What sauvegarde is
Sauvegarde (safeguard) is a French court procedure that only the company itself can ask for, and only while it can still pay its debts (Code de commerce, article L620-1). It is used to reorganise before the problems become an insolvency, so InsolvencyRadar flags it for review rather than marking the company insolvent.
The company keeps trading and its directors stay in charge. The court appoints a mandataire judiciaire to represent the creditors, and sometimes an administrateur judiciaire to supervise. An observation period of six months, renewable once, so at most twelve months, gives time to prepare a plan.
What it means if the company owes you money
- Debts from before the judgment are frozen: the company cannot pay them, and legal action and enforcement to recover them stop.
- Interest stops, except on loans of a year or more.
- Declare your claim to the mandataire judiciaire within two months of the BODACC publication, or four months if your business is outside France. A claim not declared gets nothing from the plan. How to declare a claim in France.
- If a person guaranteed the company's debt to you, action against that guarantor is suspended during the observation period.
New orders
New supplies must be paid as normal, and if they are not, they rank ahead of the frozen debts. The administrateur can require an existing contract to continue, and a clause ending it because of the procedure has no effect. Unlike in a redressement, there is no general right to demand cash on delivery, so decide case by case how much credit to give.
How it ends
- A safeguard plan (plan de sauvegarde): declared debts are repaid over up to ten years, on terms creditors are consulted on.
- A switch to redressement judiciaire or liquidation judiciaire if it turns out the company has in fact stopped paying. What redressement judiciaire means.
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.