An analysis of the provisions of the May 20, 2020, order adapting certain regulations to address the challenges faced by businesses as a result of the COVID-19 pandemic. Today, Kérine Tran discusses the adaptation of the conciliation procedure.
Once again, we find ourselves in a period of public health emergency. Today, we’d like to discuss the rights of businesses in financial distress. As you can imagine, the government has had to adapt these rules to the situation that market participants are currently facing.
Here, we have focused on how the conciliation procedure has been adapted in light of the COVID-19 pandemic. As a reminder, the conciliation procedure is a confidential process initiated by the company’s management, during which the conciliator is tasked with facilitating amicable agreements between the company’s customers and business partners. Under normal circumstances, during such a process, creditors who are unable to reach a satisfactory agreement with their debtors may initiate or continue legal proceedings to obtain a judgment ordering payment.
The Order of May 20, 2020, which adapts the rules governing business difficulties to the consequences of the COVID-19 pandemic, established the option for a debtor to request from the court a targeted suspension of enforcement proceedings if a creditor refuses to restructure the debt. The debtor may also requestthe suspension or prohibition of any enforcement proceedings by that creditor.
Finally, the debtor may obtain a deferral or installment plan for the payment of amounts owed. In a sense, if the judge grants the debtor’s requests, the debtor may, for the duration of the conciliation period, benefit from certain provisions normally specific to collective proceedings—such as safeguard proceedings, reorganization, and judicial liquidation. One might question whether such an adaptation is compatible with the principle of consensus that characterizes conciliation.
In any case, this provision may not remain in effect beyond December 31, 2020, the date until which the provisions of the order of May 20, 2020, remain in effect.