Bankruptcy Law

In order to avoid late filings of declarations of cessation of payments but also to guarantee the information of third parties , the legislator relies on various mechanisms and in particular accounting documentation (balance sheet, profit and loss account and annex) , which has the advantage of giving a faithful account of the economic and financial situation of a company and favors the detection, …

Cost accounting and forecasting

In order to avoid late filings of declarations of cessation of payments but also to guarantee the information of third parties , the legislator relies on various mechanisms and in particular accounting documentation (balance sheet, profit and loss account and annex) , which has the advantage of giving a faithful account of the economic and financial situation of a company and favors the detection, at a very early stage, of its economic, legal and/or financial difficulties.

Traders  are in particular required to draw up accounting documentation, but also, if certain thresholds  are exceeded, non-trading legal entities that carry out an economic activity  and associations .

However, an analysis of the accounting documentation alone cannot precisely identify the difficulties that the company may face and thus avoid its bankruptcy, since it only traces past flows. Aware of this difficulty, the legislator requires certain companies to establish, in addition, a so-called “forecast”  information.

Forecasting information enables the managers of a company to anticipate future difficulties and to implement one or more exit solutions. Commercial companies , non-trading legal entities carrying on an economic activity (non-trading companies and associations) , excluding sole proprietors and unincorporated companies whose number of employees or sales do not reach the alternative thresholds set by law , are required to prepare forecasted accounts. When these thresholds are exceeded, the documents  that make up the projected accounts must be drawn up by the board of directors, the management board or the managers, as the case may be.

The projected income statement, which summarizes all foreseeable income and expenses, is drawn up annually, at the latest by the end of the fourth month following the beginning of the current fiscal year. It is revised within four months of the beginning of the second half of the fiscal year , in accordance with the rules set forth in Article R. 232-5 of the Commercial Code . The projected financing plan summarizes all financial requirements and the resources needed to meet them. It is drawn up in accordance with Articles R. 232-3 and R. 232-5 of the Commercial Code.

The projected income statement and financing plan are analyzed in written reports, which describe the accounting policies, methods used and assumptions made, and justify their relevance and consistency . These reports on the development of the company's situation are submitted to the general meeting of shareholders and are drawn up by the board of directors, the management board or the manager , as appropriate.

The forecast documents and explanatory reports are communicated, within eight days of their preparation, to the statutory auditor, who may formulate his observations  in a report, to the supervisory board and, where appropriate, to the social and economic committee . In the event of non-compliance with the provisions of Article L. 232-2 of the Commercial Code  or if the information provided by the manager, the board of directors or the management board calls for observations on the part of the statutory auditor, the latter shall inform the aforementioned bodies  of these observations in a report. This report must be brought to the attention of the next general meeting in the case of a public limited company . In other types of companies, the auditor may ask the managers to send his report to the partners .

The Commercial Code does not provide for any specific sanction against managers who fail to prepare forecasting documents. However, such a failure may constitute a mismanagement for which the director may be held accountable.

See also Chapter 2, The Role of Legal Publicity.

Situation of the realizable and available assets, excluding operating values, and of the current liabilities, a provisional income statement, a financing table together with the annual balance sheet and a provisional financing plan.

Presentation rules and methods used to prepare the documents mentioned in Article R. 232-3 may not be changed from one period to the next without justification in the reports mentioned in Article R. 232-4. These reports shall describe the impact of these changes.

The items in the cash flow statement, the projected financing plan and the projected income statement shall include an indication of the figure relating to the corresponding item for the previous financial year.

The items of the situation of the realizable and available assets, excluding operating values, and of the current liabilities include the figures relating to the corresponding items of the two previous semesters.

The documents mentioned in Article R. 232-3 show, each insofar as it is concerned, the company's cash position, its projected results and its means and forecasts of financing. If necessary, additional information is provided to enable the data contained therein to be reconciled with the annual financial statements.

The projected income statement may include one or more variants when justified by particular circumstances.

Commercial Code Art. L. 232-3 for public limited companies and Art. L. 232-4 for companies other than public limited companies.

Commercial Code, Art. L. 232-3, Art. L. 232-4 and Art. R. 232-6.

Commercial Code, Art. L. 232-2: “In commercial companies which meet one of the criteria defined by decree of the Conseil d'Etat and which are based on the number of employees or turnover, possibly taking into account the nature of the activity, the board of directors, the management board or the managers are required to draw up a statement of realisable and disposable assets, excluding operating assets, and of current liabilities, a provisional profit and loss account, a cash flow statement at the same time as the annual balance sheet, and a provisional financing plan”.

Commercial Code, Art. L. 123-12 (SARL, EURL, SA, SAS, SCA, SNC whose partners are SARLs, SAs, SASs or SCAs, and SELs, SEs).

Commercial Code, Art. L. 232-4(2) and R. 232-7(2): “The managers shall make this communication within eight days of receiving the report”.

Commercial Code, Art. R. 612-1 (non-trading legal entities under private law with an economic activity that meet two of the following three thresholds: 50 employees, 3.1 million euros in sales, a balance sheet of 1.55 million euros) and D. 612-5 (associations receiving subsidies of up to 153,000 euros).

GUYON, L'information prévisionnelle, JCP E 1985, I, 14608.

Commercial Code, Art. L. 232-2 and Art. R. 232-2 (commercial companies: 300 employees or more or whose net turnover at the same time is equal to or greater than 18 million euros); Art. R. 612-3 (non-trading private legal entities with an economic activity: 300 employees or more or whose turnover excluding taxes or resources is equal to or greater than 18 million euros).

Bankruptcy Law

9. Cost accounting and forecasting

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise

Les notions juridiques connexes

9. Cost accounting and forecasting

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise