Restructuring and Insolvency Proceedings in France: Safeguard, Judicial Reorganisation and Judicial Liquidation

French insolvency law offers a graduated toolkit: confidential pre-insolvency procedures (mandat ad hoc, conciliation) before default, followed by public court-supervised proceedings (safeguard, judicial reorganisation and, as a last resort, judicial liquidation), the opening of which depends on whether the company is still able to pay its debts.

France offers one of the most debtor-friendly restructuring frameworks in Europe, but its procedural rules are strict and timing is critical. Foreign executives who wait too long lose the best turnaround options and expose themselves to personal liability. This guide provides an overview of the available procedures and the situations in which each should be used.

The French toolkit at a glance

What is insolvency (cessation des paiements) and why does it matter?

Cessation des paiements is the pivotal test: the company is unable to meet its liabilities as they fall due out of its available assets. The company’s director must file a declaration with the registry of the competent court within 45 days of its occurrence, unless conciliation proceedings have been opened. This date determines which proceedings are available and starts the clock for directors’ liability.

What confidential prevention tools are available?

The best restructurings are carried out discreetly, before default.

• Mandat ad hoc: a facilitator appointed by the President of the Court helps negotiate with creditors. The procedure is fully confidential and flexible, with no time limit as long as the company is not insolvent.
• Conciliation: a short, confidential procedure (five months maximum) aimed at reaching an agreement, which may either be acknowledged by the President of the Court to make it enforceable, or approved (homologué) by the court for enhanced protection.

Safeguard, judicial reorganisation and judicial liquidation

These are collective proceedings conducted under court supervision. In the twelve cities taking part in the pilot scheme running until 31 December 2028, including Paris, Nanterre and Versailles, these proceedings fall within the jurisdiction of the Economic Activities Court (tribunal des activités économiques, TAE).

• Safeguard: opened solely at the debtor’s request before insolvency; management remains in place. An observation period of 6 to 12 months leads to a safeguard plan allowing pre-existing liabilities to be paid in instalments over a maximum of 10 years. Under certain conditions, an accelerated version makes it possible to impose a safeguard plan, pre-negotiated during prior conciliation proceedings, on dissenting classes of creditors.
• Judicial reorganisation: for companies that are already insolvent but viable. A court-appointed administrator (administrateur judiciaire) assists the director in managing the business. The outcome may be a continuation plan allowing pre-existing liabilities to be paid in instalments over a maximum of 10 years, or a sale of the business (sale plan).
• Judicial liquidation: where recovery is impossible. The assets are realised and the company is wound up, sometimes after a brief continuation of trading to allow the business to be sold as a going concern.

How are creditors treated and ranked?

Since the transposition of the EU Restructuring Directive, creditors and equity holders are divided into classes of affected parties which vote on the plan, provided that the company meets certain turnover and headcount thresholds, or with the authorisation of the supervising judge (juge-commissaire). A cross-class cram-down may allow the plan to be imposed on dissenting classes if certain conditions are met. Security interests, the new money privilege and employee claims all affect ranking, so lenders should model their position at an early stage.

Safeguard vs judicial reorganisation