteed the company's debts must also prepare a defence against the bank.
What is the deadline for filing a claim?
Two months from the publication of the opening judgment in the BODACC, the official gazette, extended by two months for creditors based outside mainland France. After that, a creditor may still apply to be relieved from the time bar, within six months and under strict conditions.
Who can submit a takeover bid for a company in insolvency proceedings?
Any third party, whether an individual or a company, within the deadline set by the court. The company's director, their relatives by blood or marriage up to the second degree and the creditor controllers are excluded, unless the court grants a special authorization at the request of the public prosecutor. Employees may bid, often through a company formed for the purpose.
What must a takeover bid contain?
The precise list of the assets, contracts and employees taken over, the business and financing forecasts, the price and its payment terms, the takeover date, the jobs preserved, the guarantees and the duration of the commitments. The court selects the bid that best ensures the continuation of the business and of employment and the payment of creditors, not necessarily the highest one.