What are collective proceedings?
Although this term may seem obscure, it refers to a set of legal processes designed to support companies in difficulty.
In France, there are three types of collective proceedings:
- Safeguard: for companies facing challenges but still able to pay their creditors;
- Receivership: for those who can no longer honour their previous debts;
- Judicial liquidation: for situations with no way out.
We’ll be focusing on the first two options, which are often misunderstood yet crucial.
A poorly perceived but effective tool
Despite their bad reputation, insolvency proceedings are a particularly useful tool for company directors who are experiencing temporary difficulties but wish to preserve their business. They offer a lifeline for managers facing temporary turbulence. Early intervention is key: the sooner the procedure is initiated, the better the chances of recovery.
How it works
As soon as the decision to open insolvency proceedings is pronounced, all legal actions by creditors are suspended. In addition, it is forbidden to settle debts incurred prior to the opening of insolvency proceedings.
The second effect of a decision to open insolvency proceedings is the provision of support. If requested at the outset of insolvency proceedings, the company can ask for the appointment of an administrator to help it make the right management decisions for the good of the business. In addition, throughout the duration of the proceedings, the judge can help the company, for example by ordering the termination of contracts deemed to be detrimental to the business (e.g. expensive and unnecessary franchise or lease management contracts, which the customer is not free to terminate).
Finally, the last effect of collective proceedings is the adoption of a safeguard or recovery plan which, once the business has stabilized, spreads debt repayment by the debtor over several months or years.
How can I benefit from collective proceedings?
If you are experiencing difficulties and would like to find out more about insolvency proceedings, or even apply for the opening of insolvency proceedings, DESRUMAUX AVOCATS can support you from the application stage and throughout the proceedings.
This will enable you to benefit from all the advantages of this procedure and ensure the long-term future of your company.
