In brief: Loi 73-17 (amending Book V of the Code de Commerce) organizes the treatment of business insolvency in Morocco in four stages: prevention (internal and external), conciliation, safeguard and restructuring/judicial liquidation. The objective is to prioritize saving the business and maintaining employment before considering liquidation. The role of the chartered accountant is central, from early warning to supporting restructuring plans.
Overview of the framework (Loi 73-17)
Loi 73-17, which came into force in 2018, profoundly reformed Moroccan insolvency law by introducing notably the safeguard procedure (inspired by the French model) and modernizing prevention and conciliation procedures. It amends Book V of the Code de Commerce (Art. 545 to 738).
The framework is built around one guiding principle: intervene as early as possible to maximize the chances of recovery. The sooner the director acts, the more options are available and the higher the chances of the company’s survival.
Phase 1 — Prevention of difficulties
Internal prevention: the statutory auditor’s alert (Art. 546)
When the statutory auditor detects facts likely to compromise the continuity of operations, they are required to trigger the alert procedure:
- First alert: the auditor informs the director by registered letter and requests explanations
- Second alert: if no satisfactory response is received within 15 days, the auditor invites the director to have the board of directors or the general meeting deliberate
- Notification to the court president: if the measures taken are insufficient, the auditor informs the president of the commercial court
Shareholders also have a right of alert: any shareholder may submit written questions to the manager about facts likely to compromise continuity (Art. 546 al. 4).
External prevention: referral to the court president
The president of the commercial court may be referred to by:
- The director themselves (voluntary approach)
- The statutory auditor (in case of failure of internal prevention)
- A shareholder
- Ex officio based on information gathered
The president summons the director for a confidential interview and may order the disclosure of any useful document (financial statements, bank statements, contracts). They may then appoint a special representative tasked with negotiating with creditors or proposing recovery measures.
Phase 2 — Conciliation (Art. 551-559)
Conciliation is an amicable and confidential procedure that aims to find an agreement between the company and its main creditors.
Conditions for opening
- The company is experiencing proven or foreseeable economic, financial or legal difficulties
- It has not been in cessation of payments for more than 30 days
- The request is made by the director to the court president
Process
- The president appoints a conciliator for a maximum period of 3 months, renewable once
- The conciliator negotiates with creditors a protocol agreement (payment schedule, debt waivers, payment extensions)
- The protocol can be:
- Acknowledged by the president (simple act, remains confidential)
- Approved by the court (public judgment, gives the protocol binding force and suspends individual proceedings)
Advantages of conciliation
- Confidentiality: third parties are unaware of the procedure
- The director remains in their functions
- Creditors who provide new financing during conciliation benefit from a payment privilege (Art. 558)
Phase 3 — Safeguard proceedings (Art. 560-574)
Safeguard is the major innovation of Loi 73-17. It is inspired by the American Chapter 11 and the French sauvegarde.
Conditions for opening
- The company is experiencing proven difficulties that it is unable to overcome
- It is NOT in cessation of payments
- The request is made exclusively by the director
This last condition is fundamental: unlike restructuring, safeguard is a proactive tool available to the business leader.
Course of safeguard proceedings
- Opening judgment: the court opens the proceedings and appoints a supervisory judge and a trustee (syndic)
- Observation period: maximum duration of 4 months, renewable once. During this period:
- Individual creditor proceedings are suspended
- The director retains management of the company (under the supervision of the trustee)
- Business continues normally
- Ongoing contracts cannot be terminated solely because of the opening of proceedings
- Safeguard plan: the director, assisted by the trustee, develops a restructuring plan providing for:
- Reorganization measures (social, economic, financial)
- Creditor payment schedule (up to 10 years)
- Maintaining employment
- The court approves the plan or, failing that, converts the proceedings into judicial restructuring
Phase 4 — Judicial restructuring (Art. 575-620)
Judicial restructuring occurs when the company is in cessation of payments, meaning it is unable to meet its due liabilities with its available assets.
Declaration of cessation of payments
The director must file the declaration of cessation of payments with the clerk of the commercial court within 30 days of the date of cessation (Art. 575). The declaration must be accompanied by:
- The financial statements of the last fiscal year
- A cash flow statement (available assets and due liabilities)
- The list of creditors with amounts owed
- The list of employees
- An inventory of assets
The court may also be referred to by a creditor or by the public prosecutor.
Observation period
The court appoints a trustee (syndic) who assists or replaces the director in management. The observation period lasts a maximum of 4 months, renewable once.
During this period:
- Individual proceedings are suspended
- Interest ceases to accrue (except interest on loans exceeding one year)
- The trustee proceeds with verification of claims
- The court may authorize economic layoffs if necessary
Outcome of restructuring
At the end of the observation period, the court may:
- Approve a continuation plan: the company continues its activity under conditions (payment schedule, restructuring), the director is maintained or replaced
- Approve a disposal plan: the company (or a branch of activity) is sold to a buyer who commits to maintaining employment and paying a sale price
- Order judicial liquidation: if no plan is viable
Phase 5 — Judicial liquidation (Art. 621-650)
Judicial liquidation is ordered when recovery is manifestly impossible. It results in the cessation of activity and the realization of assets to pay creditors.
Realization of assets
The trustee (now liquidator) proceeds with the sale of the company’s assets:
- Public auction or private sale (authorized by the supervisory judge)
- Global or lot-by-lot disposal
- Recovery of the company’s receivables
Creditor priority order
The proceeds of the liquidation are distributed according to a strict priority order:
| Rank | Category | Examples |
|---|---|---|
| 1 | Super-privileged | Salaries for the last 60 days (Art. 382 Code de Commerce) |
| 2 | Legal costs | Trustee fees, court costs |
| 3 | Privileged creditors (Art. 558) | Creditors who provided new financing during conciliation |
| 4 | Secured creditors | Banks with real guarantees |
| 5 | Treasury and CNSS | Taxes, social contributions |
| 6 | Unsecured creditors | Suppliers, service providers without guarantees |
In practice, unsecured creditors recover only a minimal fraction of their claims, or nothing at all.
Closure of liquidation
Liquidation is closed by the court:
- Either by extinction of liabilities (all creditors have been paid — rare case)
- Or by insufficient assets (assets are not enough to pay all creditors)
Closure due to insufficient assets does not release the director from all consequences: asset-related sanctions may be imposed.
Asset-related sanctions against directors (Art. 738)
Loi 73-17 provides for severe sanctions against directors at fault:
Extension of proceedings
The court may extend restructuring or liquidation proceedings to the director’s personal assets when:
- They disposed of company assets as if they were their own
- They abusively continued a loss-making activity in their personal interest
- They maintained fictitious accounts or made accounting documents disappear
Payment of asset shortfall
Directors (de jure or de facto) may be ordered to cover all or part of the asset shortfall from their personal assets in case of management fault contributing to the shortfall.
Personal bankruptcy and management ban
The court may order:
- Personal bankruptcy: prohibition from directing, managing or controlling any commercial enterprise
- A management ban for a determined period
These sanctions are in addition to the criminal liability of directors provided for by the Penal Code and company laws.
The role of the chartered accountant
The chartered accountant plays a central role at each stage of insolvency treatment:
In prevention
- Implementation of dashboards and warning indicators (working capital requirements, cash flow, debt ratio)
- Early detection of deterioration signals
- Advising the director on corrective measures
In conciliation and safeguard
- Preparation of the conciliation file (cash flow statement, projections, restructuring plan)
- Assistance in negotiations with creditors
- Development of the safeguard or continuation plan with the necessary financial projections
In restructuring and liquidation
- Assistance with the declaration of cessation of payments (preparation of mandatory documents)
- Collaboration with the trustee for verification of claims
- Supporting the director against the risks of asset-related sanctions
Frequently asked questions
What is the difference between safeguard and judicial restructuring in Morocco?
Safeguard proceedings are intended for companies experiencing proven difficulties but that are not in cessation of payments. They are requested by the director themselves and allow them to retain management of the company. Judicial restructuring, on the other hand, can only be opened when the company is in cessation of payments (inability to meet due liabilities with available assets). It can be requested by the director, a creditor or the public prosecutor.
Within what timeframe must the director declare cessation of payments?
The director must file the declaration of cessation of payments with the clerk of the commercial court within 30 days of the date of cessation (Art. 575 du Code de Commerce modifié par la Loi 73-17). Failure to comply with this deadline may result in asset-related sanctions (payment of asset shortfall, extension of proceedings) or even a management ban.
What is the role of the chartered accountant in insolvency proceedings?
The chartered accountant plays a key role at several levels: in prevention, they detect warning signals (cash flow deterioration, recurring losses) and advise the director; during conciliation, they assist in negotiations with creditors and prepare financial projections; in safeguard or restructuring, they develop the plans (continuation plan, disposal plan) with the necessary accounting and financial data. Contact our experts for a preventive assessment.
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