Service Point's 51%-owned French subsidiary (Reprotechnique) to restructure

At the end of the Press Release Service Point issued to announce its 1st Half 2010 Financial Results, Service Point's Press Release said this:

Reprotechnique’s restructuring plan

The shareholders of Reprotechnique, a French company where Service Point holds a 51% stake acquired in June 2008, have formally applied for a “Redressement Judiciaire”, a process aimed at redressing the company’s economic trend and undertaking a plan to make the said subsidiary viable whilst not entailing an additional financial burden on shareholders’ funds.


Joel's comments:

My french-language skills are not very good (disclaimer; I took 2 years of French in high-school, but that was over 45 years ago!), so I was not familiar with the french words, "redressement judiciaire". I copied those two words into the translation window on Google Translate and Google Translate came up with this translation: "receivership".

After doing some further Googling on the words, "Redressement judiciaire," I came up with a web-site at http://www.connexionfrance.com/ (France's English-language newspaper), on which I found an article about "bankruptcy" in France. I don't think that "Redressement judiciaire" means or is the same thing as "bankruptcy", and I'm only mentioning the article I found because it does mention "Redressement judiciaire" and, if you care to read more about that term and what it means (or might mean), have at it .....

"What to know about bankruptcy"
Connexion edition: October 2009
BY THE end of the year 70,000 businesses will have failed in France, according to a recent study by credit insurers Euler Hermes SFAC - a rate not seen since 1990 and 20% more than 2008.

In France bankruptcy procedures involve several stages aimed at trying to keep a business afloat.
Bankruptcy may be translated as faire faillite, though this is no longer used officially. In everyday language people also call it déposer son bilan. The modern procedure usually involves three stages - cessation de paiements, then redressement judiciaire and liquidation judiciare.

If your business is in serious difficulty with payments a procédure de sauvegarde may stave off bankruptcy. This involves formal negotiations with creditors under judicial supervision to help you reorganise. This is done on application to a tribunal de commerce.

Two other options with a similar aim involve nomination by the court of intermediaries between the firm and creditors called a mandataire ad hoc or a conciliateur (the latter is available even after cessation de paiements, for 45 days).

A business is said to be in cessation de paiements once it is unable to pay its due debts. The owner is obliged to declare it to the tribunal de commerce within 45 days unless conciliation is under way (it is the tribunal de grande instance for professions libérales, sociétés civiles and associations). The court will call the owner for a private hearing within 15 days. It then either opens redressement judiciaire or goes straight to liquidation judiciaire if it is impossible for it to be saved.

Redressement (literally “setting something back on its feet”) allows for the business to continue, maintain employment and start paying debts.

The court designates a juge-commissaire (a judge to oversee correct procedure), a mandataire judiciare who acts in the interest of creditors. An administrateur judiciaire (administrator) may also be appointed (obligatory for large firms only). A firm may also be called into redressement following a writ from a creditor or a request from the government or a court (for example if conciliation has failed).

There is an observation period of up to 18 months, during which the administrator may help the business owner or run the business themselves. Third parties interested in buying the firm to maintain activity are invited to make offers.

During the observation period the firm may be closed on debts being paid off or the court may decide to liquidate it. Otherwise, a recovery plan (for up to 10 years), is worked out if there is a chance it can be saved. This includes an agreement on how to pay debts, accounting for agreed delays and discounts, and may involve stopping certain activities. The administrator agrees on whether contracts for ongoing work should be fulfilled and limits on payment of new debts are set.

The redressement is noted (if appropriate) in the registre du commerce et des sociétés or répertoire des métiers and is inserted in BODACC (an official civil and commercial announcements bulletin) and a legal announcements journal.

If redressement is impossible, liquidation judiciare follows on order of the court.

An employment law expert for Dordogne Chamber of Commerce, Philippe Berlouin, said the impact on owners varied.

“If they are a sole trader and have not protected themselves with a déclaration d'insaisissabilité [drawn up with a notaire] they may have to sell some of their own assets to pay debts. The owner of a limited company is protected unless they are deemed to have acted improperly.”

• On www.infogreffe.fr you can consult information on firms, including, for €1.55, details of procédures de sauvegarde or orders of redressement or liquidation. You can also set a notification alert for changes.

Effects on staff

YOU may face redundancy during the redressement period if it is decided your job has to be sacrificed to keep the firm going. If your firm is liquidated you will also be made redundant. Staff must be paid any compensation they are entitled to under contracts (eg. for the redundancy and untaken holidays), if necessary using a national insurance scheme funded by employers’ contributions (la garantie des salaires) - this scheme can also be used to ensure staff are paid during redressement.

There is usually an administrative delay of about a month before unemployment pay can be established following redundancy, but the compensation helps tide them over, according to employment law expert Philippe Berlouin.

“Some times there can be extra delays, for example if the employees were not properly informed of their right to either take ordinary redundancy or to a follow a conversion plan.”

The CRP plan gives benefits and priority for job training - see Redundancy: the start not the end

If there are disputes over compensation or the employee feels correct procedure was not followed, an application to the conseil des prud'hommes may be made.

“For example, they might not have been asked to a preliminary interview before being made redundant within the correct period - there are very formal rules.” This application is free and usually no lawyer is required, though it may be advisable, in which case possible legal aid will be means-tested. Sometimes people may have a legal assistance component to an insurance policy.

Creditors

If a company is undergoing redressement this will include establishing committees of major creditors who will be consulted.

Creditors should lodge details of what they are owed with the mandataire judiciaire.

In liquidation, a liquidator is appointed to pay creditors with remaining assets based on a set order of precedence, with legal costs, salaries, taxes and charges top priority, then banks, suppliers and finally customers.