What happens to shareholders in the event of liquidation of a listed company

(BFM Bourse) – The Paris commercial court recently declared the judicial liquidation of Pixium Vision, whose shares will soon be delisted. Although this event remains exceptional, the fact remains that shareholders will be the last served in this scenario.

End of game for Pixuim Vision. The Paris commercial court declared the liquidation of the bionic eye specialist on Wednesday January 31, with immediate effect and without continuation of the activity.

Commercial justice has in fact decided to reject NeuroTech Vision’s offer to acquire the assets of Pixium Vision. This company was the only one to have made a takeover offer as part of a judicial recovery procedure opened for the benefit of Pixium Vision on November 13, 2023.

Without extrapolating the decision of the commercial courts, the weak history of NeuroTech Vision must surely have weighed in the balance. The potential buyer had only 11 days of legal existence when he submitted his offer on November 20, the day of the deadline.

For the shareholder, on the other hand, the opening of this liquidation procedure therefore means the end of the listing of the Pixium Vision share. It was suspended at a final price of 0.3764 euros on January 30. Pixium Vision will soon request a delisting of its shares from Euronext.

9 listed companies liquidated in 2023

Pixium Vision has been transparent about this potential outcome. The company has repeatedly warned that shareholders will be at a loss. “Taking into account the price proposed by the candidate buyer and the level of debt of the company (9 million euros at the beginning of October, editor’s note), the sale proceeds received in the event of a favorable decision from the commercial court will not allow a total or partial reimbursement of shareholders,” the company warned last January.

Remember that Pixium Vision was listed on the stock market in June 2014 at a price of 8.28 euros to finance the clinical development and commercial launch of its vision restoration system in Europe and the United States. This price then showed a market capitalization of more than 100 million euros, compared to only 2 million euros at the twilight of its stock market career.

In May 2023, Lysogene, another company in the life sciences universe, experienced a similar fate after not having received any takeover offer. The company found itself in great financial distress after the partial failure of a clinical study for a potential treatment of Sanfilippo syndrome, a rare, incurable neurological disease of genetic origin.

It is one of the 9 listed companies which left the Paris stock market following a judicial liquidation in 2023, according to the 15th barometer of public offers recently unveiled by EY.

The shareholders last on the list

Although fortunately this does not happen on a daily basis, the disappearance of a listed company is not an exceptional event, and shareholders must never forget the risk involved. Because in the event of liquidation, they find themselves last on the list of creditors to be repaid.

It is up to the liquidator, appointed by the courts, to sell the assets which can still be sold on behalf of the various creditors listed in the liabilities. Once everything is sold, repayment is made according to what is called lien order. Firstly, it is the collection of most taxes which has priority, sometimes even before employees (who however benefit from the salary guarantee scheme, in other words a national fund which allows employees to receive the sums corresponding to their salary even if there are no funds left within the company).

Then come what are called unsecured creditors, who do not benefit from any particular privilege, notably suppliers. Reimbursement of banks and other creditors also depends on possible mortgages or collateral.

Only if the debts of all these creditors have been cleared can the shareholders hope to share what is called a liquidation bonus. It goes without saying that in the event of judicial liquidation – occurring when the company is no longer able to honor its debts and presenting liabilities greater than assets – we should not count on it. It is therefore a dead loss to which investors are exposed.

Consider declaring your capital losses to the tax authorities

All they have to do is claim their loss from the tax authorities, which may require some tedious procedures. In the past it was necessary to wait for the liquidation to close (which can take years). From now on, it is possible to have your capital losses recognized as soon as the liquidation judgment is pronounced, if it clearly mentions the nullity of the value of the shares. This provision has its origins in the emblematic and no less dramatic bankruptcy of Moulinex in 2001.

“To possibly allow holders of Moulinex securities to recognize their capital losses, the listing of shares will be resumed from November 14 to December 14, 2001 inclusive, in the compartment of securities delisted from regulated markets” was proposed to small holders of Moulinex securities. Moulinex to dispose of their actions. However, the latter were unable to sell their Moulinex shares due to the lack of a buyer in the order book. Who would want to position themselves on a stock whose company is bankrupt?

The deputy Charles de Courson thus included the “Moulinex amendment” in the amending finance law for 2002 in its article 12 published in the Official Journal of December 31, 2001. This provision therefore allows unfortunate shareholders to tax capital losses on the shares of bankrupt companies once a judgment ordering the sale of the company (in the absence of any continuation plan) or its judicial liquidation has been rendered.

To do this, you must obtain a copy of the judgment from the registry of the court that issued the judicial decision and then send it to your financial intermediary so that he can note the liquidation and the zero value of the shares. The latter will send a certificate of gain and loss made, under the wording “losses on securities following collective proceedings”, which will have to be produced to the tax administration to deduct, if necessary, the loss in value from its gains.

Sabrina Sadgui – ©2024 BFM Bourse

Source link -84