French Insolvency Law - Leaseback Issues
Pursuant to the Insolvency Act 26 July 2005 and Article L622-17 of the Code de Commerce, debts arising after the date a French company is put into Receivership must be paid by the company's Receiver. However, those debts e.g. rents that arose prior to the leaseback company becoming insolvent must be lodged in the insolvency proceedings. This is a necessary step in order for the Court to admit claims and consider you as a (usually non-preferential) creditor in the Receivership.
The process of lodging a claim or proof of debt with the competent official of the insolvency proceedings (Liquidator or Creditors’ Representative) is called 'Déclaration de créance '. Until a creditor has filed its proof of debt, any discussion with this official is, in most cases, ineffective. 'Déclaration de créance' Claims must be filed either with the creditor's representative, whose duty is to represent the interests of the creditors and list all claims, or with the Liquidator if the company is already in liquidation.
Proofs of Debt must be very carefully drafted. Some essential points to consider are as follows:
• Drafting the proof of debt in French;
• Mentioning whether the debt is a preferential one or not;
• The legal interest on unpaid sums should be included. Interest stops accruing at the date of the commencement Receivership Order;
• All sums must be converted in Euro with the exchange rate applicable at the date of the Order;
• The 'Declaration de Créance' is to be signed by a legal representative of the foreign creditor, or anyone holding a special power of attorney, or the creditor's solicitor;
• Above his/her signature, the creditor or its legal representative must handwrite a special Statement of Truth;
• All supporting documentation evidencing the claim should be listed on a document called 'Bordereau de documents justificatifs';
The time-limit for filing claims is two months from the date the Receivership Order is published. Such publishing normally takes place around three weeks following the date of the Order. The time limit is extended to 4 months for overseas-based creditors.
ABOUT THE AUTHOR: Fabien Cordiez Avocat & Solicitor
Fabien Cordiez Avocat & Solicitor is a registered French law firm that focuses on property law and inheritance, with an international approach. We are a small niche law firm offering non-resident clients a fully personalised service throughout France.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.