Receivership is a procedure aimed at safeguarding a company and clearing its debts through a composition agreement per the OHADA Law.
A debtor who is unable to clear his current debts with his assets shall file a declaration of insolvency so that receivership proceeding may be commenced regardless of the nature of his debts.
The declaration shall be made before the competent court in return for a receipt within a period of thirty days from the date payments are suspended. The declaration shall include the following documents drawn upon the date of the declaration;
- An extract of the registration in the Trade and Personal Property Rights Register,
- Summary financial statements comprising specifically the balance sheet, profit and loss account and statement of income and expenditure,
- Available funds
- A statement in figures of claims and debts containing the names and addresses of the creditors and debtors,
- Detailed statement of collateral securities and secured debts granted or received by the company and its managers,
- An inventory of the debtor’s property showing the movable property subject to claim by their owners and the property affected by an ownership reserve clause etc.
At the time of deposit of the documents mentioned above and no later than fifteen days following the said deposit, the debtor shall file a composition proposal specifying the measures and conditions envisaged for the recovery of the company, in particular:
- The modalities for continuing the operation of the company such as the application for time limits and debt remissions, partial transfer of assets specifying the property to be transferred; transfer or management lease of a branch of an activity which is part of the business; the transfer or management lease of the entire company. Such modalities shall not be restrictive or exclusive of each other.
- The persons who will execute the composition agreement and all the engagements undertaken by them for the recovery of the company etc.
As soon as the debtor deposits the composition, the competent court shall forward same to the Bankruptcy Trustee to seek the opinion of the controller where one has been appointed. The proposal shall be notified to the creditors through published legal notices.