Today, following up on our last video, we will discuss the amendment introduced bythe ordinance of May 20, 2020—which adapts the rules governing business difficulties resulting from the COVID-19 pandemic—regarding the business recovery procedure.
As a reminder, this procedure—which is modeled after the personal debt relief process for individuals—allows a sole proprietor to have their debts discharged without resorting to judicial liquidation. Of course, certain criteria must be met to qualify for this procedure, notably that of declared assets totaling less than €5,000. The order issued on May 20 raised this asset threshold to €15,000, which significantly broadens the scope of professional rehabilitation procedures.
The advantage of such an amendment isthat it provides an additional opportunity for a debtor who has faced—and continues to face—a situation that poses a serious threat to their businessto get back on its feet.
The drawback we see lies in the limits of the debtor’s financial credibility, which, moreover, may no longer be covered by credit insurers. Normally, this change in the threshold is in effect through December 31, 2020, inclusive. Only time will tell whether this provision will remain in effect after that date.