There are several criteria for defining a company in difficulty. In general, a company is in difficulty when it struggles to honor its financial deadlines, whether it concerns monthly loan payments, invoices or bills that remain unpaid.
Social difficulties can also come into play: poor staff management, numerous departures or understaffing can, along with the financial question, aggravate a situation.
Most companies encounter difficulties during their existence, without this being considered problematic. There is a risk to the health of the company when the difficulties become chronic. There are then several procedural solutions to try to stabilize the situation, or if necessary, to cease the activity.
A specific criterion characterizes the opening of the various procedures concerning companies in difficulty: this is the “ cessation of payments ”. It is defined as the fact, for a company, of no longer being able “ to meet its liabilities with its available assets” ( article L. 631-1 of the Commercial Code ). Any manager of a company in a state of cessation of payments must declare this state to the registry of the competent court within 45 days following the cessation of payments.
Let’s see in detail what solutions are possible when a company is in difficulty.
In the context of the health crisis linked to the Covid-19 epidemic , several measures have been put in place for companies, and in particular:
The State-Guaranteed Loan (PGE) provides support for bank financing of businesses. It is open to all companies until June 30, 2022 (article 161 of law n° 2021-1900 of December 30, 2021 of finance for 2022 ) everywhere on the territory and this, whatever their size and their legal form. Companies could take out a PGE with their bank. The amount of the loan could reach up to 3 months of 2019 turnover or 2 years of payroll for innovative companies or companies created since January 1, 2019.
A temporary “simplified processing” procedure to help companies facing difficulties caused or aggravated by the health crisis. This procedure is reserved for companies with fewer than 20 employees and less than 3 million euros in declared liabilities. It is open to companies in default of payment and applies until June 1, 2023 ( law no. 2021-689 of May 31, 2021 relating to management of the end of the health crisis). This procedure makes it possible to adopt a crisis exit plan and aims to restructure the company’s debts.
A transition fund provides support for medium-sized companies and large companies affected by the repercussions of the health crisis. Provided they meet persistent financing needs or strengthen their balance sheets, this fund makes it possible to obtain loans or quasi-equity instruments. An advisory committee studies each file before accepting or refusing aid. Funding requests are made by e-mail to the following address: fonds.transition
Aid for “rent and rental charges” for retail businesses and services prohibited from receiving the public between February and May 2021. The aid application is made in one go between November 29, 2021 and February 28, 2022 from the tax
The Government had set up a “fixed cost aid” aimed at compensating for the uncovered fixed costs of companies created between January 1, 2019 and January 31, 2021, whose activity is particularly affected by the Covid-19 epidemic. Single requests for aid had to be submitted electronically between December 1, 2021 and January 31, 2022
Additional aid to the solidarity fund has been put in place for the period from July 2021. This additional aid is paid to companies that carry out an activity falling within the S1 or S1 bis sectors, under certain conditions. The aid is paid from January 2022 without any action by the company.