LexInter | September 15, 2010 | 0 Comments

CODE OF COMMERCE AND JUDICIAL RECOVERY

Title III: Judicial reorganization.

Chapter I: The opening and progress of the recovery

judicial.

Article L631-1

A judicial reorganization procedure is instituted open to any debtor mentioned in the

Articles L. 631-2 or L. 631-3 which, unable to meet the liabilities due with their assets

available, is in suspension of payments.

The reorganization procedure is intended to allow the continuation of the activity of

the company, the maintenance of employment and the discharge of liabilities. It gives rise to a plan adopted by

judgment at the end of an observation period and, where applicable, the establishment of two committees

creditors, in accordance with the provisions of Articles L. 626-29 and L. 626-30.

Article L631-2

The reorganization procedure is applicable to any trader, to any person

registered in the trades register, to any farmer, to any other natural person exercising

an independent professional activity including a liberal profession subject to a statute

legislative or regulatory or whose title is protected, as well as to any legal person

private.

A new judicial reorganization procedure cannot be opened with regard to a person

subject to such a procedure or to a judicial liquidation procedure, as long as it has not been

end of the operations of the resulting plan or that the liquidation procedure has not been closed.

Article L631-3

The reorganization procedure is also applicable to the persons mentioned in

first paragraph of Article L. 631-2 after the end of their professional activity if all or part

of their liabilities come from the latter.

When a trader, a person registered in the trade register, a farmer or

any other natural person exercising a self-employed professional activity, including a

liberal profession subject to a legislative or regulatory status or whose title is protected, is

deceased in suspension of payments, the court may be seized, within a period of one year from the date of

date of death, on the summons of a creditor, whatever the nature of his claim, or on request

of the public prosecutor. The court may also seize it ex officio within the same time limit and may be

seized without delay by any heir of the debtor.

Article L631-4

The opening of this procedure must be requested by the debtor at the latest within

forty-five days following the cessation of payments if he has not, within this period, requested

the opening of a conciliation procedure.

In the event of failure of the conciliation procedure, when it emerges from the conciliator’s report that the

debtor is in suspension of payments, the court, ex officio, takes action to rule on the opening

reorganization proceedings.

Article L631-5

When there is no ongoing conciliation procedure, the court may also seize ex officio

or be seized at the request of the public prosecutor for the purposes of opening the reorganization procedure

judicial.

Subject to this same reservation, the procedure can also be opened on the summons of a creditor, which

whatever the nature of its claim. However, when the debtor has ceased his professional activity,

this assignment must take place within one year from:

1 ° Cancellation from the trade and companies register. If it is a legal person, the deadline

runs from the delisting following the publication of the closing of

liquidation;

2 ° The cessation of the activity, in the case of a person registered in the trades directory, of a

farmer or a natural person exercising an independent professional activity, including

including a liberal profession subject to a legislative or regulatory status or whose title is

protected;

3 ° The publication of the completion of the liquidation, in the case of a legal person not subject to

registration.

In addition, proceedings cannot be opened with regard to a debtor carrying on an agricultural activity who

is not incorporated in the form of a commercial company unless the president of the tribunal de grande

body was seized, prior to the summons, of a request tending to the designation of a

conciliator presented in application of article L. 351-2 of the rural code.

Article L631-6

The works council or, failing that, the employee representatives can communicate to the chairman

of the court or to the public prosecutor any fact revealing the cessation of payments of the debtor.

Article L631-7

Articles L. 621-1, L. 621-2 and L. 621-3 are applicable to the reorganization procedure

judicial.

Article L631-8

The court fixes the date of cessation of payments. If this date is not determined, the

cessation of payments is deemed to have occurred on the date of the judgment establishing it.

It can be postponed one or more times, without being able to be more than eighteen months earlier than

the date of the judgment stating the cessation of payments. Except in cases of fraud, it cannot be

postponed to a date prior to the final decision having approved an amicable agreement in

application of II of article L. 611-8.

The court is referred to by the administrator, the judicial representative or the public prosecutor. It is

pronounces after having heard or duly called the debtor.

The request for a change of date must be presented to the court within one year after the

judgment opening the procedure.

Article L631-9

Articles L. 621-4 to L. 621-11 are applicable to the reorganization proceedings. The

court may seize of its own motion for the purposes mentioned in the third and fourth paragraphs of article L.

621-4.

Article L631-10

From the opening judgment, the de jure or de facto managers, remunerated or not,

may, on pain of nullity, sell the shares, equity securities or securities giving

access to the capital representing their social rights in the company which was the subject of the judgment

opening only under the conditions set by the court.

The equity securities or securities giving access to the capital are transferred to a special account

blocked, opened by the administrator in the name of the holder and kept by the company or the intermediary

financial as the case may be. No movement can be made on this account without the authorization of the

judge commissioner.

The administrator, where applicable, mentions in the registers of the legal person

the non-transferability of the directors’ shares.

Article L631-11

The judge-commissioner fixes the remuneration relating to the functions performed by the debtor if he is

a natural person or the directors of the legal person.

In the absence of remuneration, the persons mentioned in the previous paragraph may obtain on

the assets, for them and their families, of the subsidies fixed by the judge-commissioner.

Article L631-12

In addition to the powers conferred on them by this title, the mission of the director (s)

is set by the court.

The latter charges them together or separately to assist the debtor for all acts relating to the

management or some of them, or to ensure alone, in whole or in part, the administration of

the company. When the administrator (s) are responsible for ensuring, alone and fully

the administration of the company and that each of the thresholds mentioned in the fourth paragraph of article

  1. 621-4 is reached, the court appoints one or more experts to assist them in their

management mission. In other cases, he has the right to designate them. The president of the court stops

the remuneration of these experts, chargeable to the procedure.

In his mission, the administrator is required to comply with legal and contractual obligations.

incumbent on the debtor.

At any time, the court can modify the administrator’s mission at the latter’s request,

the judicial representative, the public prosecutor or ex officio.

The administrator operates, under his signature, the bank or postal accounts whose

debtor is the holder when the latter has been subject to the prohibitions provided for in Articles L. 131-72

or L. 163-6 of the Monetary and Financial Code.

Article L631-13

From the opening of the procedure, third parties are allowed to submit tenders to the administrator

the maintenance of the activity of the company, by a total or partial sale of this one according to the

provisions of section 1 of chapter II of title IV.

Article L631-14

  1. – Articles L. 622-2 to L. 622-9 and L. 622-13 to L. 622-33 are applicable to the procedure for

legal redress.

  1. – However, natural persons who are co-obligated or who have granted a surety bond or

independent guarantee cannot rely on the provisions provided for in the first paragraph of Article L.

622-28.

Article L631-15

  1. – At the latest after a period of two months from the opening judgment, the court

order the continuation of the observation period if it appears to him that the company has available for this purpose

sufficient financing capacities. However, when the debtor carries out an agricultural activity,

this period can be modified according to the current cropping year and the specific uses of

productions of this exploitation.

The court rules on the basis of a report drawn up by the administrator or, when one has not been

designated, by the debtor.

  1. – At any time during the observation period, the court, at the request of the debtor, to

the administrator, the judicial representative, a controller, the public prosecutor or ex officio, may

order the partial cessation of activity or pronounce judicial liquidation if the conditions

provided for in Article L. 640-1 are met.

It rules after having heard or duly called the debtor, the administrator, the legal representative,

the controllers and representatives of the works council or, failing that, staff representatives, and

have obtained the opinion of the public prosecutor.

When the court pronounces liquidation, it ends the observation period and, subject to the

provisions of Article L. 641-10, to the role of the administrator.

Article L631-16

If it appears, during the observation period, that the debtor has sufficient sums

to pay off the creditors and pay the costs and debts relating to the procedure, the

court can terminate it.

It rules at the request of the debtor, under the conditions provided for in the second paragraph of II of article

  1. 631-15.

Article L631-17

When redundancies for economic reasons are urgent, inevitable and

essential during the observation period, the administrator may be authorized by the

commissioner to proceed with these dismissals.

Prior to referral to the statutory auditor, the administrator consults the works council or,

failing this, the staff representatives under the conditions provided for in Article L. 321-9 of the Code du

work and informs the competent administrative authority mentioned in Article L. 321-8 of the same

coded. He attaches, in support of the request he sends to the bankruptcy judge, the opinion obtained and the

justifications for its due diligence in order to facilitate the compensation and reclassification of employees.

Article L631-18

  1. – The provisions of Chapters III, IV and V of Title II of this book are applicable to the

reorganization proceedings.

  1. – However, the recourse provided for in the first paragraph of article L. 624-3 is also open to

the administrator when his mission is to ensure the administration of the company.

For the application of Article L. 625-1, the judicial representative cited before the council of

labor tribunal or, failing that, the plaintiff calls before the labor tribunal the institutions

referred to in Article L. 143-11-4 of the Labor Code.

In addition, for the application of Article L. 625-3 of this code, the institutions mentioned in

Article L. 143-11-4 of the Labor Code are challenged by the judicial representative or, failing that,

by the applicant employees, within ten days of the judgment opening the

reorganization or judgment converting a safeguard procedure into a

recovery. Likewise, the pending proceedings before the industrial tribunal on the date of

opening judgment are pursued in the presence of the administrator, when his mission is

to ensure the administration, or the latter duly called.

Article L631-19

  1. – The provisions of Chapter VI of Title II are applicable to the recovery plan.
  2. – When the plan provides for redundancies for economic reasons, it cannot be stopped by the

court only after the works council or, failing that, the staff representatives have been consulted

under the conditions provided for in Article L. 321-9 of the Labor Code and that the administrative authority

competent authority mentioned in Article L. 321-8 of the same code has been informed.

The plan specifies in particular the redundancies which must occur within a period of one month after the

judgment. Within this period, these redundancies occur upon simple notification from the administrator,

subject to the notice rights provided for by law, collective labor agreements or agreements.

Article L631-20

By way of derogation from the provisions of article L. 626-11, the co-obligated and the persons having consented

a surety bond or an independent guarantee cannot rely on the provisions of the plan.

Article L631-21

The provisions of Chapter VII of Title II are applicable to the recovery plan.

During the observation period, the activity is continued by the debtor who exercises the prerogatives

devolved to the administrator by article L. 631-17 and proceeds to the notifications provided for in the second

paragraph of II of Article L. 631-19.

The judicial representative exercises the functions devolved to the administrator by the second and

third paragraphs of article L. 631-10.

Article L631-22

On the basis of the administrator’s report, the court may order the total or partial transfer of

the company if the debtor is unable to ensure its own recovery. AT

With the exception of I of article L. 642-2, the provisions of section 1 of chapter II of title IV are

applicable to this assignment. The judicial representative exercises the missions devolved to the liquidator.

The administrator remains in office to carry out all the acts necessary to carry out the

assignment.

Chapter II: The invalidity of certain acts.

Article L632-1

  1. – The following acts are void, when they have occurred since the date of cessation of payments:

:

1 ° All acts free of charge transferring movable or immovable property;

2 ° Any commutative contract in which the obligations of the debtor significantly exceed those of

the other part ;

3 ° Any payment, whatever the mode, for debts not due on the date of payment;

4 ° Any payment for overdue debts, made other than in cash, commercial paper, transfers,

transfer slips referred to by law n ° 81-1 of January 2, 1981 facilitating business credit

or any other method of payment commonly accepted in business relationships;

5 ° Any deposit and any deposit of sums made in application of article 2075-1 of the code

civil (1), in the absence of a court decision having acquired the force of res judicata;

6 ° Any conventional mortgage, any judicial mortgage as well as the legal mortgage of

spouse and any pledge or pledge right on the debtor’s property for debts

previously contracted;

7 ° Any protective measure, unless the registration or the deed of seizure is prior to the date

of suspension of payment;

8 ° Any authorization, exercise and resale of options defined in Articles L. 225-177 et seq. Of

this code;

9 ° Any transfer of property or rights in a trust patrimony in application of articles 2011

and following of the Civil Code.

  1. – The court may, in addition, annul the acts free of charge referred to in 1 ° of I made within six months

preceding the date of cessation of payments.

Article L632-2

Payments for debts due made after the date of cessation of payments and deeds to

onerous title made after this same date may be canceled if those who have dealt with the

debtor became aware of the suspension of payments.

Any notice to third party holder, any seizure, allocation or opposition can also be canceled.

when it has been issued or practiced by a creditor after the date of cessation of payments and in

knowledge of it.

Article L632-3

The provisions of Articles L. 632-1 and L. 632-2 do not affect the validity of the payment.

a bill of exchange, a promissory note or a check.

However, the administrator or the judicial representative may bring a related action against the

drawer of the bill of exchange or, in the case of drawing for account, against the principal, thus

only against the payee of a check and the first endorser of a promissory note, if it is established that they

were aware of the suspension of payments.

Article L632-4

The nullity action is brought by the administrator, the legal representative, the statutory auditor

execution of the plan, the liquidator or the public prosecutor. It has the effect of reconstituting the assets of the

debtor.

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