The firm advises the directors and shareholders of companies facing cash-flow pressure, debt that has become excessive or the loss of a key customer. It acts from the first warning signs, at the prevention stage, and through to insolvency proceedings.
Mandat ad hoc and conciliation (in French), the two French pre-insolvency procedures, allow bank, tax and social security debt to be renegotiated under the protection of the court and in confidence.
The firm prepares the file, applies to the president of the court, negotiates with the creditors alongside the court-appointed mandataire or conciliateur, and drafts the settlement agreement.
Timing is decisive: conciliation is open to companies that have not been in cessation des paiements, the inability to meet due liabilities out of available assets, for more than forty-five days. Waiting closes doors.
Sauvegarde (protective proceedings, opened before cessation des paiements), redressement judiciaire (court-supervised reorganisation, opened after it), liquidation judiciaire (winding-up): the firm assists the director at every stage, from the declaration of cessation des paiements to the adoption of the plan.
It drafts the sauvegarde or redressement plan, negotiates with the creditors and with the officers appointed to the proceedings, and represents the company at hearings.
It attends to the protection of the director: liability for insufficiency of assets, personal guarantees, disqualification from management.
Rescheduling, partial write-off with a return-to-better-fortune clause, conversion of debt into equity, refinancing by a new entrant: the firm structures and documents the negotiated solutions, together with its banking finance practice.
The four levers of debt restructuring and their legal framework (in French).
For buyers, on an acquisition through the court (a plan de cession in redressement judiciaire or liquidation judiciaire, the court-ordered sale of the business as a going concern), the firm prepares and files the offers, negotiates the perimeter of the assets and of the contracts taken over, and secures the transfer of the employees and of the authorisations.
As soon as the company foresees that it will be unable to meet its liabilities in the coming months, and in any event before it has been in cessation des paiements for more than forty-five days. Conciliation is confidential, lasts four months and may be extended by one month, and allows the debt to be negotiated with the creditors under the authority of a conciliateur appointed by the president of the court.
The inability to meet due liabilities out of available assets. It is not balance sheet insolvency: a company may have positive net assets and still be in cessation des paiements for want of cash. The director must declare it to the court within forty-five days, failing which his or her personal liability may be engaged.
Sauvegarde is open to a company that is not yet in cessation des paiements; the director remains in charge and puts forward the plan. Redressement judiciaire opens after cessation des paiements, with a court-appointed administrateur judiciaire who assists or replaces the director, and with the possibility for third parties to submit offers to take over the business.
The risk arises from personal guarantees, which become enforceable if the company defaults, and from the action for liability for insufficiency of assets where mismanagement has contributed to the shortfall. Declaring cessation des paiements within the time limit and keeping management decisions documented substantially reduce that second risk.
Yes, and that is the route to prefer for as long as cessation des paiements has not occurred. Mandat ad hoc and conciliation are confidential procedures: no publication, no entry on the register, no notice to customers or suppliers. The director remains in charge of the company.
A mandataire or a conciliateur appointed by the president of the court conducts the negotiation with the creditors. Their task, defined in article L. 611-7 of the French Commercial Code, is to promote the conclusion of an agreement between the debtor and its principal creditors. The agreement reached may remain purely contractual, be recorded by the president, or be approved by the court, each degree affording greater legal certainty in exchange for wider publicity.
Four levers, most often combined. Rescheduling spreads the instalments over a longer period and lightens the annual burden. A partial write-off of the claim, usually coupled with a return-to-better-fortune clause, cancels part of the liabilities. Conversion of debt into equity turns a creditor into a shareholder, which means accepting dilution. New money, lastly, funds the restart.
What is negotiated is not only the amount, but the timetable, the security granted in return, the position of the director's personal guarantees and the circumstances in which the agreement lapses. A rescheduling obtained without dealing with the guarantees leaves the director personally exposed.
The term is set by the court and may not exceed ten years, under article L. 626-12 of the French Commercial Code. It is extended to fifteen years where the debtor carries on an agricultural activity.
That ceiling is not a target. A plan that runs too long holds the company under a cash constraint for a decade and deters investors. A plan that is too short fails at the first difficulty, and its non-performance leads to termination. The term is built on a realistic cash-flow plan, not on the wish to reassure the creditors.
The points directors bring to us most often, treated in depth, with sources.
