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Unintentional closure: court

Verified 17 June 2022 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Justice

The liquidation of the court concerns a company which is in default and whose recovery is clearly impossible. The procedure terminates the company's activity. His assets are then sold to allow the payment of different creditors. Small companies may, under certain conditions, use a lighter procedure: simplified court liquidation.

Judicial liquidation

The judicial winding-up procedure concerns companies which are termination and recovery is impossible.

The companies concerned are:

  • Micro entrepreneurs
  • EIRL: titleContentonly for the assets assigned to the professional activity
  • Individual entrepreneurs (only the professional property are concerned by the judicial winding-up)
  • Businesses

FYI  

even after radiation of the Commercial and business Register (CSR), a trader may be put into legal liquidation if at least part of his liability is of professional origin.

Judicial winding-up procedure must be requested by the individual contractor or business manager within 45 days of termination.

No request to initiate conciliation shall not have occurred during that period.

The individual director or contractor shall apply to the competent court for winding-up in accordance with his activity.

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Business

individual business

The Commercial Court shall assess whether the conditions for opening the judicial winding-up are met.

For the individual contractor, the court checks the conditions ofeligibility for judicial winding-up and a procedure overhang. It opens a judicial winding-up procedure that deals with both the business and personal debts of the individual entrepreneur.

Where the debts only arise from personal heritage the individual contractor, the commercial court, with the consent of the contractor, shall not open a judicial liquidation. He refers him to the debt overhang board.

The request to open the judicial liquidation shall be made by the Head of company.

He must complete the form n°10530 and file it with the court of commerce of the place of company.

Application for the initiation of legal proceedings (with or without professional reinstatement)

Who shall I contact

The application for the opening of judicial liquidation must be accompanied by the following documents:

  • Unique company identification number
  • Status liability and the available assets (supplemented by the list of claims for which payment is being pursued on the assets in question) and declaration of termination
  • Number of employees employed on the date of application (name, address, etc.) and the amount of turnover on the closing date of the last accounting year
  • Active and Liabilities Statement security and off-balance sheet commitment
  • Summary inventory of company assets, rights and obligations (distinguishing between those of professional and personal heritage). The waiver the protection of personal property shall also be indicated by specifying the name of the creditor concerned and the amount of the undertaking.
  • Annual accounts for the last financial year
  • Cash position (list of claims and debts) less than 1 month old
  • Certificate of honour certifying the absence of appointment of an ad hoc agent or the opening of a conciliation within 18 months prior to the request
Business

The application to initiate the judicial winding-up is filed by the director.

He must fill out the form n°10530 and file it with the court of commerce office of the company.

Application for the initiation of legal proceedings (with or without professional reinstatement)

Who shall I contact

The application for the opening of judicial liquidation must be accompanied by the following documents:

  • Unique company identification number
  • Number of employees employed on the date of application (name, address, etc.) and the amount of turnover on the closing date of the last accounting year
  • Active and Liabilities Statement security and off-balance sheet commitment
  • Summary Inventory of company Assets
  • Annual accounts for the last financial year
  • Cash position (list of claims and debts) less than 1 month old
  • Certificate of honour certifying the absence of appointment of an ad hoc agent or the opening of a conciliation within 18 months prior to the request

Handicraft activity

Individual entrepreneur

The Commercial Court shall assess whether the conditions for opening the judicial winding-up are met.

For the individual contractor, the court checks the conditions ofeligibility for judicial winding-up and a procedure overhang. It opens a judicial winding-up procedure that deals with both the business and personal debts of the individual entrepreneur.

Where the debts only arise from personal heritage the individual contractor, the commercial court, with the consent of the contractor, shall not open a judicial liquidation. He refers him to the debt overhang board.

The application to initiate the judicial winding-up is made by the Head of company.

He must complete the form n°10530 and file it with the court of commerce of the place of company.

Application for the initiation of legal proceedings (with or without professional reinstatement)

Who shall I contact

The application for the opening of judicial liquidation must be accompanied by the following documents:

  • Unique company identification number
  • Status liability and the available assets (supplemented by the list of claims for which payment is being pursued on the assets in question) and declaration of termination
  • Number of employees employed on the date of application (name, address, etc.) and the amount of turnover on the closing date of the last accounting year
  • Active and Liabilities Statement security and off-balance sheet commitment
  • Summary inventory of company assets, rights and obligations (distinguishing between those of professional and personal heritage). The waiver the protection of personal property shall also be indicated by specifying the name of the creditor concerned and the amount of the undertaking.
  • Annual accounts for the last financial year
  • Cash position (list of claims and debts) less than 1 month old
  • Certificate of honour certifying the absence of appointment of an ad hoc agent or the opening of a conciliation within 18 months prior to the request
Business

The request to open the judicial liquidation is filed by the director.

He must fill out the form n°10530 and file it with the court of commerce office of the company.

Application for the initiation of legal proceedings (with or without professional reinstatement)

Who shall I contact

The application for the opening of judicial liquidation must be accompanied by the following documents:

  • Unique company identification number
  • Number of employees employed on the date of application (name, address, etc.) and the amount of turnover on the closing date of the last accounting year
  • Active and Liabilities Statement security and off-balance sheet commitment
  • Summary Inventory of company Assets
  • Annual accounts for the last financial year
  • Cash position (list of claims and debts) less than 1 month old
  • Certificate of honour certifying the absence of appointment of an ad hoc agent or the opening of a conciliation within 18 months prior to the request

Liberal activity

Individual entrepreneur

The court shall assess whether the conditions for the opening of the judicial winding-up are met.

For the individual contractor, the court checks the conditions ofeligibility for judicial winding-up and a procedure overhang. It opens a judicial winding-up procedure that deals with both the business and personal debts of the individual entrepreneur.

Where the debts only arise from personal heritage the individual contractor, the commercial court, with the consent of the contractor, shall not open a judicial liquidation. He refers him to the debt overhang board.

The application for the opening of the judicial winding-up shall be submitted by the individual contractor.

He must complete the form n°10530 and file it with the registry of the court of the place of company.

Application for the initiation of legal proceedings (with or without professional reinstatement)

Who shall I contact

The application for the opening of judicial liquidation must be accompanied by the following documents:

  • Unique company identification number
  • Status liability and the available assets (supplemented by the list of claims for which payment is being pursued on the assets in question) and declaration of termination
  • Number of employees employed on the date of application (name, address, etc.) and the amount of turnover on the closing date of the last accounting year
  • Active and Liabilities Statement security and off-balance sheet commitment
  • Summary inventory of company assets, rights and obligations (distinguishing between those of professional and personal heritage). Acts of renunciation of the protection of personal property shall also be indicated by specifying the name of the creditor concerned and the amount of the undertaking.
  • Annual accounts for the last financial year
  • Cash position (list of claims and debts) less than 1 month old
  • Certificate of honour certifying the absence of appointment of an ad hoc agent or the opening of a conciliation within 18 months prior to the request
Business

The application to initiate the judicial winding-up is filed by the director.

He must complete the form n°10530 and file it with the registry of the court of the place of the company's head office.

Application for the initiation of legal proceedings (with or without professional reinstatement)

Who shall I contact

The application for the opening of judicial liquidation must be accompanied by the following documents:

  • Unique company identification number
  • Number of employees employed on the date of application (name, address, etc.) and the amount of turnover on the closing date of the last accounting year
  • Active and Liabilities Statement security and off-balance sheet commitment
  • Summary Inventory of company Assets
  • Annual accounts for the last financial year
  • Cash position (list of claims and debts) less than 1 month old
  • Certificate of honour certifying the absence of appointment of an ad hoc agent or the opening of a conciliation within 18 months prior to the request

Agricultural activity

Individual entrepreneur

The court shall assess whether the conditions for the opening of the judicial winding-up are met.

For the individual contractor, the court checks the conditions ofeligibility for judicial winding-up and a procedure overhang. It opens a judicial winding-up procedure that deals with both the business and personal debts of the individual entrepreneur.

Where the debts only arise from personal heritage the individual contractor, the commercial court, with the consent of the contractor, shall not open a judicial liquidation. He refers him to the debt overhang board.

The application for the opening of the judicial winding-up shall be submitted by the individual contractor.

He must complete the form n°10530 and file it with the registry of the court of the place of company.

Application for the initiation of legal proceedings (with or without professional reinstatement)

Who shall I contact

The application for the opening of judicial liquidation must be accompanied by the following documents:

  • Unique company identification number
  • Status liability and the available assets (supplemented by the list of claims for which payment is being pursued on the assets in question) and declaration of termination
  • Number of employees employed on the date of application (name, address, etc.) and the amount of turnover on the closing date of the last accounting year
  • Active and Liabilities Statement security and off-balance sheet commitment
  • Summary inventory of company assets, rights and obligations (distinguishing between those of professional and personal heritage). The waiver the protection of personal property shall also be indicated by specifying the name of the creditor concerned and the amount of the undertaking.
  • Annual accounts for the last financial year
  • Cash position (list of claims and debts) less than 1 month old
  • Certificate of honour certifying the absence of appointment of an ad hoc agent or the opening of a conciliation within 18 months prior to the request
Business

The application to initiate the judicial winding-up is filed by the director.

He must complete the form n°10530 and file it with the registry of the court of the place of the company's head office.

Application for the initiation of legal proceedings (with or without professional reinstatement)

Who shall I contact

The application for the opening of judicial liquidation must be accompanied by the following documents:

  • Unique company identification number
  • Number of employees employed on the date of application (name, address, etc.) and the amount of turnover on the closing date of the last accounting year
  • Active and Liabilities Statement security and off-balance sheet commitment
  • Summary Inventory of company Assets
  • Annual accounts for the last financial year
  • Cash position (list of claims and debts) less than 1 month old
  • Certificate of honour certifying the absence of appointment of an ad hoc agent or the opening of a conciliation within 18 months prior to the request

Where there is no conciliation in progress, the opening of the winding-up may be requested by one of the following persons:

  • Public Prosecutor
  • One of creditors company in difficulty (supplier, commercial premises owner, Urssaf)
  • Any heir to a individual business

In case of death of individual contractor (IS)who was in default of payment for the professional part of his estate, the court may be seized within 1 year from death.

FYI  

the judicial winding-up may be imposed during the period of observation of backup or judicial remedy.

If the winding-up application is accepted by the court, the court shall decide whether to initiate the winding-up and shall appoint the interveners in that proceeding.

The court orders the opening of the proceedings (the opening judgement) and shall designate a commissioner judge and a judicial liquidator.

If it exists in the company, Social and Economic Committee shall appoint a representative from among the employees of the company. This representative checks the claims resulting from the employment contracts and monitors the payment of the sums to the employees.

The opening judgement has immediate consequences for the company, its manager and its employees.

Publicity of the judgement of opening the judicial liquidation

The opening judgement shall be published by the Registrar of the Court:

  • In the register of trade and businesses (RCS) for a commercial activity or in the register of trades (RM) for a craft activity or in the register kept by the registry of the court for other activities
  • To the official bulletin of civil and commercial advertisements (Bodacc)
  • In legal ad support
Company activity and cessation of duties

In principle, judicial liquidation entails the cessation of the company's activities.

The company manager shall be removed from office and the judicial liquidator shall be responsible for managing the business.

The individual entrepreneur can no longer administer and dispose of the assets that make up his professional heritage. From the beginning of the judicial winding-up, he shall be prohibited from altering his professional assets if this results in a reduction in assets. This prohibition applies until the winding-up is closed.

However, the continuation of the activity may be authorised by the court for a maximum period of 6 months in one of the following cases:

  • The total or partial transfer of the company is possible
  • The public interest or the interest of creditors demands it

In these 2 cases, the court appoints a judicial administrator to manage the company. He will exercise the powers of the liquidator.

Warning  

When a judicial winding-up procedure is opened against an individual contractor, the a new professional activity. This is not possible if he has been subject to a judicial winding-up closure for insufficient assets or a closure of a professional recovery in the last five years.

A new professional heritage is then created. This new professional asset is not affected by the current liquidation procedure.

Appointment and assignment of liquidator

Upon initiation of the proceedings, the liquidator shall administer the company and perform the following tasks:

  • Company Management
  • Verification of claims
  • Sale of property (goods, material, immovables, right to lease,...) either as part of a global sale of the company (transfer plan) or by separate sales (the funds are then distributed among the various creditors following the rank each)
  • Termination of employment and payment of wages
  • Recovery of sums due to the company, if necessary in court

Warning  

in principle, the liquidator cannot sell the assets personal the individual contractor to pay the liability. However, upon request of the contractor and with the agreement of the judge-commissioner, the liquidator may do so if this facilitates the realisation of assets of the professional patrimony.

Appointment and Mission of the Judge-Commissioner

In the judgement which opens the judicial liquidation, the court shall appoint a judge-commissioner.

The Ombudsman is responsible for ensuring that the proceedings are conducted promptly and for protecting the interests at stake.

Following the judgement which pronounces the judicial liquidation, the company must cease its activity immediately unless the activity is permitted to continue.

Termination of employment contracts

The liquidator must implement the economic redundancy and consult the Social and Economic Committee if it exists.

The employment contracts between the employees and the company in difficulty shall be terminated within 15 days of the judgement giving the judicial winding-up or after the expiry of the authorisation to continue the activity.

This period shall be increased to 21 days where job safeguard plan (PSE) is established.

If the liquidator is obliged to set up an ESP, he must submit it to the Dreets: titleContent for validation or approval.

The Dreets shall take a decision within 4 days of the date of the last meeting of the ESC.

Claims arising from the breach of the employment contract (wages, premiums, allowances, contributions and social contributions...) are covered by the contribution to the wage guarantee scheme (AGS).

Termination of individual proceedings

The opening judgement prevents all legal proceedings against the company to obtain the payment of an amount of money: it could be a share for rent or a sale price.

Any legal action to terminate a default contract is also suspended or prohibited.

Interest rate stop

The opening judgement sets the rate of interest (conventional, legal, etc.) and increases, except for interest on loans over 1 year old.

Settlement of creditors

Within 2 months of the publication of the opening judgement at Bodacc: titleContent, creditors declare claims to the liquidator.

All debts of the company for the maintenance of the activity after the opening of the procedure must be paid immediately.

The court shall close the liquidation in any of the following cases:

  • When all the creditors are uninterested (exceptional situation), that is to say the company has been able to repay all the creditors and still has money that it will distribute to the partners
  • When the company runs out of assets - that is, the company does not have enough money to repay all the claims

Once the liquidation has been completed, individual proceedings against the liquidating company by creditors are no longer possible.

However, in the event of tax evasion, asset concealment or personal or criminal sanctions against the individual manager or entrepreneur, creditors regain their right to sue the company in liquidation.

Simplified judicial settlement

The simplified court settlement applies where the company does not own any real estate (i.e., in the absence of land, a building, for example). However, the individual entrepreneur owner of his principal residencee may also benefit from the simplified court settlement.

For businesses, other conditions must be met.

The court has the possibility to revert to the common rules of judicial liquidation at any time if the liquidator discovers the existence of a real estate asset (other than the principal residence).

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Micro-entrepreneur

He shall benefit from the opening of the simplified court settlement if his assets do not include any real estate.

individual business

The individual contractor shall benefit from the opening of the simplified court settlement provided that its assets do not include real estate. The individual contractor who owns his principal residence may benefit from the simplified court winding-up procedure.

Business

A business shall benefit from the simplified court settlement when the following 3 conditions are met:

  • The asset has no real estate.
  • The number of employees in the 6 months preceding the opening of the simplified winding-up procedure shall not exceed 5.
  • Revenue excluding taxes is less than or equal to €750 000.

The application for the opening of the simplified winding-up shall be submitted by the individual director or contractor to the court office of the company's registered office, depending on the nature of the activity.

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Commercial or craft activity

individual business

The court shall assess whether the conditions for the opening of the judicial winding-up are met.

If the individual contractor meets the conditions for eligibility for a judicial liquidation and a procedure overhang, court opens judicial liquidation which deals with the personal and professional debts of the individual entrepreneur.

Where the debts only arise from personal heritage the contractor, the commercial court, with the consent of the contractor, does not open a judicial liquidation and refers the contractor to the debt overhang board.

The application for the opening of the judicial winding-up shall be submitted by the individual contractor.

He must fill out the form n°10530 and file it with the court of commerce office of the company.

Application for the initiation of legal proceedings (with or without professional reinstatement)

Who shall I contact

The application for the opening of judicial liquidation must be accompanied by the following documents:

  • Unique company identification number
  • Status liability and the available assets (supplemented by the list of claims for which payment is being pursued on the assets in question) and declaration of termination
  • Number of employees employed on the date of application (name, address, etc.) and the amount of turnover on the closing date of the last accounting year
  • Active and Liabilities Statement security and off-balance sheet commitment
  • Summary inventory of company assets, rights and obligations (distinguishing between those of professional and personal heritage). Acts of renunciation of the protection of personal property shall also be indicated by specifying the name of the creditor concerned and the amount of the undertaking.
  • Annual accounts for the last financial year
  • Cash position (list of claims and debts) less than 1 month old
  • Certificate of honour certifying the absence of appointment of an ad hoc agent or the opening of a conciliation within 18 months prior to the request
Business

The application to initiate the judicial winding-up is filed by the director.

He must fill out the form n°10530 and file it with the court of commerce office of the company.

Application for the initiation of legal proceedings (with or without professional reinstatement)

Who shall I contact

The request for opening of the liquidation shall be accompanied by the following documents:

  • Unique company identification number
  • Number of employees employed on the date of application (name, address, etc.) and the amount of turnover on the closing date of the last accounting year
  • Active and Liabilities Statement security and off-balance sheet commitment
  • Summary Inventory of company Assets
  • Annual accounts for the last financial year
  • Cash position (list of claims and debts) less than 1 month old
  • Certificate of honour certifying the absence of appointment of an ad hoc agent or the opening of a conciliation within 18 months prior to the request

Liberal or agricultural activity

individual business

The court shall assess whether the conditions for the opening of the judicial winding-up are met.

If the individual contractor meets the conditions for eligibility for a judicial liquidation and a procedure overhang, court opens judicial liquidation which deals with the personal and professional debts of the individual entrepreneur.

Where the debts only arise from personal heritage the contractor, the court, with the consent of the contractor, does not open a judicial liquidation and refers the contractor to the debt overhang board.

The application for the opening of the judicial winding-up shall be submitted by the individual contractor.

He must complete the form n°10530 and file it with the registry of the court of the place of the company's head office.

Application for the initiation of legal proceedings (with or without professional reinstatement)

Who shall I contact

The application for the opening of judicial liquidation must be accompanied by the following documents:

  • Unique company identification number
  • Status liability and the available assets (supplemented by the list of claims for which payment is being pursued on the assets in question) and declaration of termination
  • Number of employees employed on the date of application (name, address, etc.) and the amount of turnover on the closing date of the last accounting year
  • Active and Liabilities Statement security and off-balance sheet commitment
  • Summary inventory of company assets, rights and obligations (distinguishing between those of professional and personal heritage). The waiver the protection of personal property shall also be indicated by specifying the name of the creditor concerned and the amount of the undertaking.
  • Annual accounts for the last financial year
  • Cash position (list of claims and debts) less than 1 month old
  • Certificate of honour certifying the absence of appointment of an ad hoc agent or the opening of a conciliation within 18 months prior to the request
Business

The application to initiate the judicial winding-up is filed by the director.

He must complete the form n°10530 and file it with the registry of the court of the place of the company's head office.

Application for the initiation of legal proceedings (with or without professional reinstatement)

Who shall I contact

The application for the opening of judicial liquidation must be accompanied by the following documents:

  • Unique company identification number
  • Number of employees employed on the date of application (name, address, etc.) and the amount of turnover on the closing date of the last accounting year
  • Active and Liabilities Statement security and off-balance sheet commitment
  • Summary Inventory of company Assets
  • Annual accounts for the last financial year
  • Cash position (list of claims and debts) less than 1 month old
  • Certificate of honour certifying the absence of appointment of an ad hoc agent or the opening of a conciliation within 18 months prior to the request

In practice, claims are not checked as a whole.

The only procedure is to verify the claims of wages and those that can be settled with the available assets (according to their rank).

The liquidator shall sell the movable property within 4 months of the decision ordering the simplified winding-up procedure.

This occurs in one of the following ways:

  • Over-the-counter (free sale with the agreement of the seller and the buyer)
  • Public auctions

After the verification of claims and the sale of assets, the liquidator shall include his allocation proposals on the statement of claims.

It assesses the amount of predictable legal costs.

The statement of claims is thus completed and deposited in the court registry.

The statement of receivables is only published if the sums to be distributed allow payment to all creditors.

If the amounts to be distributed only allow the payment of the preferred creditors (i.e. those with security or the Treasury for example), the statement of claims is not published.

Any interested party may take note of this statement of claims and lodge a complaint before the Judge-Commissioner.

The liquidator then distributes the sums according to the proposals of the liquidator or the decision of the judge-commissioner.

The simplified judicial winding-up shall be closed at the latest within 6 months of the initiation of the simplified judicial winding-up procedure.

However, the proceedings shall be closed within 1 year where the two conditions are met:

  • The company employs more than 1 employee
  • Revenue excluding taxes is greater than €300 000

In all cases, the court may extend the proceedings for 3 months.

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