Bankruptcy Law

When the proposed plan concerns deadlines and discounts, Article L. 626-5 of the Commercial Code requires the legal representative to obtain, individually or collectively, the agreement of each creditor who has declared his claim, in accordance with Article L. 622-24. On the other hand, if the proposal concerns a conversion into securities giving or capable of giving access to capital, the legal r …

Consultation with creditors

When the proposed plan concerns deadlines and discounts, Article L. 626-5 of the Commercial Code requires the legal representative to obtain, individually or collectively, the agreement of each creditor who has declared his claim, in accordance with Article L. 622-24. On the other hand, if the proposal concerns a conversion into securities giving or capable of giving access to capital, the legal representative may only obtain the agreement of the declaring creditors individually, and in writing. The court may not approve the plan presented by the debtor without verifying whether the creditors' representative has obtained the agreement of each creditor who has declared his or her claim, either individually or collectively, on the proposed deadlines and discounts .

Article R. 626-7 of the Commercial Code requires that the proposals for the payment of debts be communicated by registered letter with acknowledgement of receipt to each creditor consulted who has declared his claim. The letter sent to the creditors must specify the form chosen for the consultation and include a statement of the active and passive situation with a breakdown of the privileged and unsecured liabilities, all the proposals relating to the payment of debts and an indication of the guarantees offered and the opinion of the legal representative as well as of the auditors if they have been appointed. In the absence of these elements, the deadline for response cannot run .

In case of individual consultation, the letter shall contain a reproduction of the provisions of the first two sentences of the second paragraph of Article L. 626-5 . In case of collective consultation, the creditors are convened to an assembly held under the chairmanship of the legal representative during which the latter gives them a report on the state of the procedure as well as on the conditions of the continuation of the debtor's activity since its opening and collects their possible agreement in writing on the proposals relating to deadlines and remissions . On the other hand, the creditors do not have to be consulted again following the proposals made by the debtor in her appeal submissions when proposals by the representative or the receiver relating to payment deadlines and debt remissions with a view to the continuation plan of the company have been submitted to them . A creditor who has refused the deadlines and remissions proposed by the debtor does not have to be consulted on the uniform payment deadlines, which it is up to the court alone to impose on him alone .

The law and case law identify cases of exemption from consultation with creditors. Pursuant to Article L. 626-5(4) the legal representative is not required to consult creditors for whom the draft plan does not modify the terms of payment or provides for full payment in cash as soon as the plan is approved or as soon as their claims are admitted . The Court of Cassation also considers that the consultation of a creditor concerning a debt remission provided for in the context of the preparation of a plan is not compulsory if it does not concern him . Moreover, according to case law, consultation of the creditor is only necessary when the court is considering the adoption of the continuation plan and not when it is rejected by the court from the outset . The legal representative is exempted from consulting the creditors when the proposed continuation plan does not take into account all of the debtor company's liabilities, is based on an unrealistic increase in turnover and consequently appears to be unfeasible . Similarly, a debtor who proposes to sell the real estate that constitutes his only asset in order to pay off his liabilities, must be considered as unable to propose a continuation plan, so that there is no need to consult the creditors . However, where the creditors have not been consulted on the proposals contained in the plan for the continuation of the business, no decision can be taken on the plan .

Cass. com., 22 May 2007, LawLex202200006042JBJ (RJ).

Cass. com., 14 November 2019, LawLex202100001735JBJ (S).

Cass. com., 4 January 2000, LawLex202200004104JBJ (RJ).

CA Paris, 22 March 1988, LawLex202200004077JBJ (RJ).

C. com. Law 626-5(2): “Where the proposal concerns deadlines and discounts, the legal representative shall obtain, individually or collectively, the agreement of each creditor who has declared his claim in accordance with Article L. 622-24. In the event of written consultation, failure to reply within thirty days of receipt of the letter from the legal representative shall be deemed to constitute acceptance [...]”.

Cass. com., 10 July 1990, LawLex202200004073JBJ (RJ); 6 February 1996, LawLex202200004106JBJ (RJ).

Cass. com., 6 February 1996, cited above.

See for an application, CA Lyon, 13 May 2015, LawLex202100005316JBJ (RJ).

Cass. com., 26 March 2013, LawLex202100003104JBJ (RJ).

CA Versailles, 20 January 1994, LawLex202100005317JBJ (RJ).

Cass. com., 25 March 1997, LawLex202200004083JBJ (RJ).

Bankruptcy Law

247. Consultation with creditors

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

247. Consultation with creditors

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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