By Yasmine EDDAM
27 April 2025
The prospect of compulsory liquidation is a critical time for any company and its director. Often dreaded, this procedure marks a decisive turning point, generally when financial difficulties reach a point of no return. It is essential to understand precisely the circumstances in which liquidation proceedings may be initiated and the immediate consequences for the debtor. This article sets out the conditions for opening a compulsory liquidation and analyses the first major effects, which have a direct impact on the company's directors and management. Strict conditions for opening a compulsory liquidation Opening compulsory liquidation proceedings is not a decision taken lightly. It meets the precise legal criteria set out in the French Commercial Code, which aim to establish that the company's financial situation has been irretrievably compromised. Two cumulative conditions must be met: cessation of payments and manifest impossibility of recovery. Cessation of payments: definition and assessment The first...
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