Procédure de sauvegarde: how safeguard proceedings work in France

Two conditions: the company is not insolvent (cessation des paiements), meaning it can still pay its debts that are due out of its available assets, and it faces difficulties it cannot overcome (Article L. 620-1 of the French Commercial Code). The difficulties can be of any kind: the loss of a major customer, a dispute, a loan repayment it cannot meet. Companies, associations, traders, craftspeople, farmers and the self-employed professions can apply, micro-entrepreneurs included (Article L. 620-2). Only the director can apply: neither a creditor nor the prosecutor can impose safeguard. The application goes to the commercial court (tribunal de commerce) for a commercial or craft business, otherwise to the judicial court (tribunal judiciaire) (Article L. 621-2), or, in 12 trial areas since 1 January 2025, to the economic activities court (tribunal des activités économiques). A company already insolvent goes into receivership (redressement judiciaire) or liquidation instead.

Condition

Not insolvent

Who applies

The director alone

The director keeps running the company, and the debts that arose before the judgment are frozen. The receiver (administrateur judiciaire), where one is appointed, supervises or assists the director (Article L. 622-1 of the French Commercial Code); below 20 employees and €3 million turnover excluding tax, a receiver is optional (Articles L. 621-4 and R. 621-11). The judgment bars payment of earlier debts (Article L. 622-7), stops creditors' lawsuits and seizures (Article L. 622-21), and stops interest, except on loans of one year or more (Article L. 622-28). Selling an asset outside the ordinary course of business needs the authorisation of the supervising judge (juge-commissaire). The creditors' representative (mandataire judiciaire) acts for all creditors, who file their claims 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).

The director

Stays in charge

Earlier debts

Frozen from the judgment

Yes for everything arising after the judgment, no for earlier debts. Deliveries, rent, salaries and loan instalments arising after the judgment are paid when due (Article L. 622-17 of the French Commercial Code). Earlier invoices can no longer be paid: suppliers file them as claims with the creditors' representative, and they are dealt with in the plan. Ongoing contracts continue: the other party cannot terminate them merely because of the proceedings or earlier unpaid invoices, but what it supplies afterwards is paid in cash, unless it accepts payment terms (Article L. 622-13). For rent falling due after the judgment, the landlord can seek termination of the lease only after 3 months (Article L. 622-14). Loans do not become payable early (Article L. 622-29), and interest on loans of one year or more keeps running. A seller with a retention of title clause must claim its goods 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 for 6 months: 12 months at most (Article L. 621-3 of the French Commercial Code). The court decides on renewal at the request of the receiver, the director or the prosecutor. The exceptional extension by 6 more months exists only in receivership (Article L. 631-7). During the observation period, the director prepares the draft plan, with the receiver if there is one. If the difficulties disappear, the court ends the proceedings at the director's request (Article L. 622-12). Otherwise, it adopts a safeguard plan of 10 years at most (Article L. 626-12), with a first payment within one year at the latest (Article L. 626-18). Two years after the plan is adopted, the company can have the entries on the proceedings removed from the registers, even if the plan is still running (Article R. 626-20).

Observation

12 months at most

Plan

10 years at most

The court adopts a safeguard plan when the company has a serious chance of being saved (Article L. 626-1 of the French Commercial Code). The plan can provide for stopping, adding or selling one or more activities; such sales follow the rules of the sale plan (plan de cession), including the ban on bids from the director and close relatives (Article L. 642-3). The largest companies group their creditors in classes of affected parties that vote on the plan (Article L. 626-29). In the others, 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). On creditors who refuse, the court imposes uniform terms: first payment within a year, at least 5% of each admitted claim from the third annual instalment, 10% from the sixth year (Article L. 626-18). A plan supervisor (commissaire à l'exécution du plan) monitors performance (Article L. 626-25).

Length

10 years at most

Creditors

30 days to reply

It depends on the company's situation and on how far talks with its creditors have gone. Conciliation is amicable and confidential: a court-appointed conciliator helps reach an agreement with the main creditors, within 5 months at most (Articles L. 611-6 and L. 611-15 of the French Commercial Code). It remains available up to 45 days after insolvency (Article L. 611-4). Accelerated safeguard (sauvegarde accélérée) requires a conciliation in progress and a draft plan with enough support from the creditors concerned to be adopted quickly: within 2 months, 4 at most (Articles L. 628-1 and L. 628-8). If the company was already insolvent when safeguard opened, or becomes so during the observation period, the court converts the proceedings into receivership, or orders liquidation if a rescue is manifestly impossible (Articles L. 621-12 and L. 622-10). A lawyer helps choose the procedure and prepare the application.

Conciliation

Confidential, 5 months at most

Accelerated

4 months at most