French insolvency law – lawyer in Marseille

Director: anticipating the crisis and protecting your assets

Financial distress rarely strikes overnight. A shrinking order book, lengthening payment cycles, a major dispute freezing cash flow. French insolvency law provides structured responses at every stage of deterioration – provided you act before it is too late.

When your company can no longer meet its due liabilities with its available assets, it is in a state of cessation des paiements – the French equivalent of an inability to pay debts as they fall due. You then have 45 days to file a declaration with the Commercial Court registry. This is not a cooling-off period: missing the deadline exposes the director personally to liability for the company’s shortfall, a management ban, or personal bankruptcy.

Before reaching that point, prevention tools exist. The mandat ad hoc and conciliation are confidential procedures that allow directors to negotiate restructuring agreements with creditors under the supervision of the president of the Commercial Court, without any public disclosure. These informal proceedings are often overlooked, yet they deliver concrete results when initiated early enough.

What we handle

• Assessing the financial position and determining whether cessation des paiements has occurred
• Setting up confidential prevention procedures: mandat ad hoc, conciliation
• Preparing and filing the declaration of insolvency with the Commercial Court registry
• Representing the director at the opening hearing before the Commercial Court
• Advising throughout the observation period in safeguard or judicial reorganisation
• Drafting the safeguard plan or reorganisation plan with the court-appointed administrator
• Defending against personal liability claims for the company’s shortfall and management ban applications
• Protecting the director’s personal assets and personal guarantees

Creditor: protecting your rights in insolvency proceedings

Your debtor has been placed in safeguard, judicial reorganisation, or judicial liquidation. From the moment the opening judgment is handed down, individual enforcement actions are automatically stayed – a moratorium comparable to the UK administration moratorium. You can no longer seize assets or demand payment directly. Your sole recourse is to file a proof of debt (declaration de creance) with the court-appointed creditors’ representative. The deadline is strict: two months from publication in the official gazette (BODACC). Miss it, and you are barred from any distribution.

Filing a proof of debt is only the first step. The verification process may give rise to challenges on the amount, the nature, or the ranking of your claim. If a safeguard or reorganisation plan is proposed, the terms of repayment may extend to ten years. Defending your position in these negotiations requires a lawyer with a thorough command of French insolvency procedure.

What we handle

• Filing proofs of debt in compliance with statutory form and time requirements
• Asserting retention of title claims and recovering assets held under finance leases
• Defending secured creditor ranking: pledges, mortgages, statutory liens
• Challenging the admission or rejection of your claim before the supervisory judge (juge-commissaire)
• Participating in asset disposal proceedings in judicial liquidation
• Resuming individual enforcement after closure of proceedings for insufficient assets

Purchaser: seizing acquisition opportunities

French insolvency proceedings create opportunities for investors and acquirers. A disposal plan in judicial reorganisation or an asset sale in liquidation allows you to acquire all or part of a going concern, often on favourable terms. The purchaser acquires the assets free of pre-existing liabilities; employment contracts of retained staff transfer automatically by operation of law – comparable in effect to the TUPE regime.

The acquisition bid must be robust, credible, and comply with the conditions set out in the French Commercial Code. The court selects the bid that best ensures the preservation of jobs and the repayment of creditors. Competing bids are common; preparation makes the difference.

What we handle

• Identifying and analysing acquisition opportunities in distressed companies
• Drafting and filing the acquisition bid in statutory form
• Representing the purchaser at the hearing before the Commercial Court
• Negotiating with the court-appointed administrator or liquidator
• Legal due diligence on assets, contracts, and risks

From prevention to liquidation: our approach

French insolvency law is built on a graduated scale of responses to business distress. Each procedure has its own opening conditions, logic, and constraints. The lawyer’s role is to guide the director towards the right procedure and to defend the client’s interests throughout the process.

The cessation des paiements threshold separates two worlds. While the company remains solvent, the director may apply for safeguard proceedings. Once insolvency is established, judicial reorganisation is mandatory – unless recovery is manifestly impossible, in which case judicial liquidation is ordered. Prevention procedures (mandat ad hoc and conciliation) operate upstream, in a confidential framework, to avoid formal insolvency proceedings altogether.

Our firm appears before the Marseille Commercial Court and courts throughout France. We also handle cases with an international dimension.

For detailed information on each procedure, see our dedicated pages:

• Safeguard procedure
• Judicial reorganisation
• Judicial liquidation

Frequently asked questions

What is the difference between safeguard, reorganisation, and liquidation under French law?

Safeguard (sauvegarde) is available to a company that is not yet insolvent but faces difficulties it cannot overcome alone – somewhat analogous to a pre-pack or a UK Company Voluntary Arrangement (CVA) in purpose, though not in form. Judicial reorganisation (redressement judiciaire) applies once the company is insolvent but rescue is still considered possible. Judicial liquidation (liquidation judiciaire) is ordered when recovery is manifestly impossible – similar in outcome to compulsory winding up. They differ in their opening conditions, the director’s powers during the proceedings, and the available outcomes: continuation plan, disposal plan, or realisation of assets.

How much does an insolvency lawyer cost in France?

Fees depend on the complexity of the case: the size of the company, the number of creditors, and whether ancillary litigation is involved (personal liability claims, challenges to proofs of debt). We offer an initial consultation to assess your situation and provide a detailed fee proposal before commencing any work. Legal aid is available, subject to means testing, for individual directors.

Is a company director personally liable for the company’s debts in France?

Not automatically. Personal liability requires proof of a management fault that contributed to the company’s shortfall (Article L. 651-2 of the Commercial Code). The most severe sanctions – personal bankruptcy and management bans – are reserved for serious management failings. Our firm assesses the risks from the outset and prepares the director’s defence from the opening of proceedings.

Do you handle urgent matters?

Yes. A summons from a creditor before the Commercial Court, a hearing notice, or a personal liability claim all require a swift response. We take on urgent cases and act within the tight procedural deadlines.

Can judicial liquidation be avoided?

Yes, provided you act early. The mandat ad hoc and conciliation allow confidential debt restructuring. Safeguard proceedings provide court protection before insolvency materialises. Judicial reorganisation aims to preserve the business through a repayment plan. Each procedure is an alternative to liquidation, so long as prospects of recovery exist and the process is initiated in time.