Bankruptcy Law

The successive reforms of the law on the prevention of business difficulties  have brought the effects of recorded or homologated agreements closer together, to the point where the value of the distinction tends to diminish .

Like the decision establishing the agreement , the decision homologating the agreement puts an end to the conciliation procedure .

Whether the agreement is recorded or approved, the signatory creditors are subject to the rule of the interruption of legal actions or individual lawsuits, both on the movable and immovable property of the debtor. When a schedule has been established, both creditors and debtor must adhere to it. Notwithstanding the provisions of Article 1343-2 of the Civil Code, interest accruing on the claims covered by the agreement may not accrue. In return for the suspension of proceedings imposed on the creditors, the agreement interrupts, during its period of performance, the time-limits imposed on them on pain of forfeiture or cancellation of the rights relating to the claims mentioned in the agreement . If, during the performance of the agreement, the debtor is put in default or sued by one of the creditors called to the conciliation with the aim of obtaining payment of a claim that was not the subject of the agreement, the court who opened the proceedings may, at the request of the debtor and after having heard, if necessary, the observations of the agent for the execution of the agreement, postpone or stagger the payment of the sums due, up to a maximum of two years .

Financial assistance granted in the course of conciliation proceedings is also secured. Thus, financial aid granted to a company in the context of a conciliation procedure cannot subsequently be denounced by the debtor in the context of a liability action for unreasonable support .

Under the terms of Article L. 611-10-2(1), persons who are co-obligated or who have granted a personal guarantee or assigned or transferred an asset as security may avail themselves of the deadlines and remissions granted by the creditors who are parties to the conciliation agreement.

If the matter is referred to the president of the court by one of the parties to an agreement that has been recorded or approved, the president of the court may, if he finds that the undertakings given have not been fulfilled, order that the agreement be rescinded. The same sanction applies to the non-performance of an approved agreement. All parties to the agreement as well as the creditors on whom payment deadlines have been imposed must have been challenged by the claimant, if necessary on the order of the court. The president of the court or the court that decides on the resolution of the agreement may also declare the forfeiture of any payment period granted to the debtor pursuant to the fifth paragraph of Article L. 611-7 or the second paragraph of Article L. 611-10-1 . The judgment is communicated to the public prosecutor and notified to the creditors. It is then published as provided for in Article R. 611-43 .

Since Ordinance 2021-1193 of 15 September 2021, the expiry or resolution of the amicable agreement cannot render ineffective the clauses whose purpose is to organize the consequences of it .

Finally, the opening of safeguard, receivership or court-supervised liquidation (liquidation judiciaire) proceedings automatically terminates the agreement recorded or approved in accordance with Article L. 611-8. In this case, the creditors recover all their claims and securities, less the sums collected, without harm to the conciliation privilege provided for in Article L. 611-11 .

Law No 2005-845, 26 July 2005; Ordinance No 2008-1345, 18 December 2008; Ordinance No 2014-326, 12 March 2014.

Of course, there are two major differences: the total absence of publicity attached to the recorded agreement, which makes it more attractive both for the debtor and for creditors, in particular credit institutions that have granted debt waivers (V. I), and the conciliation privilege that benefits “new money” contributors in the context of approved agreements (V. III).

CA Pau, 29 November 2011, LawLex202100005590JBJ.

Commercial Code, Art. L. 611-10-4. The purpose of this new provision is to counteract a criticized solution adopted by the Court of Cassation in two recent decisions, which had held that the nullity of the agreement extended to all of its provisions, see Cass. com., 25 September 2019, LawLex202100001244JBJ ; 21 October 2020, LawLex202100005570JBJ.

31. Similarities in procedures