CHAPTER VI : BANKRUPTCY
There are two rules of court in
the Cameroon legal system : faillite (bankruptcy)
and liquidation judiciaire (judicial liquidation).
These rules of court are built in view of
paying off the creditors.
The court cannot impose either
the cancellation of a debt or any delays in
payment due. In consequence, the company's
survival depends exclusively on the creditor's
will.
The major advantage of these rules
of court are to temporarily stop proceedings
and to stop interests on claims from running
when these claims are not guaranteed by securities.
Additionally, these two procedures
lead to the company's recovery if the creditors
accept the composition proposed to them by
the debtor.
I. THE BANKRUPTCY PROCEDURE
The insolvency can be brought
to the attention of the Court by the debtor
or by one of the creditors. The judgment which
opens the bankruptcy procedure nominates the
trustee in charge of the proceedings.
The trustees are more particularly
in charge of taking conservatory measures
concerning the debtors such as registering
the creditors' mortgage, selling the debtor's
assets or assisting him when he has been allowed
to continue his activity.
In any case, the court also designates
a judge with the mission of overseeing as
well as speeding up the operations. Decisions
taken through statutes are registered at the
clerk of the court's office. They can be opposed
to by any person concerned or by the court
itself. The delay in which an opposition can
be made is of five days from the statute date.
The judge can nominate one or
more "controllers" among the creditors;
their competence and the control that they
have are not directly sanctioned.
The debtor's situation
The opening judgment renders all
the debts containing terms of payment immediately
due and the creditors must declare the total
amount of these debts.
Certain acts, such as payments
and securities granted to some creditors before
the opening judgment are considered as being
suspect and thus are void. These acts are
those accomplished by the debtor after the
court determined date of insolvency, or within
the ten precedent days in view of favoring
some creditors.
The fundamental difference between
faillite and liquidation judiciaire is that
the debtor undergoing liquidation judiciaire
can ask the judge's permission to continue
production with the liquidator's assistance.
On the other hand, the faillite
is a civil punishment. It is automatically
pronounced either at the request of the creditors
when it is established that the request for
liquidation judiciaire was not made within
fifteen days of the insolvency or, if the
court finds it necessary, when the debtor
does not obtain acknowledgment of his composition.
II. THE COMPOSITION
The composition can include a
third party acquisition of the debtor's assets,
a scale-down of debts, a moratorium on repayment
or any combination of these.
It must be voted by a double majority
: the simple numerical majority and the majority
of the creditors representing two thirds of
the debt. In order to calculate the majorities,
one must deduce the votes as well as the amount
of the claims of those who did not vote.
The composition which has been
accepted by the creditors must be confirmed
by the court which can refuse it only in cases
of procedural flaws or cases involving public
interest or the creditor's interest.
The confirmation makes the composition
applicable to all creditors. Only a legal
action demanding invalidation for fraud or
for non-fulfillment is possible.
When there is no composition or
when the debtor does not fulfill the terms
of the composition, liquidators reduce the
debtor's assets to cash and distribute the
proceeds to creditors on a pro-rata basis
in accordance with the payment order laid
down by the law. Individual debtors and sociétés
de personne partners are not discharged from
the bankruptcy debts. This is not the case
of sociétés de capitaux' shareholders.
