PRACTICAL GUIDE: WHAT IS CONCILIATION (FRENCH AMICABLE PROCEEDINGS)?

Ø A preventive proceeding (Open to any business carrying out a commercial or craft activity and which has not been in a state of cessation of payments for more than 45 days) *.

Ø A proactive proceeding (Only the director of the business in difficulty may request its opening and has the possibility of proposing the name of the conciliator who will be appointed to assist them).

Ø A management-led proceeding (The debtor is in no way divested of the administration and disposal of its assets. A conciliator will be appointed, at the debtor's request, by the President of the Court with the task of facilitating the conclusion, between the debtor and its main creditors, of an amicable agreement intended to put an end to the difficulties of the business).

Ø A confidential proceeding (The opening of conciliation (French amicable proceedings) is not subject to any publication, and any person involved in the proceeding who undermines its confidentiality could be subject to criminal sanctions. Moreover, the debtor is not required to inform the employee representative bodies of the opening of the proceeding.).

Ø A customisable proceeding (The business in difficulty chooses only those creditors and partners with whom it wishes to negotiate in order to obtain payment deadlines or debt write-offs).

Ø A participatory proceeding (The financial administrations, the social security bodies and the institutions managing the unemployment insurance scheme may “agree to waive all or part of the debtor's debts under conditions similar to those which a private economic operator placed in the same situation would grant it under normal market conditions”).

Ø A protective proceeding (During the proceeding, a debtor formally notified or sued by a creditor may, under certain conditions, ask the judge who opened the proceeding to apply Article 1343-5 of the Civil Code, which provides for the obtaining of a maximum period of 24 months to settle the debt).

Ø A structured proceeding (The conciliator is appointed for a maximum period of four months, renewable for one further month at most.) **

Need to go further ❓

❓ What is an agreement recorded in conciliation (French amicable proceedings)? A court-approved agreement? What is their enforceability? What is an agent in charge of enforcing the agreement?

❓ Within the framework of conciliation (French amicable proceedings), is it possible to organise a partial or total sale of the business that could be implemented, where applicable, within the framework of subsequent safeguard, judicial reorganisation or judicial liquidation proceedings?

❓ What is the cost of conciliation (French amicable proceedings)?

❓ Does the court-approved agreement make it possible to lift the prohibition on issuing cheques?

❓ Can a clause of a contract modify the conditions for continuing an ongoing contract by reducing the rights or aggravating the obligations of the debtor solely on account of the opening of conciliation (French amicable proceedings)?

NB* : Pursuant to the provisions of the Order of 27 March 2020 adapting the rules relating to business difficulties, the state of cessation of payments is assessed in light of the debtor's situation as at 12 March 2020.

NB** : Pursuant to the provisions of the Order of 27 March 2020 adapting the rules relating to business difficulties, the statutory duration of conciliation (French amicable proceedings) is extended by operation of law by a period equivalent to that of the state of public health emergency plus three months. This measure is necessary in view of the practical difficulty of conducting negotiations with creditors and taking operational decisions during the current lockdown period.

In addition, the Order provides that the legal provisions imposing a three-month waiting period to open new conciliation (French amicable proceedings) are not applicable until 24 August 2020 (at least). It will therefore be possible, during this period, to carry out several conciliation proceedings in succession.

🤝 SAINT-LOUIS AVOCATS is at your disposal on +33 (0)1 44 32 07 00 / contact@saintlouisavocats.com to assist you in connection with the difficulties faced by your company in these unprecedented times.