What redressement judiciaire is
Redressement judiciaire is court-supervised reorganisation for a French company that has stopped paying its debts (it is en cessation des paiements) but may still be saved (Code de commerce, article L631-1). The company must ask for it within 45 days of stopping payments. A creditor can also ask the court to open it, and so can the public prosecutor.
The company keeps trading. The court appoints a mandataire judiciaire to represent the creditors, and often an administrateur judiciaire to supervise or run the business alongside the directors. An observation period of six months, renewable, and at most eighteen months, gives time to find out whether the business can be saved.
What is frozen
- Debts from before the judgment cannot be paid. The only exception is set-off between directly connected debts under the same contract.
- Legal action to recover money and enforcement against the company stop.
- Interest stops, except on loans of a year or more.
To be paid anything on those older debts, you must declare your claim to the mandataire judiciaire within two months of the BODACC publication, or four months if your business is outside France. How to declare a claim in France.
Supplying during the procedure
- New supplies made after the judgment, for the needs of the business, are paid when due. If they are not, they are paid ahead of the older debts, provided you tell the administrateur (or the mandataire) within a year of the end of the observation period (article L622-17).
- The administrateur can require a contract to continue even though older invoices are unpaid, and a clause ending it because of the procedure has no effect. You are then entitled to payment in cash, on delivery, unless you agree otherwise (article L631-14).
- If you want to know whether a contract continues, send the administrateur a formal notice. No answer within a month ends the contract.
How it ends
- A plan (plan de redressement): the company keeps trading and repays declared debts over up to ten years. Creditors are asked whether they accept the proposed payment terms, and silence for 30 days after a written consultation counts as acceptance. Creditors who refuse can still have instalments imposed by the court: the first within a year, and from the third year at least 5% of each claim a year (10% from the sixth). Large companies (250 employees and €20 million turnover, or €40 million turnover) vote in classes of affected parties instead.
- A sale of the business to a buyer, with the proceeds shared among creditors.
- A liquidation (liquidation judiciaire) if the rescue fails. What liquidation judiciaire means.
Each of these is published in the BODACC, and InsolvencyRadar alerts you when it happens to a company you watch.
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.