Permanent Closure: Company in Judicial Liquidation
A difficult but necessary decision
When a company faces financial difficulties, judicial liquidation may become the only solution to orderly cease its activities. This procedure, regulated by the law, allows for the sale of the company’s assets to repay its creditors and definitively end its activities.
The decision to resort to judicial liquidation is never taken lightly. It usually comes after months, or even years, of financial difficulties and unsuccessful attempts to turn the situation around. For business leaders, it is often heartbreaking to have to put an end to an entrepreneurial adventure that may have lasted for years, or even decades.
Steps of judicial liquidation
Judicial liquidation is a complex procedure that involves several steps. Firstly, the company must submit a file to the commercial court to request the opening of the procedure. Once this request is accepted, a liquidator is appointed to manage the sale of the company’s assets.
The company’s creditors are then called upon to make themselves known so that their claims can be taken into account within the liquidation process. The liquidator then proceeds to sell the company’s assets, starting with the most easily marketable assets (equipment, inventory, etc.).
Once all assets are sold and creditors are repaid as much as possible, the company is definitively closed and deregistered from the business registry. The company’s employees lose their jobs and may be entitled to severance pay within the judicial liquidation procedure.
Consequences of judicial liquidation
Judicial liquidation has significant consequences for all stakeholders of the company. For executives, it often marks the end of an entrepreneurial career and the acknowledgment of the failure of their project. For employees, it means losing their jobs and sometimes their rights to training and unemployment benefits.
For suppliers and creditors of the company, it often results in significant financial loss. Indeed, within the scope of judicial liquidation, claims are repaid in order of priority, which means that some suppliers may never see their money again.
Finally, for the local economy, the closure of a company in judicial liquidation can have significant consequences. The disappearance of an economic player can lead to repercussions on employment and the activities of neighboring businesses.
FAQ on judicial liquidation
What are the differences between judicial liquidation and bankruptcy?
Judicial liquidation is a legal procedure that allows for the orderly winding up of a company by selling its assets to repay its creditors. Bankruptcy, on the other hand, is a situation of company insolvency, which can lead to judicial liquidation if no solution for recovery is found.
What recourse do employees have in the event of judicial liquidation?
Employees of a company in judicial liquidation may be entitled to unemployment benefits and severance pay within the procedure. They can also bring a case to labor courts to contest the conditions of their dismissal and claim damages.
What are the rights of creditors in the context of judicial liquidation?
Creditors of a company in judicial liquidation must inform the liquidator of their claims. They will be repaid in order of priority, beginning with preferred creditors (employees, social security agencies, etc.) before moving on to ordinary creditors (suppliers, banks, etc.).
In conclusion, judicial liquidation is a difficult but necessary procedure to terminate the activities of a financially troubled company. It has significant consequences for all stakeholders, but ensures an orderly and fair ending for everyone.
