When our company's accounts are overdue and we can no longer repay our debts, sometimes the only solution is compulsory liquidation. This is certainly not a situation one wants to face alone. But when should we contact a lawyer specialized in this area? Here is what you need to know about judicial liquidation.
What is judicial liquidation?
When a company is no longer able to honor its debts and its cash flow is negative, it may have to turn to compulsory liquidation as the ultimate solution. This is an article listed in the Commercial Code (L.640-1). It is a procedure that can be used when a company can no longer recover financially. It is then in cessation of payments. In such a case, it is necessary to act quickly by calling on the responsiveness of a lawyer specializing in judicial liquidation. It is he who will be able to guide the manager in the procedures to be followed, in order to put an end to the activity of the company.
What will happen at that time is a liquidation of the company's assets which will allow it to repay its creditors, at least in part. Only a lawyer specializing in compulsory liquidation can help the owner of the business, by ensuring that his rights and interests are respected throughout the process.
What are the stages of judicial liquidation?
For a judicial liquidation to occur, someone must first apply for it. First of all, it is the manager of the company who can proceed in this way, but only within a period of 45 days following the date of cessation of payments. However, other people also have the right to request this judicial liquidation. This is the case of the public prosecutor, a partner in the company, or even one of its creditors.
Once the request has been made, it will be filed with the competent court. Depending on the nature of the company's activity, this may vary. A study of the file will be carried out to determine whether or not the request will be accepted. In the event of a positive response, then a judge will take the steps to arrive at judicial liquidation. The following steps will then occur, in this order:
- The dismissal of the business manager who will be replaced by a judicial liquidator.
- The latter will have to dismiss employees who are still working in the company, within 15 days.
- At the same time, he will proceed with the sale of the company's assets. The money collected will be used to repay the company's creditors.
- Finally, there are only two possibilities at the end of the judicial liquidation. Either the debts will have all been repaid thanks to the sale of the assets, or the company will not be able to settle all its debts in this way.
You should know that sanctions can be taken against the manager of the company, in relation to a judicial liquidation. It is therefore important that he calls on the services of a specialized lawyer, if he wants to be able to assert all his rights.