Title III: Judicial reorganization.
Chapter I: The opening and progress of the recovery
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.
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
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.
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.
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
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
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
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
3 ° The publication of the completion of the liquidation, in the case of a legal person not subject to
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.
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.
Articles L. 621-1, L. 621-2 and L. 621-3 are applicable to the reorganization procedure
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.
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.
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
The administrator, where applicable, mentions in the registers of the legal person
the non-transferability of the directors’ shares.
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.
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
- 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.
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.
- – Articles L. 622-2 to L. 622-9 and L. 622-13 to L. 622-33 are applicable to the procedure for
- – 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.
- – 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.
- – 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.
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
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.
- – The provisions of Chapters III, IV and V of Title II of this book are applicable to the
- – 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.
- – The provisions of Chapter VI of Title II are applicable to the recovery plan.
- – 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.
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.
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.
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
Chapter II: The invalidity of certain acts.
- – 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
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
9 ° Any transfer of property or rights in a trust patrimony in application of articles 2011
and following of the Civil Code.
- – 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.
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.
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.
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