Bankruptcy Law

In the absence of an ongoing conciliation procedure, Article L. 640-5 of the Commercial Code allows the public prosecutor to petition the court to initiate a court-supervised liquidation procedure. The public prosecutor is informed of the company's difficulties from several sources.

The members of the social and economic committee may inform the committee and the president of the court of any fact revealing the debtor's cessation of payments . In addition, when the president of the court is informed of facts that indicate that the debtor is in a state of cessation of payments, Article L. 640-3-1 of the Commercial Code allows him to inform the public prosecutor by means of a note setting out the facts that justify referring the matter to the court . On the other hand, where the creditor who initiated the application to open an insolvency procedure has withdrawn its claim and its action, the court may not order an investigation into the debtor's financial situation solely on the basis of oral submissions by the public prosecutor, which do not constitute a referral on application in accordance with Article R. 631-4 of the Commercial Code .

Pursuant to Article R. 631-4 , the public prosecutor's request must state the facts on which its application is based. The president of the court must arrange for the court registrar to summon the debtor by registered letter with acknowledgement of receipt to appear before the court within the time-limit set by the president of the court and attach the request from the public prosecutor to the summons.

If the public prosecutor requests the opening of a court-supervised liquidation procedure in respect of this debtor, the chairman may not sit on the panel of courts or take part in the deliberations, failing which the judgment will be null and void.

CA Versailles, 7 July 2020, LawLex202200006528JBJ (RJ).

Applicable to the court-supervised liquidation procedure on referral from art. R. 640-1.

656. Referral to the court by the public prosecutor