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Microcap & Penny Stocks : REFR Since Gauzy -- Ignore unavailable to you. Want to Upgrade?

To: dimtint who wrote (1603)

11/14/2025 6:01:53 PM

From: dimtint

Respond to of 1667

I asked grok fwiw What oversight mechanism does the French court use to determine risk of default?

Grok says

Under French insolvency law (Book VI of the Commercial Code), the Commercial Court (Tribunal de Commerce) does not proactively monitor companies for default risk through ongoing oversight mechanisms like a U.S. bankruptcy early-warning system. Instead, it acts reactively when a formal trigger is presented. The court’s determination of cessation des paiements (inability to pay debts as they fall due) is made only during a specific hearing, not via continuous surveillance.

Here’s how the process works in practice, with specific relevance to Gauzy’s case:

1. Trigger for Court InvolvementThe court only assesses default risk when one of the following occurs:

Company self-declares insolvency (most common).
A creditor petitions the court (rarely used; requires proof of unpaid debt >30 days).
The public prosecutor (procureur de la République) alerts the court (e.g., from tax/social security audits).
The court is already seized in a related matter (e.g., a conciliation failed).

In Gauzy’s case: No public evidence shows a creditor petition or company filing. The court likely acted ex officio (on its own motion) during a scheduled hearing—possibly after a confidential conciliation (procédure de conciliation) broke down or was converted.

2. The Court’s Assessment: Cessation des Paiements TestThe court applies a two-prong legal test:

Liquidity Test: Can the company pay due and payable debts with immediately available assets (cash, confirmed credit lines, realizable receivables)?
No Grace Period: Debts in moratorium (e.g., under negotiation) don’t count, but overdue supplier invoices, taxes, or loan payments do.

The court does not forecast future risk—it only rules on current inability to pay.

3. Evidence Reviewed (No Ongoing Oversight)During the hearing, the court examines:

Bank statements (last 45–60 days).
Aged payables/receivables.
Debt maturity schedules.
Interim financials (often unaudited).
President’s declaration (if self-filed).

There is no periodic reporting mandate unless the company is already under a prior preventive procedure (e.g., mandat ad hoc or conciliation).

4. Preventive Procedures (Voluntary, Confidential)Before redressement judiciaire, companies may enter:

Mandat ad hoc: Court appoints a mediator (confidential, no filings).
Conciliation: Court-approved repayment plan with creditors (still confidential).

If these fail, the court can convert them into redressement or liquidation—this may explain Gauzy’s situation.

Likely scenario: Gauzy’s French subs were in conciliation, negotiations collapsed, and the court ruled cessation des paiements existed ? ordered redressement on November 13.

5. No Early-Warning Oversight SystemUnlike U.S. Chapter 11 (debtor-in-possession with reporting), French courts:

Do not receive monthly operating reports pre-insolvency.
Do not monitor covenants or liquidity ratios.
Rely on ad hoc triggers, not systemic risk flags.

Summary: How the Court Knew Gauzy Was at Risk

MechanismUsed in Gauzy Case?Notes

Company self-filing	Unlikely	Gauzy calls ruling "unwarranted"
Creditor petition	No evidence	Would be disclosed
Failed conciliation ? conversion	Most plausible	Confidential until court order
Ex officio court action	Yes	During Nov 13 hearing

Bottom line: The French court does not use ongoing oversight. It acted on real-time evidence presented in a hearing (likely after a failed conciliation), ruling that the subsidiaries currently cannot pay due debts with available assets—triggering redressement judiciaire immediately.

For exact details, the court file at the Greffe du Tribunal de Commerce de Lyon would list the trigger (conciliation protocol, balance sheet, etc.), but this is not public. Gauzy’s appeal will challenge the court’s cessation des paiements finding.