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Firms in difficulty

What your lawyer can do for you when it comes to firms in difficulty

It is often in a rush, when a company is facing cash flow difficulties, that tensions grow in its relations with banks and suppliers.

In the very short term, your company is going to encounter difficulties, or your company is already experiencing difficulties, what are the solutions?

We help you, in complete confidentiality, to overcome your financial difficulties by choosing the solution best suited to your company. We accompany you throughout the procedures implemented to achieve your goal.

  • Consulting us as soon as the first difficulties arise allows us to anticipate and sometimes simply find agreements to spread the debts directly with the creditors.
  • It also allows, when these solutions are adapted, to choose preventive measures such as an ad hoc mandate or a conciliation.
  • We make a diagnosis of the situation of your company, on a possible situation of default of payments.
  • Once this diagnosis has been made, we help you choose the procedure or strategy to be implemented.
  • We assist the manager whose responsibility may be sought and/or whose personal guarantee may be engaged.
  • Are your relations with your creditors or your bank strained? Are you unable to repay your loans? The bank asks you for your guarantee or wants to implement your guarantee? We can assist you in the negotiations with your creditors and the bank or in the framework of a litigation.
  • In the event of late payment of the sums you owe with respect to your social security and tax obligations, we help you present your case before the CCSF (commission des chefs de services fiscaux) in order to obtain payment delays.
  • Your company is summoned to open insolvency proceedings by a creditor: we are here to assist you.
  • We are here to assist you and follow-up on the implementation of a discharge plan or any other solution, in direct contact with the administrators and/or judicial agents involved in the process.
#Difficulty
#Restructuring

You are interested in taking over a company in difficulty.

We assist you in this takeover in order to prepare your offer.

  • We assist you in the examination of the elements communicated by the judicial administrator.
  • We take care of the drafting of the business purchase offer.
  • We defend the offer before the Tribunal in charge of the collective proceedings.
  • We can take care of drafting all the deeds of assignment following the acceptance of your offer.

Your client is undergoing collective proceedings: ad ‘hoc mandate, conciliation, safeguard, receivership, judicial liquidation.

We assist you in your efforts to optimize your chances of obtaining payment of your debt.

  • We take care of the necessary formalities for the declaration of claim.
  • We analyze the feasibility of a procedure for claiming back the transferred materials.
  • We advise you on how to adapt your business relations with your client placed in receivership proceedings.

Company in difficulty,
how to address the situation?

• What do I do when the bank refuses to work with my company experiencing difficulties?

The bank blocks your company’s accounts or refuses to grant you longer payment deadlines or any other payment facilities, etc.

It is advisable to consult a lawyer in order to set up an amicable or legal procedure adapted to the situation, depending on whether your company is in a situation of default or not.

In this way, the bank’s action towards you can be suspended and you can even negotiate payment terms to spread out your business loans or overdrafts.

• How to solve a cash flow problem?

In the context of the pandemic, cash shortfall can be resolved with a loan backed by the state. In case of refusal of a loan backed by the state, by requesting ad ‘hoc assistance from the departmental committee on examining problems of business financing (CODEFI).

It is also possible to use confidential measures such as a conciliation or an ad hoc mandate. A conciliator is then in charge of negotiating with your bank contacts and your main creditors.

If the cash flow difficulties have become insurmountable due to a lack of more favorable payment facilities, it is possible to use collective proceedings (safeguard, receivership, or liquidation if necessary).

In any cases, a prior diagnosis is necessary in order to consider the next steps to be taken.

• How can I pay my employees and social security contributions when my company is experiencing difficulties?

Be careful, this subject is sensitive because when you reach the point where you can no longer pay your employees at the end of the month, few solutions will present themselves.  It will then be necessary to consider judicial recovery or judicial liquidation for urgent payment by the AGS (the Association for the management of the system of guarantee of the claims of the employees).

In order to avoid this, it is possible beforehand to manage the company’s cash flow by, for example, requesting payment deadlines not only from suppliers but also on social and fiscal charges from the CSSF (Commission of Tax Services Directors).

• Who to contact when my company is experiencing difficulties?

You are facing cash flow problems, or you wish to anticipate difficulties (this is even better). You have several options when it comes to the people you can reach out to.

The DGFIP (Treasury Department of the French state) with the CSSF (Commission of Tax Services Directors) can grant you extended payment deadlines for your social and tax debts.

A lawyer specializing in this area will also be able to advise you with the benefit of an outside perspective on your business and its difficulties. Your lawyer will also be able to quickly implement the necessary steps to recover your debts, which is sometimes the first and sometimes sufficient measure to put in place, and to refer the matter to the competent jurisdiction on a rush basis.

He/she will also assist you, if need be, in preparing and presenting your conciliation file, ad hoc mandate or safeguard mandate, receivership or judicial liquidation.

• What to do when a customer or supplier is in trouble?

Swift action is needed.  This is called the “race for the prize.”  Often a company manager tries to hide the situation and put out a fire by paying the most offensive creditors.

A formal notice from your lawyer can be very effective.

There are measures that allow you to seize your debtor’s accounts and obtain a court decision within a few weeks.

If your debtor is placed under safeguard, receivership, or judicial liquidation, it will be necessary to declare your claim to the judicial representative or judicial liquidator.

You should make sure that the goods that remain in your debtor’s possession are claimed on the basis of a retention-of-title clause or in the presence of a deposit.

• Should I take a loan backed by the state (PGE)?

The PGE, State Guaranteed Loan is a way to circumvent personal guarantees.  A loan backed by the state can be interesting if you are facing economic difficulties, it can give your cash flow a second life.

Be careful, however, to prepare a forecast for the period during which it will have to be repaid.

If your bank refuses to grant your request, you can submit a file to the CODEFI (departmental committee on examining problems of business financing) for ad ‘hoc aid to support weakened companies’ cash flow issues resulting from the Covid pandemic.

On the other hand, if the difficulties you are experiencing are structural, a loan backed by the state will not be sufficient to remedy same.  Additional measures will then need to be taken in order to give a second life to your company, perhaps in the form of a conciliation, ad hoc mandate, safeguard, or legal redress. In short, you might have to consider restructuring your company.

• What solutions can I find when my company loses revenue?

First, we need to find out why. Once the cause has been identified, we need to determine whether the cause is structural or cyclical.

If it is cyclical, the company must seek resources mainly internally. If it is structural the company will have to be restructured (restructuring).

Choices will need to be made on the basis of a diagnosis and an inventory of solutions. Stopping payments, when supervised and advised to do so, will often be necessary as a first step.

• How can I prevent my business from going bankrupt?

This expression is hardly used anymore, it has been replaced by voluntary receivership or liquidation (“dépôt de bilan” in French). In reality, filing for bankruptcy means putting the company into receivership or judicial liquidation.

Receivership can be a solution to save your company if it is not too late and if the causes leading to the difficulties experienced can be corrected.

A professional specializing in this area should be consulted as soon as possible. The number one indicator is the immediate cash flow and the cash flow forecast.

• What is the solution to turn my business around?

First of all, make a clear and fair diagnosis and not be afraid or ashamed to go and talk to professionals specializing in this area (lawyers for example) who are subject to professional secrecy and trained to deal with such situations.

Then address the difficulties according to whether they are structural or cyclical. The indicator is the existing and foreseeable cash flow.

The key word is how to anticipate a cash shortfall, how to deal with it, where to find resources inside or outside my company.

It could be envisaged to spread out the debts amicably without a third party, or with the help of a third party within the framework of confidential measures such as an ad hoc mandate, conciliation, or finally use the protection of a safeguard procedure or a receivership ordered by a court having jurisdiction over the matter.

• Why call in a lawyer when my company is in trouble?

The role of a lawyer is complementary to that of an accountant. Your lawyer will focus his/her efforts on the cash flow problems and will be able to accompany and help the Company manager to take the necessary measures, including legal proceedings, which may be necessary.

A lawyer often has a fresh eye on the situation, which makes it easier to assess the situation.

In addition, tensions can grow in your relationship with your accountant when invoices remain overdue.  A lawyer can help restore a smooth relationship by organizing the payment of invoices owed to the accountant, who remains an essential supplier for the company’s turnaround (dashboards to be presented, certified situations, etc.)

Your team

The team is multidisciplinary, and we combine our skills
and experience because we have our clients’ best interests at heart.

Sylvia
CRUBLEAU-COCHARD

Partner HR

+33 (0)2 41 25 37 05 contact

Master’s degree in Corporate Law

Admitted to the bar in 2001

Sylvie
RENAULT

Legal Assistant

+33 (0)2 41 25 37 05 contact

Bertrand
BRECHETEAU

Partner

+33 (0)2 41 25 72 68 contact

Master’s degree in Private Law

University of Paris II – Panthéon Assas

Admitted to the bar in 1993

Specialist in Commercial,

Business and Competition Law

Jean-Baptiste
GUEDON

Lawyer

02 41 25 72 68 contact

Faculté de Droit d’Angers

Master 2 Contentieux privé

Faculté de Droit de Caen Normandie

 

Ecole des Avocats de Poitiers

 

Prestation de serment en 2020

Margot
TANDILLE

Legal Assistant

+33 (0)2 41 25 72 68 contact

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