Bankruptcy Law

The conciliation may fail either because no agreement was reached or because the agreement reached or approved was not implemented.

If no agreement can be reached, the conciliator shall submit a report to the president of the court without delay. The president of the court terminates the conciliator's mission and the conciliation procedure . The decision, which is notified to the debtor and communicated to the public prosecutor and the conciliator, is not subject to remedies .

The president of the court may also, if he finds that the commitments made have not been fulfilled, order the termination of the agreement. The same sanction can be pronounced by the court in the event of non-performance of an approved agreement, at the request of one of the parties. On the other hand, a third party to the agreement, such as the social and economic committee of the company in difficulty, does not have the right to refer the matter to the president of the court for resolution. However, it may bring the matter before the interim judge ("juge des référés") on the basis of tortious liability for the disturbance caused to it by a creditor's failure to perform its undertaking to make new contributions . The court who grants the application for rescission may also declare the lapse of any grace period granted to the debtor . The application for resolution of the agreement recorded or approved is made by writ of summons. All the parties to the agreement as well as the creditors against whom deadlines have been imposed are called into question by the petitioner, if necessary on the order of the court. The judgment rendered is communicated to the public prosecutor and notified by the court registrar to the creditors who have been granted grace periods. The decision pronouncing the resolution of the approved agreement is published in the Bulletin officiel des annonces civiles et commerciales and in a legal notice in the place where the debtor has his jurisdiction .

The opening of safeguarding procedure, receivership or liquidation proceedings automatically terminates the agreement recorded or approved . In this case, the creditors recover all of their claims and securities, less the sums collected . Under this rule, a creditor who has agreed to suspend its proceedings against the debtor's guarantor under the agreement may, in the event of the opening of insolvency proceedings, resume its actions against him . Similarly, a bank that has granted time-limits in return for an increase in the interest rate retains the benefit of the increased rate since the expression “puts an end to” referred to in Article L. 611-12 of the Commercial Code does not imply retroactivity . However, the Court of Cassation later held that the opening of insolvency proceedings rendered the agreement null and void. Consequently, if the creditor who had granted the debtor deadlines or debt remissions under the agreement recovered all of the claims and securities that guaranteed them, he could not retain the benefit of the new securities obtained under the agreement . In order to counter the demotivating effect of this solution for creditors, the ordinance of 15 September 2021  created a new Article L. 611-10-4 which now provides that the lapse or resolution of the amicable agreement does not deprive of effect the clauses whose purpose is to organize the consequences.

Ordinance No 2021-1193 of 15 September 2021 amending Book VI of the Commercial Code, OJ 16 September 2021.

CA Riom, 29 May 2019, LawLex202100005571JBJ.

CA Rouen, 18 October 2018, LawLex202100005573JBJ.

CA Rennes, 15 October 2019, LawLex202100003616JBJ.

Court of Cassation, 25 September 2019, LawLex202100001244JBJ; 21 October 2020, LawLex202100005570JBJ. See already, on the classification of caducity, CA Bordeaux, 24 September 2014, LawLex202100002791JBJ, which emphasized that the non-payment on the due date of the debts resulting from an approved conciliation agreement authorizes the creditor to declare the entirety of its claim to the judicial reorganization proceedings subsequently opened, due to the caducity of the waivers of claim granted.

35. Failed Conciliation