Insolvency Law at Monaco
Monaco's insolvency framework is structured to address both corporate and individual financial distress, emphasizing creditor protection and the prevention of fraudulent conduct.
🏢 Corporate Insolvency Procedures
1. Preventive Conciliation
Introduced by Draft Bill No. 1.094, this voluntary and confidential procedure allows businesses facing financial difficulties to seek amicable solutions. A debtor may request the President of the Tribunal de Première Instance to appoint a conciliator if they are not in suspension of payments for more than two weeks. The conciliator facilitates negotiations between the debtor and creditors, aiming to reach an agreement that ensures the business's continued operation. If an agreement is reached, the President can homologate it, making it enforceable and suspending legal actions against the debtor during the agreement's execution . (Preventing Business Difficulties: Towards A Monegasque Conciliation Procedure - Corporate and Company Law - Corporate/Commercial Law - Monaco, Towards a Monegasque conciliation procedure - CMS Monaco Law Firm)
2. Court-Ordered Business Pledge
Under Article 762 bis of the Code of Civil Procedure, a creditor who perceives a serious threat to the recovery of a loan can request the President of the Court of First Instance to order an interim charge over a business asset. This provisional measure protects the creditor's interests and must be followed by a court hearing within three months. If the court recognizes the debt, a final charging order is issued, allowing the creditor to seize assets or apply for an order of sale . (Court-ordered business pledge)
⚖️ Criminal Offense: Fraudulent Organization of Insolvency
Law No. 1.494, enacted on July 17, 2020, introduced provisions into the Criminal Code criminalizing the fraudulent organization of insolvency. This offense occurs when a debtor intentionally increases liabilities, diminishes assets, or conceals income or assets to evade debt enforcement. Penalties include imprisonment from one to three years and fines up to €90,000. The statute of limitations for prosecution is three years from the date of the financial ruling the debtor sought to evade . (The offence of fraudulent organization of insolvency - Criminal Law, Fraudulent Organisation of Insolvency: New Offense under Monaco Law - DL Corporate & Regulatory, The Offence Of Fraudulent Organization Of Insolvency - Insolvency/Bankruptcy - Insolvency/Bankruptcy/Re-Structuring - Monaco)
👤 Individual Insolvency
Monaco's legal framework primarily addresses corporate insolvency. While individuals facing financial difficulties may seek preventive conciliation, specific provisions for personal bankruptcy are limited. Individuals may need to resort to general civil procedures for debt relief.
RELATED Blog
0 comments