Bankruptcy of the debtor: Creditors, what are your rights and how to protect yourself?

With the health crisis we are experiencing, and despite the support of theEIn spite of the support of the State for the most affected sectors, a significant number of social plans and collective procedures are expected in order to fight against the bankruptcy of the debtor.

2021 looks dark with a forecast of business failures that willincrease significantly.

If your debtor is subject to a collective procedure, the Loi prohibits you from obtaining the payment through traditional channels. It requires you to respect certain procedural constraints in order to claim payment.

Non-preferred creditors (creditors creditors) generally have little hope of recovering their claims in the event of collective proceedings.

Indeed, once settlement of creditors preferred creditors served, the amounts to be distributedfor the remaining creditors, are often small or even nil.

As a result, to avoid the bankruptcy of the debtor, the creditor must be able to prepare himself as well as possible and try all the actions allowing him to protect his assets.creditor must be able to prepare himself as well as possible and try all the actions allowing him to protect his interests.

How to prevent unpaid bills and bankruptcy of your debtor?

Corporate credit check

It is essential before any commitment to check the solvency of your company.

Legalcity offers credit reports for all companies. This allows you to make an informed decision about entering into a contract with your new partner. You will be able to assess the risk of non-payment in view of their overall situation.

Finally, it also allows you to anticipate the failures of the companies you work with and to prepare yourself as well as possible.

Using credit insurance

The use of credit insurance is also possible. You will have to anticipate the management costs. They are significantly higher than those dedicated to debt collection through a specialized firm.

Indeed, despite the increase in prices and the decrease in protection, it seems responsible and of good management that to protect yourself and guarantee the payment of your your bills.

The credit insurance will guarantee the invoices up to a certain amount. It will compensate them in case of default of the customer. However, it will not take into account the entirety of your customer item and especially the one that represents the most financial risk or non-payment.

Thus, newly registered customers, individuals, regular and old customers who are in special situations are poorly insured. No credit limit granted which limits the use of this tool.

In the event of unpaid bills, the steps to recover them in an amicable and legal manner are taken care of by a specialized amicable collection agency. The firm will relieves you of all the steps and will preserve your contractual relationship while ensuring you a professional and legal follow-up.

Check the contractual provisions and GTC in case of non-payment

It remains essential also, for the creditor that you are, to check and analyze the lthe dispositions of the contracts and GTC in case of non-payment of invoices. Or the terms and conditions for terminating contracts.

For supplier creditorss of goods, remember to systematically insert a a retention of title clause in your contracts and GTC. This will allow you to claim the property if there is there is a default in payment and to recover it.

Collective proceedings: what you need to know

In the event of the opening of collective proceedings, the creditor will be able to claimto the property within a period of 3 months from the publication of the judgment if a retention of title clause exists.property exists.

The claim will be made in the hands of the customer if the good is still in his possession. If the goods have been resold, the creditor may invoke a right of resale on the sale price of the goods. This is done with the sub-purchaser if the amount has not yet been paid to the debtor.

Finally, when you are aware of a difficulty of your debtor, it is important to consider the demands for guarantee and payment (pledge, lien ...). Mut also to adapt your payment conditions.

Indeed, you may be may tempted to ask for additional guaranteess or cash payment.

However, during the collective procedure, the following will be studied the contracts concluded during the suspect period (period between the date of the opening judgment and the date of cessation of payments which can be set up to 18 months before the date of this judgment) and contracts or obligations of the debtor significantly exceed those of the other party or abnormal payment methods may be subject to of nullity.

When your debtor enters into collective proceedings, it is first of all essential to to declare his claim within two months following the publication of the opening judgment.

To do this, it is essential to monitor the situation of your debtors. DIdeally, you should be informed when your debtor goes into receivership.

With LEGALCITY's credit reports, you are also when your debtors enter into insolvency proceedings. Because indeed, you benefit from a one-year monitoring.

Once the insolvency proceedings have been initiated, the creditor may not terminate the current contract on this ground.

It can on the other hand send a formal notice by registered mail to à the administrator. The aim is to ask the administrator whether or not the current contract should be continued. Without a reply within 1 month the contract will be terminated by right.

Things to remember 

Tny claim madeafter the opening judgment and for the needs of the procedure or in consideration of a service provided, will be considered as a privileged claim. They will be paid à due date (article L622-17 of the Commercial Code). Code of Commerce)

Finally, and this is a very rarely used options option but it is very useful and interesting. interesting.

Lhe creditor(s) may request to be designateds as controller at least 20 days after the opening of the collective proceedings.

This allows the creditor(s) to control and have power over the procedure for theinterest of all the creditors. This allows to act against the former directors in the absence of action by the judicial administrator or the creditors' representative.