Conciliation

What is conciliation?

Conciliation is a preventive and confidential procedure accessible to all companies which are not insolvent, or which have been insolvent for less than 45 days.

Thanks to this legal framework, which provides a secure framework for discussions, conciliation can be adapted to any difficulties encountered by a company. Company managers may submit a proposal for a conciliator to be appointed by the president of the court. In this case, they must specify the conciliator’s identity and address.

Conciliations are often entrusted to professionals working with companies in difficulty, i.e. insolvency practitioners. The terms of the conciliator’s remuneration must be set out in the order appointing him or her.

Download the form for requesting the appointment of a conciliator

What situations are covered by conciliation?

Conciliation is open to any company experiencing legal, economic or financial difficulties, whether actual or foreseeable.
 

Company managers submit a request for conciliation to the president of the court, setting out their economic, social and asset situation, their financing requirements and, where applicable, the means of dealing with them.

Who is involved in the conciliation process?

Company managers, who are the only ones entitled to do so, request the opening of conciliation, by applying to the President of the Commercial Court if their company is engaged in a commercial or artisanal activity, or to the President of the Judicial Court in other cases (farmers, civil companies or groupings, associations, liberal professions, etc.).
 

If the President accepts the request, he appoints a conciliator to help the company manager in resolving the difficulties.

When does the conciliation procedure begin?

Upon receipt of the company manager’s request, the president of the court summons the manager to a confidential meeting to hear his or her observations and understand the purpose of the proposed assignment.  

If the president of the court accepts the request, he or she appoints a conciliator to help the company manager in resolving the difficulties: this is when the conciliation process begins for the period set out in the president’s decision.

This period may not exceed four months, renewable by a specifically well-founded decision, provided that the total duration of the procedure does not exceed five months. If an application for the recognition or homologation of an agreement has been made during the mission, the procedure is extended until the decision of the president of the court or tribunal.

How does conciliation work?

The purpose of the conciliator’s mission is to encourage the debtor and its main creditors and, where applicable, its usual co-contractors to reach an amicable agreement aimed at putting an end to the company’s difficulties. 

It may also submit any proposal relating to the safeguarding of the business, the continuation of economic activity and the maintenance of employment. At the request of the debtor and after consultation with the participating creditors, the conciliator may be tasked with organising a partial or total sale of the business, which may be implemented as part of subsequent safeguard, receivership or liquidation proceedings.

The conciliator’s first task is to take stock of the company’s situation with the manager, in order to diagnose together the solutions to be implemented. The conciliator then conducts discussions based on this prior joint work and the assignment entrusted to him or her. The company manager continues to manage the company alone during the conciliation process.

What are the effects of conciliation?

Conciliation provides a secure legal framework for agreements reached in this context, with a number of specific provisions:

1. During the conciliation procedure, the debtor may ask the judge who ordered the conciliation to apply article 1343-5 of the French Civil Code (taking into account the debtor’s situation and the creditor’s needs, to defer or stagger payment of the sums owed, up to a maximum of two years) with regard to a creditor who has put him in default or sued him, or who has not accepted, within the time limit set by the conciliator, the creditor’s request to suspend payment of the debt. In the latter case, the judge may, notwithstanding the terms of the first paragraph of the same article, defer or stagger the payment of outstanding debts, within the limit of the duration of the conciliator’s mission.
2. If, during the term of the agreement reached with the creditors, the debtor is put in default or sued by one of the creditors involved in the conciliation with the aim of obtaining payment of a claim that has not been the subject of an agreement, the debtor may refer the matter to the conciliation judge for application of the provisions of article 1343-5 of the French Civil Code (taking into account the debtor’s situation and considering the creditor’s needs, deferring or staggering payment of the sums due, up to a maximum of two years).
3. Individuals who, as part of an approved conciliation procedure, have made a new cash contribution to the debtor with a view to ensuring the continued operation of the business and its long-term survival, are paid, for the amount of this contribution, by preferential right in the event of the subsequent opening of safeguard, receivership or liquidation proceedings. Individuals who provide a new good or service within the same framework benefit from the same preferential right for the price of that good or service.
4. The president of the court, at the joint request of the parties, shall record their agreement and give it enforceability. The decision is taken on the basis of a declaration by the debtor certifying that he was not in a state of insolvency at the time the agreement was concluded, or that the agreement puts an end to it. In this case, no publicity is required, and the procedure is terminated by the recognition of the agreement.
5. At the request of the debtor, the court will approve the agreement reached if the debtor is not insolvent or the agreement reached puts an end to it, if the terms of the agreement are such as to ensure the continued operation of the business and if the agreement does not prejudice the interests of creditors who are not signatories to the agreement. The debtor informs the works council or, where there is no works council, the employee representatives of the content of the agreement when the debtor applies for approval. The approved agreement is sent to the statutory auditor if there is one. The approval judgement is filed with the court registry where any individual may consult it and is published. A notice of the approval decision is sent for publication in the BODACC and in a legal gazette. The debtor and the creditors who signed the agreement are notified of the approval judgment. It is communicated to the conciliator and the public prosecutor. The approved agreement, unlike the recorded agreement, is subject to publication. An approved agreement automatically removes any ban on issuing cheques.

When the president of the court records the agreement or when the court approves the agreement, it may, at the request of the debtor, appoint the conciliator as an agent for the execution of the agreement for the duration of such execution. During its term, the agreement prohibits or interrupts any legal action and suspends or prohibits any individual proceedings against both the movable and immovable property of the debtor with the aim of obtaining payment of the claims that are the subject of the agreement.

Individuals who are co-obligated or who have granted a personal guarantee or who have assigned or transferred an asset as security may avail themselves of the measures granted to the debtor and of the provisions of the recorded or approved agreement.