Law n° 1.002 of 26 December 1977 which came into effect on 1 January 1978, Article 408 to 611 of the Code of Commerce is of particular interest.
This law, which remains unchanged, sets out procedures for efficient management of terminations of payment, commonly known as “bankruptcies,” and of companies in difficulty. We will focus on two points: first, the overall procedure, and second, specific applications of article 411. The procedure can be initiated in three different ways: at the initiative of the courts, at the request of a creditor, or through the declaration of bankruptcy on the part of the debtor company. Article 411 is particularly interesting with respect to the way it is used in court. It may allow for the company to be rescued, in a way. It reads:
“Whatever the method for initiating the procedure, the President may appoint a court officer to collect all the information about the situation of a debtor. The court officer’s report is submitted to the general registry; the debtor is notified of the submission, as is, if necessary, the plaintiff creditor.”
The court officer is a certified accountant appointed by ministerial Decree by order of the President of the Court of First Instance. Court officers are responsible for examining the company’s situation with the director. The form of the report illustrates their responsibilities: description of the company, origin of difficulties, current staff, situation in relation to creditors, existing assets. This constitutes a “mini-audit”.
Following the verbal presentation of the report, at the hearing before the Tribunal of First Instance, and in presence of the debtor, the court officer will set out their findings and may make recommendations. At the hearing, the court may decide to request a new report at a given date so that the recommended solutions may be implemented. All deadlines are set by mutual consent, and are generally between three and six months.
In this way, even though it is not explicitly set out by the law, the sort of scheme for saving companies in difficulty in the neighbouring country finds a coherent and effective application in Monaco.