Suspect period

The suspect period (période suspecte) is the period preceding the opening of French insolvency proceedings (redressement or liquidation judiciaire) during which certain acts by the debtor can be annulled by the court at the request of the judicial administrator or trustee. Its maximum length is 18 months before the opening judgment. Acts targeted include: payments of unmatured debts, creation of security interests without consideration, and asset disposals at insufficient prices. In due diligence on distressed targets, identifying such acts protects acquirers from inheriting the associated restitution obligations.

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Example: due diligence on a company in judicial reorganisation identifies a CHF 280,000 shareholder loan repayment made 8 months before the opening judgment — within the suspect period. This act is potentially voidable by the judicial trustee, exposing the recipient to a restitution obligation. The acquirer requires a specific warranty in the disposal plan covering this potential restitution claim.

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Hectelion identifies suspect period transactions in distressed due diligence to quantify voidability risk for acquiring parties.