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Conciliation procedure

Verified 15 May 2022 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Justice

The conciliation procedure is an amicable procedure for preventing companies' difficulties. It allows the company to continue its activities without the head of company being divested of his powers. Its objective is to reach an amicable agreement between the company and its principal creditors.

General case

  • Business
  • Professional

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

  • The company faces legal (for example, litigation between partners), economic (for example, loss of a contract) or financial (for example, non-payment of a client) difficulties. This difficulty can be existing or predictable.
  • Company must not be in a termination for more than 45 days.

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Commercial or craft activity

To make a request (called query) of the opening of the conciliation procedure, you must complete the following document and either file it or send it to the president of the commercial court of the company's seat.

Request for the opening of conciliation proceedings

Who shall I contact

FYI  

only the contractor or company manager may request the initiation of conciliation proceedings.

This application shall be accompanied by the following documents:

  • Unique company identification number
  • Status claims and debts, together with a timetable and a list of the main creditors
  • Active and Liabilities Statement security
  • Off-balance sheet liabilities
  • Annual accounts, financing table, status of assets realisable and available, excluding operating values, liabilities due in the last 3 years, if these documents have been drawn up
  • Certificate of absence of conciliation procedure in the 3 months preceding the application
  • Statement indicating, if necessary, the third party's assumption of the costs of the procedure.

The query must also contain:

  • Description of the economic, financial and social situation of the company
  • Company financing needs
  • Means of coping with company's difficulties

Please note

in the event of termination of payments, the contractor or officer must specify the date of the termination in the application.

Liberal activity

To make a request (called query) of the opening of conciliation proceedings, you must complete the following template and submit it or address it to the president of the court of the place of the company.

Request for the opening of conciliation proceedings

Who shall I contact

FYI  

only the contractor or company manager may request the opening of a conciliation procedure and propose the name of a conciliator.

This application shall be accompanied by the following documents:

  • Unique company identification number
  • Status claims and debts with a schedule and a list of key creditors
  • Active and Liabilities Statement security
  • Off-balance sheet liabilities
  • Annual accounts, financing table, status of assets realisable and available, excluding operating values, liabilities due in the last 3 years, if these documents have been drawn up
  • Certificate of absence of conciliation procedure in the 3 months preceding the application
  • Statement indicating, if necessary, the third party's assumption of the costs of the procedure.

The query must also contain:

  • Description of the economic, financial and social situation of the company
  • Company financing needs
  • Means of coping with company's difficulties

Please note

if the company is in default, the contractor or officer must specify the date in the application.

If the President of the Court accepts the request to initiate the conciliation procedure, he shall issue an order. It specifies the following:

  • Conciliator Identity
  • Mission Purpose
  • Remuneration of conciliator
  • Conciliation time
Conciliator Identity

The conciliator is either nominated by the company or designated by the president of the tribunal.

The choice of conciliator is free unless there are incompatibilities.

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

The company also has the option to refuse the designated conciliator. For example, if the conciliator has a personal interest in the proceeding (i.e., has a direct link to one of the creditors).

More often than not, the conciliator is a judicial administrator.

Mission Purpose

The conciliator assists the executive or contractor to implement solutions to ensure the sustainability of the company.

The Conciliator shall, in agreement with the Director or Contractor, develop a Memorandum of Understanding to be negotiated with creditors of the company to obtain payment deadlines or debt forgiveness.

Remuneration of conciliator

The remuneration of the conciliator shall be fixed in agreement with the contractor or the manager. This agreement is appended to the appointment order issued by the President of the Tribunal.

Conciliation time

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 without the total duration exceeding 5 months.

As a result of the health crisis linked to Covid-19, the conciliation procedures opened since 24 August 2020 can be extended several times. In this case, the total conciliation period may not exceed 10 months. This provision shall apply until 31 December 2021.

FYI  

the request for an extension is made only at the request of the conciliator to the president of the tribunal.

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 Contractor or Officer may apply to the Judge for payment terms (up to 2 years) in respect of a creditor who has assigned payment. It may also request the cessation or prohibition of any legal action by that creditor.

This Agreement is:

  • Be established, at the request of the creditors and 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 judgement of the court. However, this agreement must safeguard the interests of the creditors who did not sign it.

If no agreement is reached, the conciliation procedure shall end.

Once the conciliation procedure has been triggered, creditors may no longer request the recovery or settlement company.

Conciliation Agreement Statement

The conciliation agreement may provide for the following:

  • Deadlines for payment of contractor's debts
  • Debt Remittances
  • Interest remittances and late penalties

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

Creditors who signed this agreement cannot obtain payment for their claims to the company in difficulty.

FYI  

the finding of the agreement is not published.

If the agreement reached is not complied with by the parties, the court to which the creditor or the company may cancel the 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 the following conditions are met:

  • The company in trouble is not in trouble termination or the agreement terminates it
  • The terms of the agreement ensure the sustainability of the company's activities
  • The agreement preserves the interests of creditors non-signatories

The approval shall allow creditors or partners who provide funds, goods or services to the company under the agreement to have payment priority where the company is backup, a recovery or settlement judicial. In addition, they will not be subject to payment deadlines.

The approval judgement shall filed at the office of the commercial court where any interested party may take note. The procedure thus becomes public.

FYI  

where one exists, the Social and Economic Committee shall be informed by the company in difficulty of the content of the agreement when applying for approval.

End of conciliation procedure

If the creditors have not reached an agreement, the conciliator shall submit his report to the president of the court. The conciliation procedure ends the conciliation procedure and the conciliation procedure.

Farmer

A farmer who has financial difficulties or who anticipates that his farm will encounter financial difficulties may use the procedure of the amicable agricultural settlement.

It allows the president of the judicial tribunal in whose jurisdiction the seat of the holding is located to consider the appointment of a conciliator.

Who shall I contact

The Conciliator's mission is to help resolve the financial situation of the farm. Its objective is that an amicable agreement with the main creditors on payment terms or debt forgiveness.

This is a confidential procedure.

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