Collective proceedings aim to place a distressed business under judicial oversight to organize the settlement of its debts.
Whether through safeguarding, judicial reorganization, or liquidation, several types of collective proceedings can apply to businesses facing difficulties.
Types of collective proceedings based on the severity of the company’s financial situation:
The safeguard procedure applies to businesses experiencing difficulties but not yet insolvent. It is a preventive measure aimed at facilitating business reorganization and restructuring its debt to maintain economic activity. All debts are frozen as of the procedure’s initiation date.
The entrepreneur must request the safeguard procedure from:
To avoid progressing rapidly to judicial liquidation, it is strongly recommended to seek assistance from a chartered accountant, a specialist in managing these situations.
The judicial reorganization procedure applies to businesses that are already insolvent. Its goal is to allow the continuation of economic activity, preserve employment, and settle liabilities (e.g., repaying debts, paying salaries).
After an observation period and assessment of recovery options, a reorganization plan will be implemented if the business is deemed viable. Otherwise, the court may initiate judicial liquidation proceedings.
Judicial liquidation is the final step when safeguard or reorganization efforts have failed. In this phase:
Judicial liquidation signifies the end of the business’s operations.
Seeking expert guidance during any stage of collective proceedings can help manage challenges effectively and, where possible, preserve the future of the business.