How to manage the receivership of the selling price of a business of a Food Business.
When selling a restaurant business, Food truck..., the purchaser will have to pay the sale price into a waiting bank account. The account will be administered by a third party (usually a lawyer) called an receiver. The purpose of this mechanism is to guarantee the rights of the seller's creditors. They can get their bills paid on the sale price. It is also a protection of the buyer, because the goodwill is transferred without liabilities.
The sale price is held in receivership during the period of unavailability of the price.
A distinction should be made between two deadlines:
- The period of unavailability of the prize of 10 days from the date of publication;
- The fiscal solidarity period of 5 months from the date of notification to the tax authorities.
What are the elements to take into account when negotiating the receivership clause?
For the minimum period of unavailability of the price after a sale of goodwill
The principle is established by the article PP. 141-17 of the commercial code. The price is unavailable as long as the creditors' objection period is running. The deadline is 10 days, but it only runs after the legal announcements have been made.
During the period of unavailability, payment of the price is possible, at the risk and peril of the buyer. Indeed, the buyer may find himself obliged to pay the seller's bills!
The recourse to receivership is the result of practice. It allows the purchaser to pay the price securely and the seller to guarantee payment of the price by the seller.
The so-called period of unavailability of the price provided for in article L. 141-17 is a maximum of 40 days and is broken down as follows:
- Publication in the Official Journal within 15 days of the transfer at the discretion of the purchaser (PP. 141-12).
- Publication in BODACC within 15 days of publication in the OJ (L. 141-12).
- Opposition period 10 days from publication in BODACC (PP. 141-14)
In the absence of opposition within this period the price is available.
The time limit of 40 days may be reduced depending on diligence Of the purchaser.
On the other hand, in case of opposition, it is necessary to record the part of the price equal to the amount of the opposition (PP. 141-20 of the commercial code).
A procedure will then be implemented by the receiver to verify the validity of the objections and to make the necessary payments.
Many institutional creditors (for example, wealthy creditors, lessors) have an automated system for declaring objections.
It is also possible for any creditor to put an alert on the BODACC website.
This makes it possible to obtain warnings as soon as a company publishes a publication at BODACC.
Public creditors and the transfer of a business asset:
THESection 1684 of the CGI provides for solidarity in the face of fiscal debt for the Buyer up to the amount of the goodwill price.
The period of 3 months (90 days) begins to run when the administration is notified of the transfer of the restaurant.
- Notification to the Official Journal of the transfer within 15 days;
- Within 45 days of publication in the Official Journal, notification to the administration (Section 201 of the CGI) of the transfer;
- The declaration to the admiration of their real profit accompanied by a summary of their income statement at the date of the sale
- 90 days of fiscal solidarity (for the current year) up to the amount of the goodwill price. The period of 90 days is reduced to 30 days if the declaration of the real benefit was made within 60 days of the transfer.
This is a maximum of 5 months. This explains why it is customary to provide for such a long period of sequestration.
On the mission of the receiver during a restaurant sale:
The duration of the receiver's mission is legally limited to a duration of 5 months (Article L.143-21 of the Commercial Code) as of the transfer of the business.
The mission of the receiver is to receive the objections of the seller's creditors and to respond to them. It can pay creditors.
The receiver's address must be located in the same department as the transferred business. The full contact details of the receiver must be mentioned in the legal announcement. Otherwise, the announcement will be unenforceable against the creditors. From then on, the purchaser will remain debtor of the claims of the acquired business.
In short:
- Seller position. Have the shortest possible receivership period (10 days for creditors and 5 months for the State). The deadlines do not start to run when the formalities are completed by the buyer. One solution to reduce the delay is to mandate a formalist or a lawyer to carry out the formalities.
- Buyer position. The Purchaser must absolutely benefit from the protection of the receiver in respect of third parties. If the seller asks for the funds on short notice, a clear timetable should be put in place for making declarations to the BODACC. It is also necessary to carry out A goodwill audit in order to verify the possibility of objections from potential creditors.
In case of additional questions or the need for a lawyer acting as receiver, our expert Food Business lawyers are at your disposal to accompany you.
