What liquidation judiciaire is
Liquidation judiciaire is the French court procedure for a company that has stopped paying its debts (it is en cessation des paiements: it cannot pay what is due out of the assets it has available) and that cannot be rescued (Code de commerce, article L640-1). It is opened straight away, or after a redressement judiciaire that failed.
The court appoints a liquidateur, who takes over from the directors, sells what the company owns and pays creditors in the order the law sets. The business usually stops at once, unless the court lets it carry on for a short time so it can be sold.
Small companies go through a faster, simplified liquidation: those with no property, at most five employees and turnover of at most €750,000. It has to close within six months, or a year if the company had more than one employee and more than €300,000 turnover.
What it means if the company owes you money
- Stop supplying on credit. The company cannot pay debts from before the judgment, and it is not trading its way out.
- Declare your claim to the liquidateur named in the BODACC notice, within two months of its publication, or four months if your business is outside France. How to declare a claim in France.
- Claim back goods on retention of title within three months of the publication, by registered letter to the liquidateur.
- Debts that are directly connected, such as an unpaid invoice and a credit note under the same contract, can still be set off against each other.
- Interest stops running on every claim from the date of the judgment.
If the liquidateur asks you to keep supplying
The liquidateur can require a contract to continue, and a clause that ends the contract just because liquidation was opened has no effect. You then have to keep performing, but you are entitled to be paid in cash, on delivery, unless you agree to give credit (article L641-11-1). A contract the liquidateur does not want ends; you can force the question with a formal notice, and if it goes unanswered for a month the contract ends automatically.
How much creditors get back
The liquidateur pays creditors in the order set by article L643-8: employees, the costs of the procedure, creditors with security and creditors with a legal priority, such as the tax office, are all paid first. Unsecured suppliers come last, and often receive little or nothing. What you recover depends on what the company owns, so plan as if the invoice will not be paid, and reclaim the VAT on it where your country allows that.
How it ends
- Closed for lack of assets (clôture pour insuffisance d'actif): nothing is left to share. Creditors cannot then pursue the company itself, except in cases such as fraud, but a guarantor who signed for the company's debt stays liable.
- Closed because all debts were paid (extinction du passif): everyone who declared was paid.
Both closures are published in the BODACC, and InsolvencyRadar shows them on the company page and in your alerts.
General information about French law (the Code de commerce), not legal advice. For a large claim, a French avocat or the office-holder named in the notice can confirm what applies to you.