The twilight of a company: judicial liquidation as the only way out
A difficult decision to make
Judicial liquidation is a final procedure that occurs when a company is in a situation of insolvency. This difficult decision is often perceived as a failure by the managers and employees, but it can sometimes be unavoidable to prevent a worsening of the company’s financial situation.
The stages of judicial liquidation
Judicial liquidation takes place in several stages. First, the commercial court appoints a liquidator responsible for selling the company’s assets to repay creditors. Then, the employees are laid off and may be entitled to severance pay. Finally, once the assets are sold and the debts are repaid, the company is permanently closed.
The consequences of judicial liquidation
Judicial liquidation has significant consequences for the company and its employees. For the company, it marks the end of its activity and legal existence. For the employees, it means losing their jobs and sometimes their severance pay. It is therefore a difficult situation for all parties involved.
Alternatives to judicial liquidation
Before resorting to judicial liquidation, there are several alternatives to consider. The safeguard procedure allows reaching an agreement with creditors to reschedule the company’s debts. Judicial recovery aims to enable the company to restructure and continue its activity. These alternatives can sometimes prevent judicial liquidation and save the company.
FAQ on judicial liquidation
When can a company be placed in judicial liquidation?
A company can be placed in judicial liquidation when it is in a situation of insolvency, meaning that it is unable to meet its debts with its available assets.
What are the recourse options for employees in case of judicial liquidation?
Employees may be entitled to severance pay and a guarantee of payment for their salaries and overtime hours by the AGS (Association for the management of the wage guarantee scheme for employees).
Is it possible to avoid judicial liquidation?
It is possible to avoid judicial liquidation by exploring alternatives such as the safeguard procedure or the judicial recovery. It is important to seek the assistance of a legal professional to find the best solution for the company.
In conclusion, judicial liquidation is a challenging outcome for a struggling company. It is a decision with serious consequences that can sometimes be unavoidable to prevent a worsening of the financial situation. It is important to seek assistance from legal professionals to find the best solution for the company and its employees.
