Conciliation procedure

• Micro-entrepreneur
• Individual contractorl engaged in a commercial, craft or agricultural activity for the professional part of their assets

• Business

• Liberal Professional

The conciliation procedure shall apply where all of the following conditions are met:

• The company encounters legal (e.g., dispute between partners), economic (e.g., loss of a contract) or financial (e.g., non-payment of a customer) difficulties. This difficulty may be existing or foreseeable.
• The company must not be in a situation of cessation of payments for more than 45 days.

If the President of the Tribunal accepts the request for the opening of conciliation proceedings, he shall make an order. It shall specify the following:

• Conciliator Identity
• Purpose of the mission
• Remuneration of the conciliator
• Duration of the conciliation

Conciliator Identity

The conciliator is either nominated by the company or appointed by the president of the court.

The choice of the conciliator is free except in case of incompatibilities.

For example, it cannot be a person who has received remuneration or payment from the company or one of its members creditors in the last 24 months.

The company also has the option of refusing the designated conciliator. For example, if the conciliator has a personal interest in the proceedings (i.e. if he has a direct link with one of the creditors).

Most often, the conciliator is a judicial administrator.

Purpose of the mission

The conciliator assists the manager or entrepreneur to implement solutions to ensure the company's sustainability.

In agreement with the manager or contractor, the conciliator shall draw up a memorandum of understanding to be negotiated with the creditors the company to obtain payment periods or debt forgiveness.

Remuneration of the conciliator

The conciliator's remuneration shall be fixed in agreement with the entrepreneur or the manager. This agreement is appended to the order of appointment made by the President of the Tribunal.

Duration of the conciliation

The conciliation procedure is scheduled for a maximum period of 4 months. But it can be extended by one month at the request of the conciliator, the total duration of which shall not exceed 5 months.

Due to the COVID-19 health crisis, conciliation procedures opened since august 24, 2020 may be extended several times. In this case, the total duration of the conciliation may not exceed 10 months. This provision shall apply until 31 December 2021.

The aim of the conciliation procedure is to reach an amicable agreement between the company and its main parties creditors (e.g. tax, social, banking), to resolve financial difficulties.

The entrepreneur or manager may ask the judge for payment periods (within 2 years) in respect of a creditor who has assigned in payment. It may also request the judgment or prohibition of any legal action on the part of that creditor.

This agreement is:

• Be established, at the request of the creditors and of the company in difficulty, by an order of the President of the Court,
• Either approved at the request of the company in difficulty, by a judgment of the court. However, this agreement must protect the interests of creditors who have not signed it.

If no agreement is reached, the conciliation procedure shall be terminated.

Once the conciliation procedure is triggered, creditors may no longer request the recovery or the liquidation company.

Conciliation agreement finding

The Conciliation Agreement may provide for the following:

• Time limits for payment of contractor debts

• Debt forgiveness

• Interest rebates and penalties for late payment

Once an agreement has been reached, the creditors and the company in difficulty may ask the president of the court of first instance to confirm their agreement. This finding makes the agreement enforceable, i.e. it can be applied by the parties.

The creditors who signed this agreement cannot obtain payment of their debts with the company in difficulty.

If the agreement established is not respected by the parties, the court seised by the creditor or the company may order the cancelation of that agreement.

Approval of the Conciliation Agreement

It shall take place at the request of the company in difficulty. The court shall approve the agreement obtained if all of the following conditions are met:

• The company in difficulty is not in cessation of payments or the agreement shall put an end to it
• The terms of the agreement ensure that the company's activities are sustainable
• The agreement preserves the interests of creditors non-signatories

Certification allows creditors or partners who provide funds, goods or services to the company under the agreement to have payment priority in the event that the company is subject to backup, a recovery or a liquidation judicial. In addition, they will not be subject to payment delays.

The approval judgment shall be lodged at the registry of the commercial court where any interested party may take cognizance of them. The procedure therefore becomes public.

Completion of the conciliation procedure

If the creditors have not reached an agreement, the conciliator shall submit his report to the President of the Court. This terminates the conciliator's task and the conciliation procedure.