Bankruptcy Law

Amicably dealing with a company's difficulties consists of negotiating one or more agreements with its creditors in order to improve its situation. Indeed, as the saying goes, a bad settlement is better than a good trial.
When the director becomes aware that his company is experiencing difficulties that he cannot overcome alone, decisions must be taken to avoid compromising the continuity of the b …

Amicable treatment of difficulties

Amicably dealing with a company's difficulties consists of negotiating one or more agreements with its creditors in order to improve its situation. Indeed, as the saying goes, a bad settlement is better than a good trial.

When the director becomes aware that his company is experiencing difficulties that he cannot overcome alone, decisions must be taken to avoid compromising the continuity of the business. However, the opening of a collective proceeding presents constraints linked to its lack of confidentiality and its possible unsuitability to the situation when the difficulties experienced can be resolved quickly and without the need to place the company under the control of the court, by dispossessing the manager of all or part of his powers.

Aware of these disadvantages, courts have allowed companies to have recourse to the assistance of a person, the ad hoc trustee, whose mission is to negotiate with creditors an agreement, acceptable to all creditors, aimed at repaying existing and/or future debts. The practice of the ad hoc mandate has intensified to such an extent that the legislator finally enshrined it in the law of 10 June 1994 . The procedure was then only slightly modified . 

As an alternative to or even subsequent to an ad hoc mandate, the law offers companies the opportunity to resort to conciliation, which replaces the former amicable settlement (règlement amiable) of the law of 1 March 1984 . The change of name of the procedure was accompanied by a modification of its conditions of access. Originally, companies could only apply for an amicable settlement when they were not in a state of suspension of payments, but since the so-called Safeguard Law (Loi de Sauvegarde) , they can now apply for a conciliation procedure when they have not been in a state of suspension of payments for more than forty-five days. The legislator has subsequently  brought the effects of the recorded and approved agreement closer together, which has made the conciliation procedure more attractive. Finally, the 2014 reform  facilitated the use of this procedure, encouraged creditors to participate more actively in the negotiations and opened up the possibility of seeking a buyer with a view to a sale. The objective of conciliation is not fundamentally different from that of the ad hoc mandate: the purpose of both procedures is to reach an agreement between the debtor and its creditors to put an end to its difficulties.

L. 94-475 of 10 June 1994 on the prevention and treatment of business difficulties, OJ 11 June 1994.

Ordinance 2008-1345 of 18 December 2008 reforming the law of companies in difficulty, OJ 19 December 2018.

L. 84-148 of 1 March 1984 on the prevention and amicable settlement of business difficulties, OJ 2 March 1984.

L. 2005-845 of 26 July 2005, OJ 27 July (known as "Loi de sauvegarde des entreprises").

Ordinance 2008-1345 of 18 December 2008, cited above.

Ordinance 2014-326 of 12 March 2014 reforming the prevention of business difficulties and collective procedures, OJ 14 March 2014.

Bankruptcy Law

18. Amicable treatment of difficulties

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Les notions juridiques connexes

18. Amicable treatment of difficulties

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Sous parties

Les notions juridiques connexes

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