Declaration and verification of claims during the observation period

The opening of collective proceedings (safeguard, receivership or compulsory liquidation) triggers a series of mechanisms designed to organise the handling of the debtor company's difficulties. At the heart of these mechanisms is the management of past liabilities, i.e. debts incurred prior to the opening judgment. Declaring claims is a fundamental step for any creditor wishing to assert their rights. Forgetting or neglecting this step can have radical consequences, including the impossibility of recovering the sums owed. It is therefore crucial to understand the consequences of the declaration, in particular the cessation of interest payments and the prohibition of new registrations. This phase is part of the broader principle of freezing liabilities, which aims to freeze the company's situation on the date of the judgment and enable an accurate assessment of its debts in the context of the progress of the observation period. The ensuing verification then enables the court to draw up the final statement of admitted claims.

Who must declare a claim?

The question of who is subject to the obligation to declare a claim is essential, as it determines the potential participation in the liabilities of the insolvency proceedings.

The principle: all creditors whose claims arose prior to the opening judgment

The general principle is set out in article L. 622-24 of the French Commercial Code: all creditors whose claims arose prior to the opening judgment, with the exception of employees, must send a declaration of their claims to the judicial representative. The nature of the claim (civil, commercial, tax, social security), its amount (even if small) and whether it is certain, liquid and due are all irrelevant. Contingent, conditional or disputed claims must also be declared. This applies to contractual claims (unpaid invoices, rent), claims in tort (compensation due as a result of negligence), or even claims for damages. receivables from contracts in progress terminated after the judgment but for which the triggering event occurred prior to the judgment.

It is important to note that this obligation also applies to creditors with a security interest (lien, pledge, mortgage), although specific rules apply to those with a published security interest. The aim is to make an exhaustive list of all previous liabilities in order to give a true and fair view of the company's situation.

Exceptions and exemptions

The main exception concerns employees. Their super-privileged claims (salaries for the last 60 days, holiday pay, etc.) and other employee claims are verified and paid under a specific procedure involving the Association pour la gestion du régime de Garantie des créances des Salariés (AGS), without them having to make an individual declaration.

Another notable exemption concerns creditors benefiting from a published security (such as a registered mortgage or a published pledge of a business). The court-appointed agent is required to notify them personally or, where applicable, at their elected domicile, of the need to declare their claim. However, this warning does not release them from the obligation to declare, but the time limit for declaring does not run for them until they have been notified of this warning. If they have not been warned, they are not foreclosed. Note that this exemption from the notification requirement only applies to published security interests; a creditor holding an unpublished security interest (such as an unregistered non-possessory pledge) is still subject to the ordinary time limit without prior notification.

Lastly, maintenance claims are not subject to declaration.

Tax and social security claims

Tax authorities (direct taxes, VAT, etc.) and social security bodies (URSSAF, pension funds) are creditors like any other and must declare their previous claims within the time limits set. However, the Treasury and social security bodies benefit from general or special privileges which must be mentioned in their declaration so that they can be taken into account when distributing funds. The fact that they are public bodies does not exempt them from this essential procedure.

How and when to declare your claim?

The declaration formality is subject to precise rules regarding its content, its addressee and, above all, its deadlines.

The content of the declaration

• The amount of the debt owed on the date of the opening judgment, with an indication of the sums due and the dates on which they fall due. The claim must be certified as true by the creditor (or his representative).  
• The nature of the claim (commercial, civil, tax, etc.).
• Evidence of the existence and amount of the claim if it does not result from a writ of execution (e.g. purchase orders, invoices, contracts, IOUs).
• The nature of any lien or security interest attached to the debt (general lien, special lien, pledge, mortgage, etc.). The documents justifying the security must be attached.
• If the claim arises from a current contract, the calculation method and a reference to any outstanding instalments.

We strongly recommend that you attach all supporting documents to your declaration (invoices, contracts, delivery notes, formal notices, any court rulings, etc.) to facilitate subsequent verification. An imprecise or unjustified declaration may be contested.

The addressee of the declaration: the judicial representative

The declaration must be sent to the judicial representative appointed by the court in the opening judgment. His or her name and contact details appear in the publication of the judgment (in particular in the BODACC - Bulletin officiel des annonces civiles et commerciales). Sending the declaration to the debtor company, the insolvency administrator (if there is one) or the court would be ineffective and would not comply with the legal requirement. It is advisable to send the declaration by registered letter with acknowledgement of receipt, so as to retain proof of dispatch and date. Increasingly, the declaration can also be made electronically via a dedicated portal.

Mandatory reporting deadlines

Compliance with deadlines is absolutely essential. According to Article L. 622-24 of the French Commercial Code, creditors must declare their claims within a period of two months from the date of publication of the opening judgment in the BODACC.

This period is extended to four months for creditors who do not reside in mainland France (DOM-TOM and abroad).  

The starting point for this period is the date of publication in the BODACC, which can be consulted online or at the court registry. For creditors holding a published security or bound to the debtor by a published contract, the two-month period runs from the date of notification of the personal warning. sent to them by the judicial representative.  

These time limits are very strict. A declaration received by the judicial representative after the expiry of the time limit is inadmissible, unless a statement of foreclosure is obtained.

Consequences of failure to declare or late declaration

Failure to declare a claim, or declaring it after the deadline, exposes the creditor to severe penalties.

The principle: extinction of the claim (unenforceability of the proceedings)

The main penalty for failing to make a timely declaration is provided for in article L. 622-26 of the French Commercial Code: creditors who have not declared their claims are not included in distributions and dividends. In practical terms, their claim will not be taken into account in the collective proceedings. They will not be paid if a safeguard or recovery plan is adopted, nor will they be taken into account in the distribution of the proceeds of the sale of assets in the event of compulsory liquidation.

This is often referred to as "extinguishment" of the claim, although legally it is more a case of the claim not being enforceable against the proceedings. The claim is not annihilated as such, but it loses all chance of being recovered within the collective framework. The negligent creditor therefore loses the benefit of his claim against the company in difficulty. The only exception: if the company becomes in bonis (for example, after a reorganisation plan has been fully implemented), the creditor could theoretically regain the right to sue individually, but this is rare in practice.

The foreclosure relief procedure: conditions and chances of success

A creditor who has exceeded the declaration period may seek to obtain a "relief from foreclosure" from the official receiver, in accordance with article L. 622-26 of the French Commercial Code. This action must be brought within a period of six months from the date of publication of the opening judgment in the BODACC (or, for creditors who must be notified personally, within six months of notification of the warning, or failing that, within one year of the opening judgment). Please note that this six-month period is itself a foreclosure period: once this period has elapsed, no further action is possible.

To grant relief from the foreclosure, the official receiver must find that the creditor's default is not due to his fault or that it is due to a voluntary omission by the debtor when drawing up the list of creditors.  

• Default not caused by the creditor : The creditor must prove that he has been prevented from declaring his claim by an external, unforeseeable and insurmountable circumstance (force majeure, sudden hospitalisation without the possibility of appointing someone, etc.). Ignorance of the law or the procedure, simple negligence, an error of address or poor internal organisation are generally not considered valid reasons. The courts assess this condition very strictly.
• Voluntary omission by the debtor : If the creditor demonstrates that the debtor has knowingly omitted him from the list of creditors that he must submit to the court-appointed trustee, the statement may be granted. Proof of such intent may be difficult to establish.

If the foreclosure relief is granted, the creditor can then declare his claim, which will be subject to the verification procedure. If it is refused, the claim remains unenforceable against the proceedings. The chances of success of an action for relief from foreclosure are therefore limited and depend very much on the circumstances of each case. The assistance of a lawyer for creditors is often a decisive factor in assessing the relevance of such an action and in defending your rights.

The claims verification phase by the judicial representative

Once the claims have been declared (or after the foreclosure has been lifted), the verification phase begins, conducted mainly by the judicial representative.

The role of the judicial representative assisted by the debtor

The judicial representative's task is to verify each claim declared, both in principle and in amount. He examines the supporting documents provided by the creditor. He is assisted in this task by the debtor (the head of the company or its directors). The debtor is summoned by the judicial representative to give his opinion on each claim: does he recognise it? Does he dispute it, and on what grounds? The debtor's observations are recorded. The liquidator also takes into account the information provided by the court-appointed administrator, if one has been appointed, particularly concerning current contracts. The role of the judicial representative is central to this stage, as it prepares the decision of the juge-commissaire with its proposals, by interaction with the debtor.

Proposals for admission, rejection or referral to the official receiver

Following this verification, the judicial representative will draw up a proposal for each claim:

• Proposed admission : If the principle and amount of the claim appear to be justified, and the debtor does not dispute the claim (or the dispute is not serious), it proposes that the claim be admitted outright, specifying the amount and the nature of the claim (preferential or unsecured).
• Proposal for rejection : If it considers the claim to be unjustified (non-existent, extinguished, already paid, etc.) or if the debtor seriously disputes it, it proposes that the claim be rejected in whole or in part.
• Proposal for referral to the juge-commissaire (establishment of a dispute) : If the claim is disputed by the debtor or by the mandatary himself, and the dispute raises a serious question (interpretation of a contract, application of a complex rule of law, etc.), the mandatary does not settle the dispute but notes the existence of a discussion and proposes that the juge-commissaire rule on the dispute.

The court-appointed agent informs the creditor of his proposal (admission without objection, or proposal for rejection/dismissal with reasons for objection).

Contesting claims: procedure and outcomes

When a claim is contested (by the debtor or the trustee), the trustee informs the creditor by registered letter with acknowledgement of receipt. The creditor then has a period of thirty days to respond to the grounds for the complaint and provide any additional supporting documents.

If the creditor does not respond within this period, he will be deemed to have acquiesced in the challenge, and the mandatary's proposal (rejection or partial admission) will be submitted as it stands to the official receiver. The creditor will no longer be able to contest the official receiver's decision on this point.

If the creditor responds and maintains its position, the dispute is referred to the official receiver. The juge-commissaire will summon the parties (creditor, debtor, mandataire judiciaire, administrator if there is one) to a hearing to hear their arguments before making a decision. The official receiver may either admit the claim (in full or in part), reject it, or declare that he has no jurisdiction if the dispute raises an issue that falls within the exclusive jurisdiction of another court (for example, a complex labour dispute).

Admission of claims by the official receiver

It is the juge-commissaire, the key body in the procedure, who decides on the final outcome of the claims declared and verified.

Decision to admit or reject

On the basis of the proposals made by the mandataire judiciaire and, in the event of a dispute, after hearing the parties, the juge-commissaire makes a decision for each claim.

• He admits the claim if he considers it well-founded, specifying its amount (principal, any interest as at the date of the opening judgment) and its nature (preferential or unsecured).
• He rejects the claim if it considers it to be unfounded.
• It notes his incompetence or the existence of pending proceedings if the dispute exceeds its jurisdictional powers.

These decisions are recorded in a statement of claims filed with the court registry. An insertion in the BODACC informs third parties that this statement has been filed.

Authority of the official receiver's decision

The official receiver's decision on the admission or rejection of a claim has significant authority. Once it is no longer subject to appeal (or appeals have been exhausted), it is res judicata. This means that the question of the existence and amount of the claim is definitively settled between the creditor, the debtor and the bodies involved in the proceedings. It cannot be called into question at a later date, except in very exceptional cases (application for review). The statement of claims drawn up by the official receiver therefore sets out the previous liabilities that will be taken into account when drawing up a plan or distributing the assets in liquidation.

Avenues of appeal

Appeals may be lodged against decisions by the official receiver to admit or reject claims.

• If it rules on its jurisdiction or on a disputed claim, its decision may be appealed by the creditor, the debtor or the judicial representative within ten days of notification of the decision.
• If it rules on an uncontested claim (admission or rejection on the basis of a simple proposal by the agent), the recourse available is an appeal to the Court of Appeal, but this is reserved for interested third parties (for example, another creditor contesting the admission of a competing claim). The creditor, debtor and agent may not lodge this appeal against a decision ruling on an uncontested claim. This appeal must be lodged within ten days of publication in the BODACC of the notice of filing of the statement of claims.

These remedies are technical and governed by strict deadlines, often making the intervention of a lawyer necessary to safeguard your rights.

Creditor of a company in difficulty? Declaring and following up on the verification of your claim are crucial steps in any hope of recovery. Given the complexity of the rules and the deadlines involved, our firm can assist you in this process and defend your interests to the best of our ability. Do not hesitate to contact us for a expert legal assistance in declaring and verifying your claims and to discuss your situation.

Sources

• French Commercial Code: articles L. 622-24 to L. 622-33 (Declaration and verification of claims)
• French Commercial Code: articles R. 622-21 to R. 622-26 (Provisions relating to the declaration of claims)
• French Commercial Code: Articles L. 624-1 to L. 624-4 (Verification and admission of claims)
• French Commercial Code: Articles R. 624-1 to R. 624-8 (Provisions relating to the verification and admission of claims)

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