The health crisis has been trying for French entrepreneurship. Despite the arsenal of aid deployed by the government, many companies are suffering from successive lockdowns and restrictions that have continued to paralyze their activities.
To support companies encountering economic difficulties, a temporary procedure called “crisis exit treatment”Was instituted by a law of May 31, 2021. Its objective: to enable small businesses to quickly adopt a plan enabling them to resolve the difficulties they are encountering as a result of the crisis.
Who is this crisis treatment procedure for?
The crisis treatment procedure is intended for individual entrepreneurs and managers of small businesses who are going through difficulties due to the Covid-19 epidemic.
To be able to benefit from the opening of this procedure, companies must:
● To be able to present regular accounts, sincere and able to give a true picture of their financial situation.
● Be in a state of cessation of payments, that is, they no longer have sufficient liquidity to settle their debts that have come due.
● Have funds available to pay their salary claims, which includes salaries and allowances.
● Be able to develop a draft plan to ensure the stability of their activity.
Note that to exclude large companies from this simplified procedure, thresholds relating to the number of employees and the balance sheet total should be set by decree in the coming days.
How is this temporary bankruptcy procedure carried out?
Until June 2023, individual entrepreneurs and managers who meet the aforementioned conditions can take the initiative to request the opening of this procedure in order to restructure their business, and more specifically to pay off their debt.
On the occasion of the judgment opening the procedure, a legal representative is appointed. Its mission is to assist the entrepreneur in the development and presentation of an audit plan.
The opening of the procedure immediately starts a period of three months. This phase, which is called the observation period, should allow the entrepreneur to draw up a complete assessment of the situation of his company in order to analyze the origin, nature and extent of the difficulties encountered. On the basis of this balance sheet, he must draw up a plan enabling him to pay off the debts of his company. The role of the agent is therefore essential, especially since the time available to the entrepreneur to develop his plan is reduced by half compared to collective proceedings usual.
What should the crisis exit plan contain?
At the end of this short three-month period, a crisis exit plan must be submitted to the court. This business continuity plan must include a set of measures allowing the company to bounce back quickly.
Thus, various debt clearance measures must be included, such as the establishment of payment deadlines and remittances, or even conversion into securities giving access to capital. In any event, the measures must be capable of being carried out within ten years.
In short, this temporary procedure is intended to encourage companies to take measures as quickly as possible to get off to a good start!
(Photo credit: iStock)
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