Bankruptcy and Judicial Liquidation in France: Understanding the Procedure

It is one of the most agonizing trials for any executive. When an entity can no longer honor current liabilities with its available liquid assets, it is officially in a state of cessation of payments (cessation des paiements). This triggers a mandatory statutory requirement to file for bankruptcy within strict deadlines.

The Strict 45-Day Statutory Deadline

French law is unequivocal: the corporate manager has at most 45 days from the onset of insolvency to file the declaration (dépôt de bilan) with the Commercial Court. Exceeding this deadline constitutes severe management misconduct (faute de gestion), which can trigger personal financial liability.

Judicial Reorganization vs. Liquidation

Upon reviewing the petition, the court determines the outcome. If recovery is viable, the court opens Judicial Reorganization (Redressement Judiciaire) to restructure debt over up to 10 years. If the company is hopelessly compromised, Judicial Liquidation (Liquidation Judiciaire) is ordered.

The Role of the Court-Appointed Liquidator

Once liquidation opens, management is divested of executive powers. A court-appointed liquidator takes charge to terminate employment contracts (guaranteed by the AGS wage insurance fund), auction company assets, and distribute funds to preferential and unsecured creditors.

Protection of Personal Assets

In limited liability companies (SARL, SAS), partner liability is restricted to subscribed capital. Personal wealth is shielded, except where personal bank guarantees (cautions) were executed or actionable management misconduct is proven.

Do Not Face the Court Alone

CIMAC assists founders in preparing an immaculate bankruptcy dossier, representing you at judicial hearings and safeguarding your personal standing throughout this ordeal.

Need assistance on this matter?

Ludovic CASSIN and his team are at your disposal to advise you and protect your interests.