- Ratification of composition agreement: The debtor is required to make a proposal for a composition with his creditors within 30 days of the declaration of insolvency. The administrator and the creditors are informed of this proposal and, at the same time as the claims are being verified, the administrator also seeks to reconcile the positions of the debtor and the creditors as to composition.
- Performance of composition agreement: The court may decide that performance of the composition agreement be supervised by controllers or by the administrator. The composition agreement may provide for a partial divestiture of the debtor’s assets, in the form of a sale of tangible or intangible, real or movable property, or of a branch of the business.
- Effects of composition agreement: Once the composition agreement has been ratified by the court, it is in principle binding upon all the creditors existing before the administration judgment. There are however exceptions to this rule.
. Administrative bodies under a statutory obligation not to grant reductions or grace periods are not bound by the composition agreement.
. Creditors with special real securities are bound, only by grace periods or reductions that they have themselves granted.
. Employees of the debtor, upon whom no reduction whatsoever and no grace period of more than two years may be imposed etc.
- Cancellation or nullification of composition agreement: The composition agreement may be cancelled by the court in the event of a serious breach by the debtor of its obligations under the agreement or if management functions are being exercised by persons who have been prohibited from assuming such functions or who have been declared in personal bankruptcy.
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