Our work in judicial reorganisation
Judicial reorganisation (redressement judiciaire) is the French insolvency procedure that allows an insolvent company to continue trading, preserve jobs, and repay its debts under court supervision. It is a race against time: 45 days to declare insolvency, then 6 to 18 months of observation to demonstrate that the business is viable. In purpose, it is closest to UK administration, though the mechanics differ significantly.
Our firm advises directors, creditors, and purchasers at every stage. We appear before the Commercial Courts and Judicial Courts, alongside the court-appointed administrator and the creditors’ representative.
Article L. 631-1, French Commercial Code
Judicial reorganisation proceedings are opened for any debtor unable to meet its due liabilities with its available assets. The proceedings are intended to enable the continuation of the business, the preservation of employment, and the settlement of liabilities.
Stages of judicial reorganisation
Cessation des paiements
Filing with the registry (45 days)
Opening judgment
Observation period (6-18 months)
Economic and social assessment
Reorganisation plan or disposal
Director: confronting your company’s difficulties
Cash is exhausted. Suppliers are withholding deliveries, the tax authority is threatening proceedings, the bank has cancelled the overdraft. Judicial reorganisation is not an admission of failure – it is often the only way to save the business and the jobs. The condition: acting quickly and correctly.
A director who fails to declare insolvency within 45 days faces personal sanctions: a management ban, personal bankruptcy, or personal liability for the company’s shortfall if management failings contributed to the deficit.
What we handle
- Assessing the financial position: available assets, due liabilities, date of insolvency
- Preparing and filing the insolvency declaration with the Commercial Court registry
- Representing the director at the opening hearing and liaising with the supervisory judge
- Advising throughout the observation period: relationship with the administrator, day-to-day management, financing
- Drafting the reorganisation plan: repayment schedule, restructuring, job preservation
- Defending the director against personal liability claims and management ban applications
Creditor: protecting your rights in the proceedings
Your debtor has been placed in judicial reorganisation. From the date of publication in the official gazette (BODACC), a two-month countdown begins to file your proof of debt with the court-appointed creditors’ representative. Miss that deadline, and your claim is time-barred – you lose all rights to payment within the proceedings.
Beyond the filing itself, the verification of claims, challenges to the reorganisation plan, and enforcement of ranking are all stages where legal representation makes the difference.
What we handle
- Filing the proof of debt on time: drafting, quantification, supporting evidence
- Challenging competing claims before the supervisory judge
- Defending your security interests: statutory liens, mortgages, pledges, suretyships
- Participating in discussions on the reorganisation plan and negotiating write-downs
- Monitoring plan performance and taking action if the debtor defaults
- Exercising rights of appeal: appeal of the opening judgment, third-party opposition
Safeguard, reorganisation, and liquidation compared
| Safeguard | Reorganisation | Liquidation | |
|---|---|---|---|
| Condition | Difficulties the debtor cannot overcome (not yet insolvent) | Cessation des paiements (insolvent) | Insolvent + recovery manifestly impossible |
| Who may apply | Debtor only | Debtor, creditor, or public prosecutor | Debtor, creditor, or public prosecutor |
| Director’s role | Remains in control | Assisted or replaced by the administrator | Fully divested in favour of the liquidator |
| Outcome | Safeguard plan | Reorganisation plan or disposal | Asset realisation and closure |
| Maximum duration | 18 months observation + 10-year plan | 18 months observation + 10-year plan | Variable (closure when assets realised) |
Purchaser: acquiring a business in judicial reorganisation
Judicial reorganisation may result in a disposal plan when the debtor cannot maintain the business itself. This creates an opportunity for acquirers: purchasing a going concern, often below market value, with pre-existing liabilities left behind. Employment contracts of retained staff transfer by operation of law.
The acquisition bid must be filed within the court-imposed deadline, comply with Article L. 642-2 of the Commercial Code, and include credible commitments on job preservation.
Our services
- Identifying acquisition opportunities (BODACC, contacts with court-appointed administrators)
- Legal due diligence on assets: ongoing contracts, commercial leases, intellectual property, security interests
- Drafting the acquisition bid in compliance with statutory requirements
- Negotiating with the administrator and representing the purchaser at the hearing
- Post-acquisition: contract transfers, employee integration, formalities
Frequently asked questions
How long does judicial reorganisation last?
The observation period lasts 6 months, renewable once. In exceptional cases, the public prosecutor may request a further 6-month extension, bringing the total to 18 months. If a reorganisation plan is adopted, it may run for up to 10 years (15 years for agricultural businesses).
What is the difference between reorganisation and liquidation?
Judicial reorganisation applies to an insolvent company whose recovery is still considered possible. The objective is to rescue the business. Judicial liquidation is ordered when recovery is manifestly impossible: the company ceases trading and its assets are sold to repay creditors.
Can the director be held personally liable for the company’s debts?
In principle, the insolvency proceedings affect the company only, not the director’s personal assets. However, if a management fault contributing to the company’s shortfall is established, the court may order the director to cover part or all of the deficit. In cases of serious misconduct, personal bankruptcy or a management ban may be imposed. Engaging a lawyer from the outset of the proceedings allows these risks to be assessed and managed.
Do you handle urgent cases?
Yes. When a creditor summons your company for reorganisation or liquidation before the Commercial Court, the timeframes are extremely short. Our firm mobilises to prepare the director’s defence, challenge the finding of insolvency if it is not established, or apply for conciliation as an alternative.