The difference between dissolution and liquidation is often misunderstood or even misunderstood. We often speak of “liquidation” to designate the procedure marking the end of life of a society. However, this is a shortcut, which ignores the specificities of two very different procedures. It is through these two stages that you will be able to definitively store liquidation proceed to the liquidation dissolution of a company.
First step: the dissolution
Dissolution is the first step in the dissolution-liquidation process of a corporation. This is the decision to cease the activity taken either by the shareholders (meeting at an extraordinary general meeting) or, exceptionally, by the commercial court judge (in case of paralysis of the company’s operations, in particular following the disagreement between the partners). The majority rules for deciding on dissolution vary according to the social forms: the majority required for a SAS is not the same as the majority required for the dissolution of an store liquidation. It is a necessary prerequisite for the liquidation procedure, which should in principle succeed it. The difference between dissolution and liquidation is thus well understood: the first orders the second.
The criteria for opening judicial liquidation
Judicial liquidation occurs when the company is in the cessation of payments. This means that it is unable to settle its debts with its available assets. Moreover, its recovery must be clearly impossible. The situation of society must thus be irreparably compromised
The procedure of the judicial liquidation
The liquidation procedure may be opened at the request of a creditor, the debtor, or the public prosecutor. If a conciliation procedure is in progress, only the debtor can take this initiative.
- Cessation of the activity of the company.
- The judgment of individual prosecutions.
- Stopping the interest rate.
- Breakdown of employees’ employment contracts.
- Exemption of all debts, even those not yet due.
The judgment pronouncing the judicial liquidation also appoints a legal representative to be liquidator. The latter is responsible for selling the property and paying the creditors.
A judge-commissioner is responsible for ensuring the speed of the proceedings and the protection of the interests of all parties.
At the end of the proceedings, the court declares the closing of the liquidation. Creditors can no longer bring individual suits against the debtor unless there are exceptions.
Hybrid forms of judicial liquidation
In the face of the slowness of the legal proceedings, the legislator has introduced simplified liquidations, designed to shorten the processing time of the file. They concern files with lighter stakes.