Home » News » Companies facing Covid-19: new adaptations for the law of companies in difficulty

Companies facing Covid-19: new adaptations for the law of companies in difficulty

Which texts are concerned?

An ordinance and a law once again modify the law of companies in difficulty. This mainly concerns (i) Law n ° 2020-1525 of 7 December 2020 on the acceleration and simplification of public action (hereinafter “ASAP Law”) which notably extends certain measures instituted by the ordinance n ° 2020-596 of May 20, 2020 adapting the rules relating to business difficulties (hereinafter “Ordinance I”) as well as (ii) ordinance n ° 2020-1443 of November 25, 2020 adapting the rules relating to the difficulties of companies and the consequences of the Covid-19 epidemic (hereinafter “Ordinance II”) which introduces new provisions.

The measures introduced or extended by these texts will take effect until December 31, 2021.

What do these new adaptations consist of?

Extension of existing measures

As mentioned above, the ASAP Act (Art. 124) extends a number of measures provided for in Ordinance I until December 31, 2021.

It should be noted first of all that the provisions of article 7 of Ordinance I which open to the administrator and the debtor the initiative of the request for the purpose of authorizing the manager to acquire his company no. have not been extended.

The main protracted measures can be summarized as follows:

Neutralization of proceedings in conciliation proceedings:

Ordinance I (Art. 2) allows the establishment of a “quasi observation period” for the benefit of debtors subject to a conciliation procedure in progress on December 31, 2021.

It is possible for a debtor to obtain by way of a request from the conciliation judge:

the prohibition or temporary suspension of proceedings which would tend to have him condemned to the payment of a sum of money or to the termination of a contract for failure to pay a sum of money;

the stopping or prohibition of any civil enforcement proceedings as well as of any distribution proceedings which have not produced an attributive effect; and

the postponement or staggering of the payment of the sums due.

These measures may be pronounced for the entire duration of the conciliation if the creditor concerned has refused to suspend the enforceability of his debt at the request of the conciliator or has not responded within the time limit set by the latter.

Ordinance I (Art. 2, III) also facilitates recourse to the system provided for by Article L. 611-7 paragraph 5 of the Commercial Code by giving the debtor the possibility of asking the conciliation judge to apply. the mechanism of Article 1343-5 of the Civil Code (ie ordering in particular the postponement or the staggering of the payment of the sums due within the limit of two years) without this being conditioned on the issuance of an act of prosecution of on the part of the creditor, the refusal of the latter to suspend the enforceability of his debt at the request of the conciliator being sufficient to request such a measure.

Facilitating the adoption of plans and their extension:

Ordinance I (Art. 4 and 5) provides for several measures relating to the safeguard and recovery plans in progress at December 31, 2021. In particular, it is planned:

a possible extension by the court of the duration of the plan for a maximum of 2 years, at the request of the public prosecutor or the commissioner for the execution of the plan. As a reminder, such an extension implies in particular the possibility for the court to adapt the deadlines of the plan to its new duration or to pronounce a series of measures like a derogation from certain legal rules (eg rule of payment of a dividend per year or minimum dividend of 5% of the liabilities admitted from the third annuity of the plan);

the possibility of requesting, within the framework of a substantial modification procedure of the plan (Art. L. 626-26 of the Commercial Code), a modification of the duration of the plan which could be extended to 12 years (17 years for debtors engaged in agricultural activity); and

the possibility for the bankruptcy judge to reduce, at the request of the agent or the receiver, the 30-day response period granted to creditors as part of their individual consultation for the adoption of a plan. This period established by Article L. 626-5 of the Commercial Code may thus be reduced to 15 days to allow accelerated adoption of safeguard and recovery plans. In the same vein, the communication formalities have been lightened and the creditors’ responses to said consultation may be communicated by any means allowing the judicial representative to establish with certainty the date of their receipt.

The privilege says of Post Money:

Ordinance I (Art. 5, IV) establishes a so-called “Post Money” privilege for fund providers in the period of observation of safeguard or receivership or for those who undertake to provide funds for the execution of safeguard or recovery plans provided that said funds ensure the continuation of the activity and the sustainability of the company.

This privilege grants in particular to its holder the right to be paid in a preferential way within the framework of a collective procedure which would be opened later.

This measure was to apply until the entry into force of the order transposing European Directive n ° 2019/1023 of June 20, 2019 (the “Directive”) and no later than July 17, 2021. From now on, it will be applicable to proceedings pending until December 31, 2021.

It should be emphasized that this device should, in any event, aim to be perpetuated in our positive law via the transposition of the Directive.

The elimination of the thresholds relating to accelerated safeguard and accelerated financial safeguard procedures:

Ordinance I (Art. 3) provides for the abolition of certain conditions of eligibility for accelerated safeguard and accelerated financial safeguard procedures. Thus, companies that do not have accounts certified by an auditor or drawn up by a chartered accountant and that are below the thresholds relating to the number of employees (20), to the amount of turnover (3 M €) or the balance sheet (€ 1.5 million), may request the opening of an accelerated safeguard procedure or an accelerated financial safeguard, provided that they meet the other conditions of eligibility for these procedures.

Like the post money privilege, this device should be perpetuated in our positive law via the transposition of the Directive.

The introduction of new measures

Ordinance II introduces new provisions relating to the law of companies in difficulty. These measures, which will apply until December 31, 2021, relate to the following points:

The duration of the conciliation procedure:

Ordinance II (Art. 1 and 4, II) provides that the conciliation procedures opened from August 24, 2020 may be extended several times without their maximum duration exceeding 10 months.

There is thus provision for an extension of 5 months compared to the legal duration of a conciliation procedure.

It should be noted that contrary to what was provided for by Ordinance I and the texts adopted previously, this extension will not be automatic and will have to intervene on a reasoned decision of the conciliation judge ruling on the request of the conciliator.

Simplification of the system for taking over salary claims by the AGS in the context of collective proceedings:

In order to simplify the payment of salaries by the AGS, Ordinance II (Art. 2) provides that statements of salary claims may be sent to the AGS under the sole signature of the judicial representative. Thus, the visa of the judge-commissioner will not be required initially, which will allow a shortening of the period of payment of salaries.

It is also specified that in the event that the copy of the statement of salary claims bearing the visa of the judge-commissioner does not conform to the one signed by the judicial representative alone, the latter must immediately send the statement bearing the visa. of the judge-commissioner at the AGS.

Simplification of the means of communication between the procedural bodies and

the registry or the court:

Ordinance II (Art. 3) provides that the communications made between, (i) the receiver, the judicial representative, the liquidator, the commissioner for the execution of the plan, the ad hoc representative or the conciliator, and, (ii) the registry of the court as well as the adjudicative organs of the procedure will be carried out by any means. Thus, the simplification of the means of communication now officially extends to preventive procedures.

It should be noted that this device does not however apply for documents filed with the registry for public consultation.

BY CAROLINE TEXIER (PARTNER) AND MEHDI ABDELOUAHAB (COLLABORATOR) WITHIN THE RESTRUCTURING DEPARTMENT OF DLA PIPER

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.