Business difficulties: how much do trustees affect?

Business difficulties: how much do trustees affect?

How much does the trustee receive on a safeguard, recovery or liquidation? Médias24 took an interest in the subject by analyzing more than 150 decisions rendered between 2014 and June 2022. The research covered the main commercial jurisdictions, including that of Casablanca, Rabat, Marrakech or Agadir.

In a procedure of difficulty, the syndic is the central body. He controls the execution of the backup plan, conducts recovery and liquidation operations, verifies receivables… These are, among other things, the prerogatives granted to him by law (Commercial Code). In practice, and depending on the case, the interested party can go so far as to replace the business manager. Full powers that place the future of the company in his hands.

If the law evasively mentions the missions of the syndic, his fees are not framed by any legal text. Revised in 2018, Book V of the Commercial Code refers this framework to a decree which is slow to see the light of day. In the meantime, remuneration is set, on a case-by-case basis, by the supervising judge in charge of the procedure.

What about the amounts? The prescriptions consulted by us show a range ranging from 2,000 DH to more than one million dirhams.

Marrakech is the city where we have identified the largest amounts. We cite the case of Youssef Zaghloul. In 2015, this chartered accountant received 1.6 million dirhams as trustee responsible for the recovery of SOCOMARYOU. The order states that the fee is for the “solution preparation period”. Which extends from the recovery judgment to the presentation of the company’s balance sheet for the adoption of a continuation or disposal plan. Theoretically, this stage should last eight months. In practice, this deadline is often exceeded.

An advance of 1 MDH for the former trustee of Samir

In 2018, the same court awarded 1 MDH to El Houcine Dinar, responsible for leading the liquidation of Sofa Sud and its subsidiaries. We have not been able to determine the duration of his missions. This is a determining criterion, but not the only one. In Fez, we have identified the case of a trustee paid 140,000 DH in a liquidation procedure where he officiated for a decade, but on a small file.

The size of the company sometimes underlies the complexity of the procedure. And seems to condition the amount of remuneration. The example of the Samir is edifying. This file is commonly accepted as being the biggest bankruptcy in the history of the Kingdom. In this case, we identified two fee decisions. They concern Mohammed Krimi, the former trustee in charge of the refiner’s liquidation. The first order dates back to 2019. The expert received 214,000 DH for the board meetings he attended on behalf of Samir. Dated February 2021, the second evokes “a advance on fees” of one million dirhams.

Mohammed Krimi officiated from March 21, 2016 to May 10, 2018, when he was replaced by Abdelkbir Safadi, a registry official.

On, research is not always easy. We find decisions that mention neither the name of the trustee nor that of the company in difficulty. At the Casablanca Commercial Court, one of these anonymous files saw the beneficiary receive a ” advance “ of 500,000 DH.

Commissions and salaries

In some cases, fees are paid on specific assignments. This is what emerges from another important file: the liquidation of LGM Denim. In 2018, his trustee Ali Oulal was authorized to deduct 200,000 DH from the judicial sale of real estate belonging to this former flagship of the textile industry.

The other mode of remuneration is similar to salaries. We noted several decisions ordering the “monthly payment of fees deducted from the net profit of the company”. The amounts often oscillate between 6,000 and 7,000 DH. This remuneration is paid until “the disposal of these assets or the cessation of its operation”. Either without a specific deadline.

Who pays the fees? It is at the expense of the company in difficulty. Fee orders are often accompanied by provisional execution (Al Nafad Al Mouajal), synonymous with urgency. These indemnities are super-privileged claims. The fact that they are born after the opening of the procedure increases their advantageous status. They are settled in priority to all claims arising prior to the judgment of safeguard, reorganization or liquidation. The trustees can thus request payment by freeing themselves from the collective procedure. Where for the rest of the creditors – especially unsecured – the payment is the price of the race.

Alongside court costs, levies due to the State, experts or lawyers… the trustee’s fees are part of these expenses which, after the judgment, are taken from the assets of the company in difficulty. In Morocco, all of these expenses correspond on average to 18% of the value of the entity concerned. Naturally, this cost is deducted from the sum that the other creditors could hope to recover at the end of the procedure.

Sensitive subject

The subject is unknown, borders on the taboo. The trustee is the essential link in this type of procedure. But in the absence of clear texts, the fees remain a question that is settled between judges and experts, sometimes outside of any control.

Hence the criticism from practitioners. Some raise problems of accumulation of fees, between those awarded by the court and those paid by business leaders. The impartiality of these legal experts is thus called into question. After a reorganization or safeguard judgement, their reports condition the decision whether or not to continue the company’s activity.

The other pitfall questions the correlation between fees and results. Rare results on this type of procedure. In Morocco, the overwhelming majority of companies in recovery end up in compulsory liquidation.

A draft decree to regulate fees

Will the expected decree address these issues? Revealed in our columns, a draft prepared under the former government eludes these elements. Even if it has the merit of proposing for the first time a framework for trustee missions. A profession which, in practice, is about to complete its third decade in the Kingdom.

In terms of fees, the text provides for remuneration according to the nature of the missions carried out.

On safeguard or recovery procedures, the trustee’s fees would be set at 2% of all claims declared in the company’s liabilities, including wage claims, which are the subject of disputes. In all cases, the sum of the fees owed by the syndic cannot, under any circumstances, be less than 6,000 DH.

The draft refers to “additional” remuneration on “the mission of monitoring the execution of the safeguard plan, continuation or transfer plan”. His fees would be calculated according to a rate fixed on the basis of the amounts remitted to the creditors, without being less than 4,000 DH (for each periodic report presented by the trustee within the framework of monitoring the execution of the plan).

The rates will vary according to the sums returned to the creditors, which are themselves divided into stages. For example, for amounts allocated to creditors ranging from 0 to 600,000 DH, the rate provided is 1% (always with a guaranteed minimum of 4,000 DH). If the amount remitted to creditors varies between 600,001 and 2,000,000 DH, the same rate goes to 0.75%.

Regarding the remuneration of the trustee in the context of judicial liquidation, the text sets it at 5% of the net proceeds from the realization of the assets of the company and the sums collected or recovered if necessary, without being less than 6,000 DH.

Finally, in terms of management operations, the trustee should receive a remuneration set at 2% (excluding taxes) of the revenue generated during the management period. Knowing that the draft decree guarantees him a minimum of 5,000 DH and a maximum of 100,000 DH per month.

On the decision of the supervising judge and subject to justification on his part, the trustee’s fees would be increased up to 30% (maximum) of the total amounts due, depending on the version which is not final.

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