Redressement judiciaire: how receivership in France works, step by step

When it is insolvent (cessation des paiements), meaning unable to pay its debts that are due out of its available assets, and its rescue is not manifestly impossible (Article L. 631-1 of the French Commercial Code); otherwise, the court orders liquidation (liquidation judiciaire). The company's legal representative applies at the court registry no later than 45 days after insolvency, unless conciliation, a confidential negotiation with creditors, was requested within that time (Articles L. 631-4 and R. 631-1). The rule makes no exception for a director living abroad. A creditor can also summon the company before the court, and the public prosecutor can refer the case (Article L. 631-5). The competent court is the commercial court (tribunal de commerce) for commercial and craft businesses, otherwise the judicial court (tribunal judiciaire) (Article L. 621-2), or, in 12 trial areas since 1 January 2025, the economic activities court (tribunal des activités économiques).

Condition

Insolvency

Deadline

45 days to apply

The business carries on, but the debts that arose before the judgment are frozen: the company may no longer pay them (Article L. 622-7 of the French Commercial Code), and creditors' lawsuits and seizures stop (Article L. 622-21). Interest stops running, except on loans of one year or more (Article L. 622-28). The court appoints a supervising judge (juge-commissaire), a creditors' representative (mandataire judiciaire), who acts for all creditors, and, where needed, a receiver (administrateur judiciaire), who assists the director or runs all or part of the business (Article L. 631-12). Below 20 employees and €3 million turnover excluding tax, a receiver is optional (Articles L. 621-4 and R. 621-11). Creditors file their claims with the creditors' representative within 2 months of the judgment's publication in the BODACC, the official bulletin of civil and commercial notices; those who do not live in mainland France have 2 more months (Article R. 622-24).

Earlier debts

Frozen from the judgment

Claims

2 months, 4 from abroad

Ongoing contracts continue. A supplier, customer or landlord cannot terminate them merely because receivership has opened, whatever the contract says, and must keep performing even if earlier invoices remain unpaid (Article L. 622-13 of the French Commercial Code). Those invoices are filed as claims. What is delivered or supplied after the judgment is paid when due (Article L. 622-17); when the receiver requires a contract to continue, payment is made in cash, unless the other party accepts payment terms. For rent falling due after the judgment, the landlord can seek termination of the lease only after 3 months (Article L. 622-14). Loans not yet due do not become payable, and a clause to the contrary has no effect (Article L. 622-29): the bank files its claim. A seller whose goods are covered by a retention of title clause must claim them back within 3 months of the judgment's publication (Article L. 624-9).

Earlier invoices

Filed as claims

New invoices

Paid when due

The observation period (période d'observation) lasts 6 months at most, renewable once, and can be extended by a further 6 months at the prosecutor's request: 18 months at most (Articles L. 621-3 and L. 631-7 of the French Commercial Code). No later than 2 months after the judgment, the court checks that the company can finance the rest of the observation period (Article L. 631-15). During this period, the director and the receiver, if there is one, assess the business and its workforce and prepare the draft plan. At any time, the court can order part of the business to stop, or order liquidation if a rescue becomes manifestly impossible. If the company has enough to pay its creditors and the costs of the proceedings, the court can end them (Article L. 631-16). The plan that follows the observation period lasts 10 years at most.

Observation

6 months, renewable

Maximum

18 months

The reorganisation plan (plan de redressement) spreads the payment of debts over 10 years at most while the company keeps trading (Article L. 626-12 of the French Commercial Code). The creditors' representative sends each creditor the proposed payment terms and write-offs; no reply within 30 days counts as acceptance (Article L. 626-5, applied to receivership by Article L. 631-19). On creditors who refuse, the court imposes uniform terms: first payment within a year, then, from the third annual instalment, at least 5% of each admitted claim, and 10% from the sixth year (Article L. 626-18). A plan supervisor (commissaire à l'exécution du plan) monitors performance (Article L. 626-25). If the company does not pay, the court can cancel the plan (Article L. 626-27); if it becomes insolvent again, the court cancels the plan and opens liquidation (Article L. 631-20).

Length

10 years at most

Creditors

30 days to reply

The court then orders the sale of the business to a buyer through a sale plan, or orders liquidation. From the opening, third parties may submit offers to the receiver to take over all or part of the business (Article L. 631-13 of the French Commercial Code). The receiver sets the deadline for offers (Article R. 631-39). At the receiver's request, the court can order the sale when the proposed plans are manifestly unable to rescue the company, or when there is none (Article L. 631-22). It chooses the offer that best secures jobs, pays creditors and is most likely to be performed (Article L. 642-5). The buyer does not take on the debts: the price is shared among creditors. The company's managers and their relatives up to the second degree cannot bid, unless the court authorises it at the prosecutor's request (Article L. 642-3). The guide to buying a business in France sets out what an offer must contain.

Sale

On offers from buyers

Who decides

The court