Conciliation procedure
Verified 26 November 2024 - Directorate for Legal and Administrative Information (Prime Minister)
In order to emerge from a crisis situation and rebound quickly, the company in difficulty can use the conciliation procedure. It enables a friendly agreement between the company and its principal parties to be reached quickly creditors (tax, social, landlords, major suppliers, bankers, etc.) with the help of a conciliator. This procedure remains confidential unless the Head of company requests approval of the conciliation agreement.
The conciliation procedure shall apply where 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 is not in a situation of cessation of payments or has been in default for less than 45 days.
FYI
This procedure shall not apply to farmers who benefit from a specific procedure known as settlement .
The head of the company shall make a written request for the initiation of conciliation called request to the president of the tribunal.
The competent court depends on the activity of the company.
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Commercial or craft activity
To apply (called request) for initiating the conciliation procedure, the following document must be completed:
Request for the opening of a conciliation procedure
FYI
Only the head of the company may request the opening of a conciliation procedure.
The query exposes the following:
- Economic, financial and social situation of the company
- Planned financing plan and profit and loss account
- Financing needs and, where appropriate, the means to meet them
- Remedial measures envisaged
- Time limits for payment or debt forgiveness for the implementation of these measures
Please note
When the company is in cessation of payments, the head of company or the head of office shall specify the date in the request.
The documents to be attached to the application are as follows:
- Extract Kbis or certificate of registration in the National Register of companies (RNE)
- Status of debts and debts, with a schedule and a list of the principal creditors
- Statement of assets and liabilities of collateral
- Assets and liabilities of off-balance-sheet commitments (e.g. leasing transactions, discounts granted to a company by its creditors)
- Annual accounts, financing table, statement of assets available and realizable, operating values excluded, liabilities due for the last 3 financial years, if these documents have been drawn up
- Honor certificate certifying the absence of conciliation procedure within 3 months before the request
- Declaration indicating, if necessary, that the costs of the procedure are to be borne by a third party.
This request must be filed or sent in 2 copies :
- at the registry of the commercial court of the place where the company has its seat
- or online through the digital court
Liberal activity
To apply (called request) for the initiation of the conciliation procedure, the form below shall be completed:
Request for the opening of a conciliation procedure
Such a request must be filed with or addressed to the President of the judicial tribunal of the place of the seat of the company.
FYI
Only the head of the company may request the opening of a conciliation procedure and propose the name of a conciliator.
The query should include the following:
- Economic, financial and social situation of the company
- Planned financing plan and profit and loss account
- Financing needs and, where appropriate, the means to meet them
- Remedial measures envisaged
- Time limits for payment or debt forgiveness for the implementation of these measures
Please note
When the company is in cessation of payments, the contractor or manager shall specify the date in the request.
The documents to be attached to the application are as follows:
- Extract Kbis or certificate of registration in the National Register of companies (RNE)
- Status of debts and debts, with a schedule and a list of the principal creditors
- Statement of assets and liabilities of collateral
- Assets and liabilities of off-balance-sheet commitments (e.g. leasing transactions, discounts granted to a company by its creditors)
- Annual accounts, financing table, statement of assets available and realizable, operating values excluded, liabilities due for the last 3 financial years, if these documents have been drawn up
- Honor certificate certifying the absence of conciliation procedure within 3 months before the request
- Declaration indicating, if necessary, that the costs of the procedure are to be borne by a third party
- Professional order on which the company depends (e.g. Architects' Order or Veterinarians' Order)
On receipt of the request, the President of the Court shall summon the head of the business or head of company to hear his explanations.
When the President of the Tribunal accepts the request for the opening of the conciliation procedure, he shall make an order.
It shall specify the following:
- Conciliator Identity
- Purpose of the mission
- Remuneration of the conciliator
- Duration of the conciliation
Appointment of the conciliator
The conciliator shall be appointed by the President of the Tribunal. The name of the conciliator may be offered by the company.
Most often, the conciliator is a court administrator.
Mission of the conciliator
The conciliator assists the manager or entrepreneur in implementing solutions to ensure the continuity of the company (e.g. negotiation of payment terms with banks or suppliers).
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.
Duration of the conciliator's assignment
The conciliator shall be appointed for a maximum period of 4 months. This duration may be extended by one month at the request of the conciliator, the total duration of which shall not exceed 5 months.
FYI
Only the conciliator has the possibility to ask the president of the tribunal for an extension of his mission.
Remuneration of the conciliator
The conciliator's remuneration shall be borne by the company. It is agreed with the entrepreneur or manager.
FYI
The conciliator's remuneration is based on the size of the company. The cost of remuneration should not be a barrier to the company.
The Head of company and the conciliator will work closely together during the preparatory period leading to a conciliation agreement (also known as an amicable agreement).
Once the conciliation procedure has been initiated, creditors may no longer apply for the company's judicial reorganization or liquidation.
Preparatory period before the signature of the Agreement
Together with the Head of company, the Conciliator shall draw up a list of those who will be invited to participate in the negotiations with a view to seeking an agreement. The aim of the conciliation procedure is to reach an amicable agreement between the company and its main parties creditors (e.g. tax administration, social agencies, bank), to resolve financial difficulties.
During the negotiation of the conciliation agreement, the company in difficulty may obtain from the judge payment periods (up to 2 years) in respect of a creditor who has assigned in payment.
Signing of the conciliation agreement
The troubled company and the main creditors agree to put certain measures in place: they will formalize the agreement and then have it confirmed or approved by the president of the court.
The conciliation agreement enables the company in difficulty to obtain the following:
- Payment periods for company debts
- Debt forgiveness
- Interest rebates and penalties for late payment
Creditors who have signed this agreement must respect the payment deadlines. If the agreement is not respected by the parties, the court is seized by a creditor party to the agreement or the company may declare the agreement void.
Payment periods may also be granted for the duration of the execution of the agreement in respect of a claim not covered by the agreement.
Recognition or approval of the conciliation agreement
Once signed, the friendly agreement adopted by the creditors is:
- Be established by a order of the president of the tribunalat the request of the creditors and the company in difficulty. The agreement remains confidential.
- Either approved by judgment of the court at the request of the company in difficulty only. The procedure is no longer secret.
Recognition of the agreement
The president of the court, at the request of the creditors and the head of company (or the manager), shall establish the agreement. This makes the agreement enforceable, i.e. it must be enforced by the parties.
FYI
The agreement found shall not be published. So it remains confidential.
Approval of the Conciliation Agreement
Only the Head of company may apply to the court for approval of the agreement. The following conditions must be met:
- The company in difficulty is not in cessation of payments or the agreement ends it.
- The terms of the agreement ensure the continuation of the company's activities.
- The agreement preserves the interests of creditors non-signatories.
The existence of the approved agreement is published in the Registry of the Commercial Court but not its content. The procedure is therefore no longer confidential.
The company in difficulty shall inform the Social and Economic Committee (ESC) of the approved agreement where one exists.
Within the framework of the approved agreement, the creditors who have provided new cash flow (or have provided new goods or services) have a new money privilege that is, they have a payment privilege over other creditors in the event of a subsequent opening of a collective proceedings .
Thus, when collective proceedings are opened, creditors must report to the judge-commissioner that they have a new money privilege. They cannot be subject to payment delays but they will be paid after the employees and after certain legal costs.
The failure of the conciliation procedure results either from the impossibility of reaching an agreement or from the non-fulfillment of the commitments resulting from the conciliation agreement.
Inability to reach an agreement
Where the creditors and the company in difficulty fail to reach an agreement, the conciliator shall submit a report to the President of the Court.
The latter puts end of the conciliator's mission and the conciliation procedure. This decision shall be communicated to the head of the company in difficulty and to the public prosecutor's office.
FYI
If conciliation fails, deadlines, debt forgiveness or collateral under the Agreement shall cease to exist.
Where the conciliation procedure has failed as a result of the refusal of certain creditors to participate in a conciliation agreement, the company may have recourse to a accelerated safeguard procedure.
The company can also use the standard backup procedure. If the situation worsens and is in danger cessation of payments, it must have recourse to judicial reorganization or winding-up proceedings.
Non-fulfillment of commitments under the Conciliation Agreement
The President of the Court shall be seized by one of the parties to the conciliation agreement. It may be a creditor or the company in difficulty.
If it finds that the commitments (e.g. debt rescheduling) have not been implemented, it may terminate the agreement.
Ad hoc mandate | Conciliation | |
|---|---|---|
Termination of payments | No | Not be in default of payments for more than 45 days |
Stakeholders | Ad hoc trustee appointed by the court with the agreement or at the suggestion of the head of company | Conciliator appointed by the court with the agreement or at the suggestion of the Head of company. Most often, the conciliator is a court administrator. |
Duration | No Maximum Duration | Maximum 5 months |
Cost | Freely determined by the parties | Freely determined by the parties |
Objective | Resolution of the difficulty with the assistance of a representative | Promote a friendly agreement with the main creditors |
Confidentiality | Yes | Yes, unless the agreement is approved. In this case, the existence of the agreement shall be published in the Bodac. |
Suspension of creditors' proceedings | No | No, except for creditors who have signed the conciliation agreement |
Completion of the procedure |
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Opening of conciliation for the trade and craft professions
Opening of conciliation for the liberal professions
Appointment of the conciliator
Mission of the conciliator
Recognition or approval of the agreement
Effect of the agreement established or approved
Appointment of the conciliator
Remuneration of the conciliator
Farmer-specific procedure