Cessation des paiements in France: when and how must it be declared?

Three key points

• An accounting loss, an overdraft or an isolated late payment is not enough to establish cessation des paiements.
• The forty-five-day period runs from the onset of cessation des paiements; it is not a period during which waiting is advisable.
• Filing the application and the court’s opening judgment are separate stages. The court decides which proceedings to open.

Cessation des paiements is the inability to meet due liabilities (passif exigible) with available assets (actif disponible). Due liabilities are debts payable immediately. Available assets are resources that can be mobilised to pay them, particularly cash and usable credit facilities. The French expression dépôt de bilan refers to the court filing; filing annual accounts is a different formality. These are French legal concepts and should not be assumed to correspond exactly to an insolvency procedure in another jurisdiction.

A practical situation

Fictional example. A company has EUR 40,000 of due debts. It has EUR 18,000 in the bank and a confirmed credit line of EUR 10,000 available for immediate use. Its available resources therefore total EUR 28,000. A machine carried in the accounts at EUR 35,000 does not automatically bridge the gap: it is not available cash.

If a creditor grants a valid deferral of EUR 15,000, immediately payable debts may fall to EUR 25,000. That changes the comparison. However, the documents, the scope of the deferral and other deadlines must be checked. An unanswered request for more time does not have the same effect as an agreed extension.

1. Which resources and debts should be compared?

The assessment is made at a particular date using documented information. Bank balances must be considered alongside payments already committed and credit facilities actually available. A usable authorised overdraft is different from funding still being negotiated. A shareholder’s intention to provide money does not, on its own, create a definite resource.

Property, equipment and stock are not equivalent to cash. Nor are customer invoices simply because they appear in the accounts. You must assess whether collection or financing against them actually makes funds available to meet the relevant deadlines, distinguishing a business forecast from available money.

On the liabilities side, examine due supplier invoices, wages and tax, social security and financial instalments in particular. A debt payable in several months is not immediately due merely because it exists. Conversely, contractual terms may make an obligation payable earlier: read the demands received and the relevant contracts.

A moratorium, meaning extra time granted by a creditor, may alter the liabilities to be included. A genuinely disputed debt also requires specific examination. Simply describing it as disputed in a spreadsheet does not remove it from the calculation. The objective is an accurate picture, with the relevant disagreements and supporting evidence.

2. When must you act, and what difference does conciliation make?

An application for redressement judiciaire or liquidation judiciaire must be made no later than forty-five days after cessation des paiements begins, unless an application to open conciliation has been made within that period. The starting point is the financial situation itself. Dates must therefore be reconstructed rather than automatically using the day the director starts preparing the file.

Conciliation is a French court-assisted procedure seeking agreement with the main creditors through an appointed conciliator. Under the ordinary rules concerned, it remains available where cessation des paiements has not lasted more than forty-five days. It requires an application and examination of the situation; merely negotiating with a bank does not open conciliation.

This possibility does not allow difficulties to be postponed indefinitely. Eligibility, timing and the action needed if difficulties persist when conciliation ends must be checked. Certain activities, particularly agriculture, have specific arrangements: the general rules must not be applied automatically.

Before cessation des paiements, preventive options may be considered, including a mandat ad hoc, involving a court-appointed professional assisting negotiations, or conciliation. Sauvegarde, another French protective procedure, also has its own conditions. The choice depends on the diagnosis. A useful forecast for negotiations does not replace the assessment of the current position needed to select a procedure.

3. Who files, and which court has jurisdiction?

For a company, the legal representative is responsible for the application. A sole trader acts for their business under the applicable rules. A shareholder does not automatically take the director’s place. The accountant assists with the figures; a lawyer can assess the legal position, prepare the application and assist the director before the court.

The competent court depends on the activity, business form and territorial jurisdiction. It may be the tribunal de commerce, tribunal judiciaire or a tribunal des activités économiques in an area covered by the French pilot scheme. Exceptions remain, particularly for certain regulated legal professions. Check jurisdiction before filing rather than inferring it solely from the business being a company.

The application should explain the origin and development of the difficulties and the prospects. The declaration form must be accompanied by the required documents. The director should prepare available accounts, a recent cash position, details of debts and receivables, information about security and commitments, an asset inventory and employee information.

The required cash position must be less than one month old. Other documents or certificates may concern previous settlement procedures, employee representatives or the relevant professional body, depending on the circumstances. Use the current form and legislation for the exact list. Missing information must not be replaced with an estimate presented as certain: explain what is unavailable and why.

4. What does the court decide, and who becomes involved?

The court examines whether the conditions are satisfied and fixes the date of cessation des paiements, which may differ from the date proposed. Where recovery is possible, redressement judiciaire may be opened to examine continued operations and the treatment of liabilities. Where recovery is manifestly impossible, liquidation judiciaire serves a different purpose. These French procedures should not automatically be equated with a foreign restructuring or bankruptcy process.

The director presents the position and application but does not select the procedure alone. The hearing should be prepared with consistent information: current operations, orders, forecast cash flow, needs and identified solutions. Prospects of continuing should be supported with concrete evidence, without guaranteeing the outcome.

The judgment appoints the professionals required by the procedure: a mandataire judiciaire, an administrateur judiciaire where appropriate, or a liquidateur. The mandataire represents creditors’ collective interests; an administrateur’s functions depend on the assigned mission. The director’s role changes according to the judgment. These professionals do not have identical functions and are not interchangeable with the director’s own adviser.

The effects on payments and enforcement arise from the opening judgment under the applicable rules. Simply filing the application does not automatically suspend every payment deadline or creditor action. A filing receipt must therefore not be treated as general permission to stop paying debts.

5. What precautions should be taken while preparing?

Keep a chronology of payment incidents, withdrawn credit facilities, agreed extensions and funds contributed. Update forecasts and promptly share changes with the professionals assisting you. This record helps explain decisions and adapt the approach if an expected resource disappears.

Avoid unusual transactions without prior analysis, particularly asset transfers or early payment of particular debts. The period between the cessation des paiements date fixed by the court and the opening judgment is known as the période suspecte. Certain transactions during that period may be set aside under the statutory conditions.

Late filing may expose a director to sanctions. A management disqualification linked to failure to apply within the statutory period requires, among other things, a knowing omission under the relevant provision. It is not automatic. This must be distinguished from the obligation to act within the deadline, which does not depend simply on when the file is finalised.

Should you wait for the next annual accounts?

No. The assessment uses current information. Older profitable accounts do not establish that present payment deadlines can be met. A recent cash position is essential.

Does the director become personally liable for all the debts?

Company proceedings do not automatically transfer its debts to the director. However, personal guarantees, personal commitments and potential liability claims must be examined separately under their own rules.

Scope of this article

General information about French law on businesses in difficulty. Sole traders, agricultural activities and regulated professions may require specific analysis. This guide does not replace an immediate assessment of a payment difficulty. Last legal review: 18 October 2026.

Please contact the firm if you would like to discuss your circumstances further.