Bankruptcy Law

Prior to referral to the bankruptcy judge, Article L. 631-17(2) of the Commercial Code  requires the receiver to implement a redundancy plan under the conditions set out in Article L. 1233-58 of the Labor Code.
In the event of court-supervised liquidation, this text requires the receiver or liquidator, as the case may be, who is considering redundancies, to implement a redundancy plan and to conve …

Procedural requirements

Prior to referral to the bankruptcy judge, Article L. 631-17(2) of the Commercial Code  requires the receiver to implement a redundancy plan under the conditions set out in Article L. 1233-58 of the Labor Code.

In the event of court-supervised liquidation, this text requires the receiver or liquidator, as the case may be, who is considering redundancies, to implement a redundancy plan and to convene and consult the social and economic committee, which must be informed in good time of any plans to restructure and reduce the workforce . Based on the information provided by the manager , the committee issues an opinion on the planned operation and its implementation, which it must then forward to the administrative authority . The opinion may not have been obtained by the receiver during a previous safeguard, if the latter was subject to different conditions .

In companies with fifty or more employees, a safeguard plan is drawn up. A collective agreement may determine the content of the plan . In particular, it provides a timetable for redundancies, the number of jobs to be lost, the occupational categories concerned, and the arrangements for implementing training and outplacement measures . In the absence of an agreement, a document drawn up by the liquidator or receiver after the last meeting of the social and economic committee sets out the content of the job safeguard plan, and contains the same elements as the agreement . An employee may only be redundant for economic reasons if all efforts to train and adapt have been made, and if he or she cannot be redeployed to available jobs within France, in the company or other companies in the group to which the company belongs, and whose organization, activities or place of operation ensure the transfer of all or part of the workforce .

In the event of redundancy of at least ten employees in a company with at least fifty employees, Article L. 1233-58, II stipulates that the majority collective agreement or the document drawn up by the receiver or liquidator must be forwarded to the administrative authority for validation of the agreement or approval of the document. The employer, receiver or liquidator may not terminate the employment contracts before notification of the favorable validation or approval decision, or the expiry of the allotted time-limits, on pain of irregularity . In the event of an unfavorable validation or homologation decision, the employer, receiver or liquidator consults the social and economic committee within three days. Depending on the case, the amended document and the opinion of the social and economic committee, or an amendment to the collective agreement, are forwarded to the administrative authority, which makes its decision within three days . Consultation of an employee representative is not required prior to approval of a job safeguard plan , and the CHSCT does not need to be consulted when the job safeguard plan does not affect health and safety conditions in the company, or the working conditions of employees whose redundancy is envisaged .

The administrative authority verifies the content of the agreement or document, in particular the implementation of redeployment measures. The mere fact that the receiver of a company in liquidation, who consulted the other companies in the group with a view to finding available redeployment positions in France, did not receive certain responses, is not sufficient to invalidate the plan proposed for approval, or the approval decision itself . Similarly, the fact that the liquidator of a company was slow to ask the only other company in the group with an establishment in France about its redeployment possibilities does not invalidate the job safeguard plan and its approval, when it is established that this company, itself in difficulty, was unable to offer positions to its sister company's employees . The redundancy for economic reasons of an employee who has suffered an industrial accident is not invalid, when the impossibility of redeployment is due to the total cessation of activity of his employer , without any continuation of activity, and when it is not established that the latter belongs to a group of companies .

The receiver must then submit to the bankruptcy judge, in support of his request, the opinion of the committee and proof of his efforts to facilitate the compensation and redeployment of employees, as well as the decision of the administrative authority . Article R. 631-26 of the  Commercial Code  stipulates that the bankruptcy judge, on receiving a request for authorization of redundancy, must issue an ordinance indicating the number of employees whose redundancy is authorized, as well as the activities and professional categories concerned, failing which the ordinance is null and void . Under the same penalty, the ordinance may not contain a list of the names of the employees concerned , since the task of designating the redundant employees falls to the receiver, under the supervision of the labor court . A redundant employee is deemed to have no real or serious cause for dismissal if the letter of dismissal sent to the employee does not include a reference to the ordinance . On the other hand, redundancy for economic reasons is not devoid of real and serious cause when the liquidator's letter of dismissal is sufficiently substantiated, provided that it refers to the court ruling under which the measure was taken, and that it proves impossible to redeploy the employees within the company or within a group .

Article R. 631-26 adds that the ordinance of the bankruptcy judge must be notified to the social and economic committee or, where applicable, to the employees' representative, and must be sent to the public prosecutor, the receiver and the liquidator. Once the ordinance of the bankruptcy judge has become final, the economic nature of the reason for redundant employees of a debtor placed in insolvency procedure can no longer be contested .

Applicable to the court-supervised liquidation procedure by reference to art. L. 641-10, para. 3.

Cons. d'Et., 13 February 2019, LawLex202300000928JBJ (LJ).

Cons. d'Et., 1 June 2022, LawLex202200006463JBJ (LJ).

Cass. soc., 9 December 2014, LawLex202200007284JBJ (LJ).

Cass. soc., 4 October 2017, LawLex202200007193JBJ (LJ) ; 15 September 2021, LawLex202200007206JBJ (LJ).

C. com., art. L. 631-17, al. 2. See for an application, see Cass. crim., 28 November 1995, LawLex202100003459JBJ(RJ).

Applicable to the court-supervised liquidation procedure insofar as it provides for the application of art. L. 631-17.

Cass. soc., 5 October 2004, LawLex202100002325JBJ (RJ).

Cass. crim., 28 November 1995, LawLex202100003459JBJ (RJ).

Cass. soc., 18 June 1997, LawLex202100002324JBJ (RJ).

Cass. ass. plén., 24 January 2003, LawLex202100003467JBJ (RJ).

Cass. soc., 2 March 2004, LawLex202100001184JBJ (LJ).

Cass. soc., 9 July 1996, LawLex202100001939JBJ (RJ).

Cass. com., 5 November 2013, LawLex202100003458JBJ (RJ).

Bankruptcy Law

807. Procedural requirements

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807. Procedural requirements

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Les notions juridiques connexes

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