Debt collection in Monaco

The debt collection procedure in Monaco begins with an assessment of the debtor’s solvency, his field of activity, the history of the company, the availability of documentary evidence of the debt, current court cases and enforcement procedures, as well as the possibility of challenging the debt. This assessment determines the strategy that will be used on behalf of the client during the collection process.

If the debtor does not have current court cases or outstanding court decisions on debt collection, and he is actively engaged in commercial activities, then it is advisable to use the stage of out-of-court debt recovery.

This stage involves active negotiations with the debtor to reach an agreement to pay the creditor’s claims or other possible settlement options (for example, return of goods, transfer of debt to a third party, exchange of services or goods).

Interaction with the debtor begins immediately after sending the notification by mail, email, telephone or instant messengers. This process involves intensive communication with the debtor in order to apply constant pressure. The main task is to establish contact with key decision makers to achieve speedy debt repayment.

The average time for unofficial out-of-court collection is up to 60 days (except in cases where an installment plan for debt repayment has been agreed upon). If this stage does not bring the expected results, or after an initial analysis it becomes clear that it is not applicable, you should proceed to recovery through the court.

Before initiating legal action, you should pay attention to the statute of limitations. The general statute of limitations in Monaco is 5 years. For claims that are based on transactions involving the transfer of goods and services to individuals or non-profit private legal entities, the limitation period is 2 years. The limitation period is interrupted if the debtor acknowledges the debt. After the interruption, the statute of limitations begins to count again. The limitation period may be reduced or extended by agreement of the parties. However, it cannot be reduced to less than one year or extended to more than seven years. The parties may also, by mutual agreement, increase the grounds for suspension or interruption of the limitation period provided by law. The provisions of the previous two sentences do not apply to transactions between professionals and individuals or to transactions between professionals and non-profit legal entities of private law.

Monaco law provides for judicial collection of debt in the form of general proceedings.

The procedure for implementing the general trial procedure depends on the category of the case and the amount of claims. Cases involving individuals with a claim amount of up to 3,000 euros are considered by magistrates. All other cases are considered by the court of first instance. A request to initiate a case can be presented to a magistrate only after that judge has implemented the procedure for preliminary calling the parties for reconciliation (this provision does not apply to requests for commercial issues). The parties will be called to reconciliation by means of a warning note on a date set by the magistrate. The parties must appear in person. They can only be represented by lawyers if they reside outside the Principality, or in the event of a justified impediment. In case of reconciliation, a protocol on the agreements reached is drawn up, which is signed by the magistrate, the secretary and the parties. If the defendant fails to appear or reconciliation is impossible, the case will be considered through hearings, which are held at least twice a week. As a result of the consideration of the case, the magistrate makes a decision, which can be appealed to the court of first instance.

The consideration of cases in the court of first instance is carried out by presenting a request for a summons, after which the court issues a summons order and serves it on the defendant. The usual time limit for summoning persons present in the Principality is six full days. On the day of the preliminary hearing, the chairman of the court or a judge delegated by him hears simple oral arguments from the parties and, if he considers that the case is ready for consideration on the merits, then schedules the main hearing. If the case is not ready for consideration on the merits, the chairman of the court sets a schedule for the investigation of the case, which records the expected number of interim hearings, the dates for the exchange of their findings, conclusions and documents between the parties, as well as the dates for presentations. After completion of the investigation stage, the chairman will schedule a main hearing to consider the merits of the case. The main hearing will consider only the latest briefs filed by the parties. If the defendant does not provide documents and his conclusions, the case will be considered on the basis of the plaintiff’s documents. After the conclusion of the debates between the parties, the court will make a decision immediately or at a subsequent hearing to be determined by the court.

The decision of the court of first instance can be appealed to the court of appeal within 30 days from the date of notification of the decision. An appeal shall suspend the execution of the contested decision, unless provisional execution has been declared or automatically attached to the decision rendered. At this stage, the parties must be represented by lawyers. The case is considered through an oral hearing. As a result of considering the complaint, the court makes a decision, which acquires the force of a final decision from the moment it is announced. The decision of the appellate court may be transferred to a higher court for reconsideration regarding the discrepancy of the disputed decision with the rules of law. The deadline for filing an appeal of reconsideration is 30 days from the date of notification of the decision. The appeal does not suspend the execution of the contested decision, however, no payments will be made in the event of recovery of funds from the Principality of Monaco. The appeal is considered through a public hearing. As a result of considering the appeal, the court makes a decision that comes into force from the moment it is announced and is not subject to further appeal.

After the court decision comes into force, the creditor should put the forced execution formula on a certified copy of the court decision and present the decision to the bailiff to open the forced execution procedure. As part of the enforcement of a court decision, the creditor’s claims can be satisfied by seizing and writing off funds from the debtor’s accounts; seizure of movable and immovable property of the debtor with their subsequent sale; confiscation of the lease right if the lease is transferable; seizure and sale of securities; arrest and confiscation of company shares.

An alternative option for debt repayment should be to consider the procedure of judicial settlement and asset liquidation. To implement this procedure, the creditor should establish, through the court of first instance, the status of termination of payments on the part of the debtor. A court decision declaring the termination of payments automatically entails, from its date, the mandatory transfer of management of the debtor’s assets and operations to a trustee. At this stage, the court declares a settlement if it feels that the debtor can offer a settlement that can help restore the company and at least partially resolve the claims of unsecured creditors. Otherwise, the court orders the assets to be liquidated. As part of the liquidation procedure, the court has the right to hold its participants liable for the company’s debts, who bear unlimited and joint liability for the company’s obligations. This responsibility also applies to participants who left the company within a year before the opening of the procedure. Also, if, by a court decision fixing the termination of payments of a legal entity, it turns out that the assets are insufficient to pay off the obligations, the court may decide on the full or partial repayment of the debts of the legal entity by attracting to the responsibility their managers, unless they prove that they have shown concern for the management of the company necessary activity and diligence. The Commercial Code also provides for holding the debtor’s managers liable for the company’s debts in cases where such managers: under the guise of a legal entity masking their actions, carried out commercial activities in their personal interests or on behalf of a third party; disposed of the property of the legal entity as if it were their own; unlawfully carried out a loss-making transaction in personal interests or on behalf of a third party, which resulted in the termination of payments by the legal entity. These possibilities for holding the debtor’s management accountable help increase the chances of satisfying the creditors’ claims in full.

If you have any questions or need support with international debt collection in Monaco, our company is ready to provide our expert assistance to effectively resolve your financial issue. Contact us to receive additional information and professional support from specialists of the leading debt collection agency.

# DEBT COLLECTION AGENCY MONACO

26.07.2024

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