To take account of the economic consequences of the Covid-19 pandemic, the government introduced a crisis recovery procedure for small businesses in difficulty in 2021. The Ministry of Justice's 2023-2027 Orientation and Programming Act provides for the scheme to be renewed unchanged for a further 2 years.
Helping small businesses in difficulty
Introduced byarticle 13 of the law of May 31, 2021 on health crisis exit management, the crisis exit treatment procedure is designed tohelp small businesses through rapid debt restructuring. Lasting 3 months, it has the advantage of being shorter than the receivership procedure (maximum 18 months).
To benefit from this procedure, companies must meet several conditions:
- Have fewer than 20 employees on the date of the application to initiate the procedure;
- A balance sheet with total liabilities excluding shareholders' equity of less than 3,000,000 euros;
- Be in a situation of suspension of payments ;
- Have sufficient funds to cover the payment of wage claims;
- Have regular and accurate financial statements that give a true and fair view of their financial position;
- Draw up a continuation plan within 3 months.
The request to initiate crisis recovery proceedings may be made by the company director. Unlike conventional reorganization proceedings, it is up to the debtor to draw up a list of his claims, referring to accounting documents or to creditors to whom he is bound by a commitment, the existence of which he can justify. If no plan has been drawn up by the end of the observation period, which is limited to 3 months, the court opens receivership or liquidation proceedings at the request of the debtor, the trustee or the public prosecutor.
A procedure extended until 2025
The Law of November 20, 2023 on the orientation and programming of the Ministry of Justice 2023-2027 reactivates the crisis exit processing procedure. Since June 2, 2023, this procedure could no longer be requested.Article 46 of this law reintroduces the procedure unchanged for a period of 2 years from November 22, 2023 to November 21, 2025 inclusive.
To qualify, companies must meet the above conditions and apply to the clerk's office of the relevant commercial court. The application must be accompanied by a number of supporting documents, including the identity document of the legal representative, a statement of pledges and liens, the company's Kbis extract, a cash flow statement, the latest closed annual accounts, and a cash flow and operating forecast.
Reactivation of the crisis exit procedure https://t.co/757ffat5CK
- Cedef documentation (@DocCedef) December 21, 2023