Bankruptcy Law

The purpose of the receivership procedure is to enable the business to continue trading, maintain employment and pay off its debts . In view of this objective, and in order to protect the debtor against a form of expropriation of his business, the court must, in the presence of several options and as far as possible, try to give precedence to the adoption of a receivership plan over that of a disp …

No receivership plan

The purpose of the receivership procedure is to enable the business to continue trading, maintain employment and pay off its debts . In view of this objective, and in order to protect the debtor against a form of expropriation of his business, the court must, in the presence of several options and as far as possible, try to give precedence to the adoption of a receivership plan over that of a disposal plan.

Pursuant to Article L. 631-22, as amended by the Ordinance of 12 March 2014 , the court may only order the total or partial sale of the business if the proposed plan or plans appear manifestly unsuitable for the receivership of the business or if no plan is presented. Accordingly, the court may only examine takeover bids in the context of a sale plan after rejecting the proposed continuation plan on the grounds that there is no serious possibility of receivership .

As the absence of serious possibilities of receivership has become the sole criterion for deciding between plans, the old solutions, which allowed the advantages and disadvantages of the two solutions to be weighed up for the company or its creditors  or made the adoption of a disposal plan subject to the debtor's inability to ensure the receivership of his company himself  seem to have to be abandoned.

If it is not possible to adopt a receivership plan by continuation or disposal, the court may order the court-supervised liquidation and terminate the observation period and the receiver's assignment, subject to the provisions of Article L. 641-10 . Thus, if the debtor's continuation plan does not appear to be serious, the court may order the liquidation without investigating, on its own initiative, whether a disposal plan is possible . However, the court has sovereign discretion to decide that an offer to sell is more advantageous for jobs and creditors than liquidation by order of the court .

Ordinance 2014-326 of 12 March 2014 concerning the reform of the prevention of difficulties for businesses and insolvency procedures, OJ 14 March 2014.

Cass. com., 4 November 2014, LawLex202100001134JBJ (RJ) ; 22 February 2017, LawLex202100005368JBJ (RJ). See also, CA Paris, 26 July 2013, LawLex202200009990JBJ (RJ).

Cass. com. 10 July 1990, LawLex202200004073JBJ (RJ), holding that the court, which was not bound by the opinions expressed by the legal representative or the commissioner for the enforcement of the plan, could decide that the receivership of a company would be better ensured by the sale plan than by the continuation plan; 9 June 1998, LawLex202200010605JBJ, holding that the sale plan may be preferable to the continuation plan, which allows creditors to be paid up to a certain amount, but without any real guarantee, since the sale offers them a sum that is admittedly half the amount, but without any delay or uncertainty.

Cass. com. 3 May 2016, LawLex202100002057JBJ (RJ), holding that the sale of a debtor company may be ordered before the end of the observation period, if it is found that it is itself unable to ensure its receivership.

Cass. com., 25 June 1991, LawLex202200010050JBJ (RJ).

Cass. com., 2 February 1993, LawLex202200010086JBJ (RJ).

Bankruptcy Law

591. No receivership plan

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591. No receivership plan

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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