[Tribune] How to maintain a buyer-supplier relationship when a company is in trouble?

Preventive methods or, in other words, friendly methods, non-judicial methods offer more flexibility to the parties involved to end a dispute. The opening of these procedures is done only at the request of the debtor to the president of the commercial court in the jurisdiction of the registered office of the company. An amicable settlement will allow the debtor and his creditors seeking agreement through effective and productive communicationwhich offers creditors a useful method for their debt collection.

Unlike collective proceedings, amicable procedures do not deprive the debtor of his management powers. The debtor is not prohibited from paying claims before the opening of the procedure, and he does not benefit from the suspension of the proceedings of his creditors.

The ad hoc mandate and the conciliation procedure are two processes of the preventive procedure, allowing the debtor and his client to reach a restructuring agreement which in any case shall not be imposed on him, before resorting to a settlement.

Amicable methods are strictly confidential procedures except for information provided by the auditor of the company to open the procedure, and of the social and economic committee only in the event of agreeing to a conciliation protocol.

The ad hoc mandate (article L. 611-3 of the commercial code)

Only debtors who have encountered difficulties that are not in the condition of stopping payment will benefit from the opening of an ad hoc mandate. The borrower must be present at the beginning of the procedurehe must arrest the president of the commercial court to request the opening of the procedure. The ad hoc order does not interrupt any alert from the auditor, and the agreement concluded between the parties has only contractual value. The mandate does not establish a maximum duration to find a good agreement with creditors, nor a waiting period to be able to open a new procedure.

Reconciliation procedure (article L. 611-4 of the commercial code)

Only debtors using a commercial or artisanal activity experiencing legal, economic or financial difficulties may request the opening of the restoration procedure. Here again, only the debtor can arrest the president of the commercial court to explain the situation of his company and request the opening of this procedure.

However, unlike an ad hoc mandate, a consent procedure is required a period not exceeding five months for the debtor and his creditors to reach an agreement beneficial for each of them. A waiting period of 3 months must be respected between the two opening of restoration procedures. This method interrupts the auditor alert.

In the case of an agreement between the parties, the procedure allows for two results. The first creation the recognition of the agreement in the conciliation procedure by order of the president of the commercial court. There is no publication of the decision confirming the settlement agreement and no appeal is possible.

The second is the approval of the agreement in the conciliation procedure through the judgment of the commercial court. The homologation judgment is published and filed in the commercial court registry but the content of the agreement remains confidential. Unlike the first issue, the approval of the agreement is subject to appeal. But one great advantage distinguishes the two issues, it is the privilege of New Money. This privilege allows the contributors of the new financing during the conciliation procedure to benefit from the credit guarantee privilege in the event of collective proceedings.

In the event of default by the borrower, one of the parties to the agreement may refer to the president of the commercial court to declare the termination of the agreement. The opening of a collective procedure also automatically ends the agreement established or approved. Creditors recover all their debts, after deducting the amount received during the agreement.

The protection method: the collective method that allows the buyer-supplier relationship to be maintained

The protection procedure (article L. 620-1 et seq. of the Commercial Code) is a procedure that is part of the collective procedures. The debtor who uses a commercial, artisanal, agricultural activity or any other independent or liberal profession that, without stopping payments, justified the difficulties he could not overcome, may request the initiation of this procedure. This method makes it possible to maintain jobs, relations with creditors, discharge debts and reorganize the company. The debtor maintains his management powers within the framework of the procedure, as for good procedures.

If the court accepts the opening of the protection procedure, it will appoint a judicial administrator (debtor’s assistance mission) and a judicial representative (creditors’ representative) which are the two organs of the procedure. The protection procedure begins with an observation period of 6 months that can be renewed three times, within a maximum period of 18 months. This period of observation will allowimplement the economic and social balance sheet of the company to study the possibilities of recovery.

The effects for the company

– Freeze the payment of debts arising before the opening judgment and obligation to pay debts arising during the proceedings.

– Termination of creditors’ proceedings against the company in difficulty.

– Cut default interest and surcharges.

Creditors must declare their claims from the BODACC publication within 2 months for creditors living in France, and 4 months for creditors living abroad. These declarations will allow the borrower to take them into account when creating the protection plan.

As with the conciliation procedure, the cash providers during the protection procedure can benefit from a priority payment privilege in the event of conversion of the procedure to receivership or liquidation.

The business backup plan allows the manager to take all the steps to be implemented to change his business so that it can be saved. The plan will impose many sacrifices on creditors such as debt forgiveness or the provision of payment terms. But thanks to these measures, the company can start again on a solid basis in a given time, if the debtor respects the plan.

The duration of The plan does not exceed 10 years, increased to 15 years for agricultural enterprises. If the debtor does not fulfill his commitments within the time limit set in the plan, the court may, at the request of one of the creditors or the commissioner for the implementation of the plan, declare the resolution of the protection plan and declare the open receivership proceedings.

Leave a Comment