Prevention of difficulties
- Internal prevention: the statutory auditor or any shareholder alerts the head of the business to facts likely to jeopardise its operations.
- External prevention: the president of the court summons the head of the business where it appears from records and documents that the business is experiencing difficulties.
- Conciliation: a conciliator is appointed to facilitate an agreement with the main creditors; once approved by the court, the agreement suspends individual enforcement actions for the duration of its performance.
Safeguard, reorganisation and liquidation
- Safeguard proceedings are opened at the request of the head of a business that has not ceased payments but is facing difficulties it cannot overcome on its own.
- Judicial reorganisation requires cessation of payments; it results in a continuation plan or a sale plan.
- Judicial liquidation is ordered where the situation is irretrievably compromised.
- The head of the business must declare cessation of payments within thirty days thereafter, failing which personal sanctions apply.
Effects of the opening judgment
- Individual enforcement actions are stayed and payment of debts arising before the judgment is prohibited.
- Creditors file their claims with the trustee within the time limit set by the judgment, failing which they are time-barred.
- Ongoing contracts may be continued by the trustee; employees enjoy a preferential right for their wage claims.
- Directors may be ordered to make good the shortfall in assets, be barred from commercial activity or be prosecuted for fraudulent bankruptcy.
Key articles
Declaration of cessation of payments
« The head of the business must apply for the opening of proceedings for the treatment of difficulties no later than thirty days after the date of cessation of payments, that is, the date on which the business is no longer able to pay its debts as they fall due. »
A lawyer's points to watch
- Late declaration of cessation of payments is the leading cause of directors being held personally liable: have the date of the situation established by an expert.
- A creditor that does not file its claim within the time limit loses the right to be paid in the proceedings: monitor publications in the Official Bulletin.
- Conciliation remains confidential and protects the business's credit standing: it is often preferable to open proceedings.
The English text on this page, including the quoted articles, is an unofficial translation. Information sheet prepared by Maître Lahfaia Law Firm, Rabat. It does not constitute legal advice. Only the text published in the Official Bulletin of the Kingdom of Morocco is authoritative; the articles cited may have been amended since this sheet was written.