Bankruptcy Law

Article L. 611-4 of the Commercial Code makes the benefit of the conciliation procedure subject to two conditions: one relates to the debtor's qualities, the other to his legal, economic or financial situation.

Indeed, conciliation proceedings before the Commercial Court are restricted to debtors who carry on a commercial or craft activity , regardless of the form or size of the business . Article L. 611-5 adds that these procedures are also available to legal persons under private law  and to natural persons who exercise an independent professional activity, including a liberal profession subject to a legislative or regulatory status or whose title is protected . In this case, the Judicial Court has jurisdiction and its president exercises the same powers as those attributed to the president of the Commercial Court. The notion of self-employed activity means work carried out by a person in his own name and for his own account, which excludes natural persons who work in the name and for the account of others, such as employees and company representatives, if any. Also excluded from the conciliation procedure are legal persons engaged in agricultural activities , syndicates of co-owners , partnerships , legal persons under public law, private individuals  and unincorporated groups under private law .

In addition, Article L. 611-4 requires that the debtor must be in legal, economic or financial difficulty, whether actual or foreseeable, and must not have been in a state of cessation of payments for more than forty-five days . The drafting of the text is sufficiently broad to take into consideration a wide variety of situations and difficulties. A situation that is sufficiently alarming but not definitively compromised must lead the court to grant the debtor's request . The mere fact that the difficulties have existed for a long time and that the debtor is not in an emergency situation is not sufficient to constitute bad faith . Similarly, the fact that the amount of the debtor's tax debts was only revealed at the time of the request for conciliation does not demonstrate bad faith, since the recourse to this procedure reflects the debtor's willingness to pay his debts by seeking an agreement for payment in instalments . Moreover, the requirement that the debtor has been in a state of cessation of payments for less than 45 days means that the procedure can be opened in the presence of such a state. Therefore, a conciliator cannot be accused of not having reported the debtor's state of cessation of payments and of having waited until the end of his mission to request the opening of collective proceedings . On the other hand, a debtor who is in a state of cessation of payments on the day the Court of Appeal rules cannot request the opening of conciliation proceedings on appeal, which presupposes the absence of this state for more than 45 days .

See, for an artisan, CA Aix-en-Provence, 29 February 2008, LawLex202100005591JBJ.

Before the law of 10 June 1994, the conciliation procedure only applied to companies that kept provisional accounts, i.e. to those that reached a double threshold in terms of workforce (300 employees) and turnover (approximately 18.3 million euros).

CA Bourges, 21 February 2019, LawLex202100005575JBJ.

CA Rennes, 27 October 2020, LawLex202100005569JBJ.

CA Angers, 20 May 2014, LawLex202100005584JBJ.

CA Aix-en-Provence, 13 November 2014, LawLex202100005582JBJ.

Conciliation has been open to these people since the law of 26 July 2005.

Commercial Code, Art. L. 611-5(2). These benefit from a specific procedure of amicable settlement, governed by Articles L. 351-1 to L. 351-7 of the Rural and Maritime Fishing Code, which we will not present.

Monetary and Financial Code, Art. L. 214-162-1.

Joint ventures, de facto companies, companies in formation, joint ownership or groups of companies.

CA Toulouse, 10 May 2007, LawLex202100003597JBJ.

24. Activity and status of the company