[Covid 19] Commercial courts have adapted their proceedings to maintain a necessary service for distressed companies

  • Non classé

On 17 March, France’s commercial courts closed and canceled most hearings scheduled for the coming weeks and until the end of the period of confinement. The canceled hearings include cases relating to collective proceedings (whether public or more restricted hearings) as well as investigative hearings, collegial pleadings, and hearings for interim relief. The only exception made is for “urgent” cases, as yet undefined, for which appointments may be made by email.

In addition to the infogreffe.fr and monidenum.fr websites, the secretariats of the commercial courts have rapidly deployed an electronic platform at “tribunaldigital.fr” via which it remains possible to apply to the commercial courts for summonses, injunctions and the institution of judicial safeguard, recovery or liquidation procedures. The portal provides access to all of France’s 141 commercial courts and is accessible to any person included in France’s register of companies (registre du commerce et des sociétés). The state of progress of cases and procedures already engaged may also be consulted via this portal.

Recourse to teleworking has enabled France’s commercial courts to continue processing formalities completed online, engage in their usual activities of control and certification and continue updating the legal and economic information on companies available to the public.

Despite these developments, on Thursday 19 March France’s justice ministry encouraged the commercial courts to refrain from opening new procedures, motivating its recommendation by the scarcity of available resources: “The initiation of new judicial safeguard, recovery or liquidation proceedings would not appear to be a matter of urgency and may prove ineffective given the limited resources available for implementing such proceedings”, writes Jean-François de Montgolfier, a high-ranking justice Ministry official.

On 25 March 2020, an administrative order issued in application of the legislation on the state of emergency has simplified the bases of application to the courts and authorized the performance of electronic hearings. Judicial safeguard and recovery proceedings may thus once again be commenced.
The order also allowed a longer delay for the declaration of the state of insolvency. The debtor in normal circumstances has to respect a delay of 45 days to declare to the court its inability to pay due to indebtedness with its available cash (or/and cash equivalent). During the COVID-19 crisis, the debtor benefits from more flexible time limits for filing in the declaration. The order indicates that companies have the possibility to declare in the 3 months following the end of the state of health emergency.

A crucial parameter about preventive procedures and the initiation of conciliation proceedings has also been changed. Until this adjustment, it appeared as no longer possible inasmuch as their typical framework of four months, then one month is liable to prove insufficient within the present context. The order has extended the time limit of this proceeding by three months after the date of termination of the state of health emergency.

This being so, it remains possible to apply for the designation of a special purpose administrator (mandataire ad hoc), which will become the option of preference unless the applicant is not so eligible (for example in the case of companies whose state of insolvency occurred less than 45 days previously). For this reason, we may expect a very significant increase in the number of appointments of special purpose administrators during the coming weeks and months.