Judicial liquidation in France: directors, shareholders, creditors and buyers
Is a French company that you run, own or trade with in judicial liquidation (liquidation judiciaire)?
FACCHINI Law Firm, a judicial liquidation lawyer for foreign companies
In France, this court procedure ends the business of a company in cessation of payments whose recovery is manifestly impossible.
A court-appointed judicial liquidator (liquidateur judiciaire) sells the assets and pays the creditors in the order set by law.
Maître Angélique FACCHINI, a member of the Lyon Bar, acts in the procedure in Lyon, in Paris and throughout France.
We assist directors and shareholders, including foreign parent companies, as well as foreign creditors and buyers of assets.
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What is judicial liquidation in France?
Judicial liquidation is one of the French collective proceedings (procédures collectives), and a French insolvency lawyer examines with the directors, before any filing, whether another procedure is still possible.
Liquidation judiciaire is governed by Articles L. 640-1 et seq. of the French Commercial Code (Code de commerce).
It is sometimes compared with a UK compulsory liquidation, but it follows French rules only.
How judicial liquidation differs from judicial reorganisation
- Safeguard proceedings (procédure de sauvegarde) and judicial reorganisation (redressement judiciaire) aim to keep the company in business, and a French judicial reorganisation lawyer works with the directors towards that outcome.
- Judicial liquidation can be opened directly, or follow a safeguard or a judicial reorganisation that has failed.
- A simplified form of the procedure (liquidation judiciaire simplifiée) applies automatically when the company owns no real property, has had no more than 5 employees over the 6 months before the opening and has a turnover of no more than €750,000 excluding VAT (Articles L. 641-2 and D. 641-10).
When is judicial liquidation opened in France?
Two conditions must be met: cessation of payments (cessation des paiements) and a recovery that is manifestly impossible (Article L. 640-1).
Cessation of payments means that the company cannot meet its debts that are due with its available assets (Article L. 631-1).
The legal representative must file a declaration of cessation of payments, which requests the opening of the procedure, within 45 days of the cessation of payments, unless the company has requested a conciliation within that period (Article L. 640-4).
Knowingly failing to do so can lead to a management ban (Article L. 653-8).
Who can request judicial liquidation?
- The company, through its legal representative.
- A creditor, by summons (assignation), for a claim that is certain, of a fixed amount and due (certaine, liquide et exigible).
- The public prosecutor.
Which court has jurisdiction?
Commercial companies come before the commercial court (tribunal de commerce) or, in the twelve courts of the 4-year pilot scheme launched on 1 January 2025, the tribunal des activités économiques (TAE).
Paris and Lyon are among them (ministerial order of 5 July 2024).
The main steps of a judicial liquidation in France
| Step | What happens | Key point |
|---|---|---|
| 1. Opening judgment | The court appoints a judicial liquidator and a supervising judge (juge-commissaire), and the judgment is published in the BODACC. | Activity stops, unless the court allows it to continue for up to 3 months, renewable once at the public prosecutor’s request (Articles L. 641-10 and R. 641-18). |
| 2. Judicial liquidator in charge | The company loses control of its assets (dessaisissement). | The judicial liquidator exercises the company’s rights and actions concerning its assets (Article L. 641-9). |
| 3. Filing of claims | Creditors file their pre-opening claims with the judicial liquidator (déclaration de créances). | 2 months from the BODACC publication, 4 months outside metropolitan France. |
| 4. Sale of the assets | Sale of the business under a sale plan (plan de cession), or of the assets one by one. | Articles L. 642-1 et seq. |
| 5. Verification and distribution | Claims are verified and the proceeds distributed by order of priority. | Unsecured creditors (créanciers chirographaires) are paid last, pro rata. |
| 6. Closure | Closure because all debts are paid or, most often, for insufficient assets (Article L. 643-9). | Reopening is possible if assets were not realised (Article L. 643-13). |
Judicial liquidation in France: risks for directors and shareholders
Liability for insufficient assets
If a fault of management contributed to the shortfall, the court can order the de jure or de facto directors to bear all or part of it (Article L. 651-2).
Simple negligence is excluded; the action can be brought by the judicial liquidator or the public prosecutor.
Time limit: 3 years from the judgment ordering the judicial liquidation.
Faillite personnelle and management ban
The court can impose a faillite personnelle (a sanction that bars a director from running a business, unrelated to consumer bankruptcy) or a management ban (interdiction de gérer) for up to 15 years (Articles L. 653-1 et seq. and L. 653-11).
Fraudulent bankruptcy (banqueroute)
Concealing assets, fraudulently increasing liabilities or keeping fictitious accounts are criminal offences (Article L. 654-2), tried before the criminal court.
Personal guarantees
A guarantee signed by a director for a bank, landlord or supplier survives the procedure.
Shareholders and foreign parent companies
- In a limited company (SARL, SAS, SA), a shareholder normally bears losses only up to the amount of its contribution.
- A parent company acting as de jure director of its subsidiary falls within the liability action, as do its permanent representatives (Article L. 651-1).
- A parent company that runs the subsidiary in practice can be treated as a de facto director (dirigeant de fait).
- Intra-group loans and invoices must be filed on time like any other claim.
Foreign creditors in a French judicial liquidation
Once the procedure opens, creditors can no longer sue the company individually for claims that arose before the judgment.
Filing of claims (déclaration de créances)
File within 2 months of the BODACC publication, or 4 months for a creditor domiciled outside metropolitan France (Articles L. 622-24 and R. 622-24).
A late claim is excluded from distributions, unless the juge-commissaire grants relief (relevé de forclusion), which is granted only on strict conditions.
Retention of title
A seller with a retention of title clause agreed in writing by the time of delivery can claim back unpaid goods that still exist in kind at the opening of the proceedings, within 3 months of the publication of the opening judgment (Articles L. 624-9 and L. 624-16).
Buying assets from a company in judicial liquidation in France
Any individual or company, French or foreign, can make an offer, subject to Article L. 642-3.
Sale plan (plan de cession)
The court chooses the offer that best ensures a lasting activity, preserves jobs and pays creditors, not necessarily the highest price (Articles L. 642-1 and L. 642-5).
Content of the offer
The offer sets out the assets and contracts, price, financing, jobs maintained, guarantees and duration of commitments (Article L. 642-2).
Once filed, it can be improved but not withdrawn.
What the buyer takes over
In principle, the buyer does not take over the company’s previous debts.
Where a security secures a loan that financed an asset taken over, the buyer pays the instalments due after the sale (Article L. 642-12).
The court can transfer the contracts needed to keep the business running (Article L. 642-7).
Assets sold one by one
Otherwise, the judicial liquidator sells assets by private agreement authorised by the juge-commissaire, or by auction.
Why choose FACCHINI Law Firm for a judicial liquidation in France?
We reply within one hour, in English, French, Italian or Spanish.
Our recognised expertise in insolvency proceedings in France
In 2025, FACCHINI Law Firm received the Trophée d’Or (gold award) of the Palmarès du Droit, organised by Le Monde du Droit in Lyon, in the Entreprises en difficulté - Restructuring category (businesses in difficulty and restructuring).
Trophée d’Or
Entreprises en difficulté - Restructuring
Palmarès du Droit
Lyon 2025
Our role as judicial liquidation lawyer in France
FAQ: judicial liquidation in France
1. What is the difference between judicial liquidation and judicial reorganisation?
Judicial reorganisation applies when the company can still be rescued; judicial liquidation applies when its recovery is manifestly impossible.
2. Is judicial liquidation the same as bankruptcy?
In British usage, bankruptcy refers to individuals, whereas companies go into liquidation (in France, judicial liquidation).
We act for businesses, whether companies or sole traders, and never for the personal over-indebtedness of private individuals (surendettement des particuliers).
3. How long does a judicial liquidation take?
From several months to several years, depending on the assets and any disputes.
4. Can the company keep trading?
Only exceptionally, with the court’s authorisation, for instance to prepare a sale (Article L. 641-10).
5. What happens to the employees?
The judicial liquidator dismisses them, usually within 15 days of the judgment (21 days with a job protection plan), the period in which the wage guarantee scheme (AGS) covers the resulting payments, within its limits (Article L. 3253-8 of the French Labour Code).
If a buyer takes over the activity, the related employment contracts are transferred, except for the dismissals provided for in the sale plan (Article L. 642-5 and Article L. 1224-1 of the French Labour Code).
6. How can I check whether a French company is in judicial liquidation?
Judgments are published in the BODACC, the official bulletin of civil and commercial notices.
7. What if a foreign creditor misses the filing deadline?
The claim no longer shares in the distributions.
Relief can be requested from the juge-commissaire within 6 months of the publication of the opening judgment, if the creditor shows that the delay was not its fault or was due to the debtor omitting it from the list of creditors (Article L. 622-26).
8. Are the company’s debts wiped out at the end?
After a closure for insufficient assets, creditors in principle cannot sue the debtor again (Article L. 643-11).
Guarantors and co-debtors remain liable.
9. Can a creditor ask the court to liquidate its French customer?
Yes, by serving a summons for a claim that is certain, of a fixed amount and due, except during a conciliation; the court then checks the conditions (Article L. 640-5).
10. Can a shareholder or parent company buy back the assets?
The debtor itself, its directors (de jure or de facto), their relatives and in-laws up to the second degree and the creditors appointed as controllers (contrôleurs) cannot make an offer; the court can lift the ban at the public prosecutor’s request, except for the debtor itself and the controllers (Article L. 642-3).
For 5 years after the sale, the same persons also cannot acquire the assets sold.
A shareholder treated as a de facto director is caught by the same ban.
11. How are fees set in a judicial liquidation matter?
Whether you are a director, a creditor or a buyer, fees can be fixed, based on time spent, or include a success fee on top of either.
They are set out in a written fee agreement after a confidential first discussion.
Judicial liquidation in France for international groups, creditors and buyers
We act for clients from the United Kingdom, the United States, Germany, Switzerland and other countries.
Maître Angélique FACCHINI is also a French business lawyer for foreign groups, handling the company law and contract questions of their French subsidiaries.
Judicial liquidation lawyer in Lyon, Paris and throughout France
Find us opposite the Rhône Prefecture in Lyon.
FACCHINI Law Firm
Contact Maître Angélique FACCHINI, French judicial liquidation lawyer
Need advice on a judicial liquidation in France?
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