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French client possibly facing bankruptcy
Thread poster: Lyn Mhairi

Lyn Mhairi
Local time: 21:23
Spanish to English
+ ...
Jul 9, 2005

Hello,

I am based in Montreal and have been translating for a Paris-based client on a daily basis for the past 8 months. For the first five months, there were no payment problems but then the client began to lag behind. He told me last week that he is facing possible bankruptcy and may not be able to pay me for my last three months of work.

I have read through several previous proz.com emails regarding possible bankruptcy but I am still wondering if there is anything specific I should do before the client declares bankruptcy. I understand that if he does indeed go bankrupt, then I will be on the bottom of a very long list.

I would appreciate any comments.
Many thanks,
Lyn


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craigs
Local time: 21:23
English to Portuguese
+ ...
Helpful link at www.iiiglobal.com Jul 9, 2005

International Insolvency Institute, France directory
http://www.iiiglobal.org/country/france.html

Let us know (generally) how things turn out.

Good luck.


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Kevin Fulton
United States
Local time: 21:23
German to English
You are an unsecured creditor Jul 9, 2005

I cannot comment on French law, but in most jurisdictions, unsecured creditors only get what's left over after the creditors with collateral get their share. Unless the amount owed is substantial, there's hardly any point in obtaining any but the most rudimentary legal advice.

You have my sympathy.


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Lyn Mhairi
Local time: 21:23
Spanish to English
+ ...
TOPIC STARTER
Thanks Jul 9, 2005

Thank you both for replying. I will check out that link. I may just stick to Canadian clients from now on!
Lyn


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Lawyer-Linguist  Identity Verified
Portugal
Local time: 02:23
Dutch to English
+ ...
Concurrent (unsecured) creditor Jul 10, 2005

Hi,

As a lawyer and former insolvency practitioner I can confirm that any claim you would have in law is concurrent (unsecured). Kevin is quite correct.

You will rank on any surplus in the estate after costs of administration of the bankruptcy/liquidation, secured and preferent creditors have been paid. More often then not the general pot is empty.

Until a bankruptcy (or liquidation) order is granted though, you should continue to try and collect your debt in the normal manner. Debtors have been known to plead poverty and on the side still be living a cushy existence and trading, so remain firm in your efforts until you see actual proof of bankruptcy/liquidation. (i.e. a court order, correspondence from the bankruptcy trustee/receiver or liquidator, as the case may be.)

For all you know you may be one in a string of translators this happens with - things goes well, daily work and then the pot dries up. Unless you see a Court order, you don't know if this is a ploy or for real.

In most countries it is a criminal offence to knowingly trade under insolvent circumstances. I suggest you let your client know that you intend pursuing this aspect.

Cash flow problems don't happen overnight, it's been hapening here for at least 3 months.

It's a long shot but maybe the thought of criminal charges being filed may put the necessary pressure on your client to pay up.

You must decide whether you want to take this route and this shouldn't be construed in any way other than friendly advice as I don't have all the facts but it is what I would probably do under the circumstances.

I once had a very large outstanding debt with an agency here in Algarve. Conventional action didn't work. It was only after I threatened to report certain tax irregularities that I had noticed were taking place generally that I got the necessary response and the agency that had been pleading cash flow problems suddenly found a way to pay.

Debt collection is notoriously slow and pricy - so find the archilles heel and use it. Here you have a client who has admitted it is insolvent and traded that way. Use it.

Finally, and this is not an "I told you so" but is rather directed at anyone else reading. This is a classic example why we should not as freelancers have too many eggs in one basket and must act and refuse tactfully to take any more assignments the moment an invoice becomes overdue by more than a few days.

We meet our deadlines and deserve the same back. Obviously any client can have a problem or overlook a payment but if you know you are getting strung along and the excuses are wearing thin, then is the time to act, not to continue working for them.

I'm really sorry to hear of your situation and hope the outcome is to your satisfaction.

Debbie


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Lyn Mhairi
Local time: 21:23
Spanish to English
+ ...
TOPIC STARTER
Thank you, Debbie Jul 10, 2005

Thank you for taking the time to respond. It is all a bit grim, really. The thought of taking someone to court in a foreign country seems like something that could quickly escalate into a much bigger problem. But I agree that it could be the only way to see any of the money.

In any case, I greatly appreciate your advice and comments.
Lyn


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Lawyer-Linguist  Identity Verified
Portugal
Local time: 02:23
Dutch to English
+ ...
Not suggesting foreign litigation Jul 10, 2005

Hi Lyn,

What I'm actually suggesting is a letter asking for proof that a bankruptcy/liquidation order has been granted or that the proceedings are underway and to state, that since this client apparently continued trading while insolvent (i.e. continued to feed you with daily orders whilst knowing he did not have the means to pay), you view this in a serious light and in addition to continued debt collection procedures, you are taking legal advice on whether to file criminal charges.

See if that jolts them a little. It worked here when I approached things from a tax perspective.

As I said yesterday, many clients plead poverty, hoping you'll give up, so keep the kettle boiling so to speak.

I don't think you have much to lose at this stage doing this but of course you must be the sole judge of that as I don't have all the facts.

If your client is declared bankrupt/liquidated a receiver/bankruptcy trustee or liquidator will be appointed. There will be a certain perod of time for you to file your claim and that info should be on the link provided yesterday. That is an administrative procedure and you do not have to proceed to Court at that stage, merely wait for the process to be completed. The appointee will report to you in terms of French law on the prospects of any dividend.

Good luck
Debbie


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Stephanie Wloch  Identity Verified
Germany
Local time: 03:23
Member (2003)
Dutch to German
Good to remember Jul 11, 2005

Deborah do Carmo wrote:
This is a classic example why we should not as freelancers have too many eggs in one basket and must act and refuse tactfully to take any more assignments the moment an invoice becomes overdue by more than a few days.

Thank you very much.
I know that - most of us do - depending on just a few clients could be a great risk (look at the poll).
And I really must take some action now.
You are also right with "refusing tactfully":
I accept only that an invoice is overdue, if it was by mistake and will be solved quickly.


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Florence B  Identity Verified
France
Member (2002)
English to French
+ ...
As far as France is concerned Jul 11, 2005

The first thing to do is to send a **double** registered letter (you will need the receipt) bearing the mention "Mise en demeure".
If it doesn't work (ie, if you are not paid) you will need to contact an "huissier de justice" (a bailiff) in the same jurisdiction as your client. You could theroratically do without, but you would need to travel to the court. He will require a few documents, including the receipt of the registered letter and a purchase order (it can be an email though), and you should normally get an "injonction de payer" from the tribunal d'instance.

You can find a bailiff from there
http://www.huissier-justice.fr/Annuaire.asp

Don't wait for them to file for bankruptcy - just do it now.

Some more info (in French of course)
http://www.cdad-gers.justice.fr/frame_fiche.asp?id_chap=8
http://www.greffe-tc-paris.fr/Judiciaire/requete_inj_payer.htm


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Lyn Mhairi
Local time: 21:23
Spanish to English
+ ...
TOPIC STARTER
Thank you Jul 11, 2005

Thank you all very much for your advice.
You've been very helpful.

Lyn


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Lawyer-Linguist  Identity Verified
Portugal
Local time: 02:23
Dutch to English
+ ...
Good advice Jul 11, 2005

[quote]Oddie wrote:


Don't wait for them to file for bankruptcy - just do it now.

Exactly my view - pleading bankruptcy is the oldest trick in the book. Call for proof of that but don't hold back on normal debt-collecting procedures.


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Lyn Mhairi
Local time: 21:23
Spanish to English
+ ...
TOPIC STARTER
Clarification Jul 11, 2005

Deborah do Carmo wrote:


Exactly my view - pleading bankruptcy is the oldest trick in the book. Call for proof of that but don't hold back on normal debt-collecting procedures.


Hi Debbie,

My client has told me that he has not yet filed for bankruptcy and that he is waiting for his shareholders to tell him what his next step should be. He "temporarily" stopped his business activities as of July 8. Should I still write asking for proof that a bankruptcy or liquidation order has been granted or that the proceedings are underway, as you mentioned? And should that request for information be separate from the "mise en demeure"? Or should I include all of the following in one registered letter?

1. Request for proof that a bankruptcy or liquidation order has been granted or that the proceedings are underway;

2. A formal request for payment;

3. Notification that I am seeking legal advice about whether to file criminal charges.

Thank you again,
Lyn


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