How do I file for bankruptcy in France?

When a company runs into financial difficulties and can no longer repay its debts, filing for bankruptcy may be a necessary step. For foreign entrepreneurs operating in France, the process can seem complex and confusing, especially given the legal and administrative differences from other countries such as the Netherlands, the United Kingdom or the United States. In this blog post, we explain how the bankruptcy process works in France, what steps to take, and what to expect.

What is bankruptcy anyway?

In France, there are different legal procedures for companies in financial trouble. The most common are:

Prévention des difficultés (early intervention): A procedure in which the entrepreneur himself requests timely help with financial difficulties, before the situation is irreversible.
Procédure de sauvegarde (recovery procedure): This procedure is designed to help the business continue its activities and restructure its debts without being declared bankrupt immediately.
Redressement judiciaire (judicial recovery): This is a procedure that is initiated if the company can no longer pay its debts. A receiver is appointed to help restructure the debts.
Liquidation judiciaire (bankruptcy/liquidation): The final step in which the company is liquidated because a relaunch is no longer possible.

As a business owner, it is important to choose the right procedure based on your company’s financial situation. In this blog post, we will focus specifically on filing for a liquidation judiciaire, or bankruptcy.

Step for filing for bankruptcy in France

The procedure for filing for bankruptcy is divided into six steps.

Step 1: Analyze your company’s financial situation.

It is essential to first determine whether your company is actually bankrupt. In France, a company is considered bankrupt when it is no longer able to pay its current debts with available funds (cessation des paiements). It must be clear that your company no longer has a reasonable chance of recovery.

Step 2: Prepare the necessary documents.

To file for bankruptcy, you will need several documents. These include:

Balance sheet and profit and loss statement for the past few years
Bank statements and financial statements
List of creditors and debtors
List of current contracts
Providence of cessation de paiements (inability to pay)

It is advisable to hire a French lawyer or accountant to help gather and prepare these documents.

Step 3: File the bankruptcy petition with the Tribunal de Commerce.

In France, the bankruptcy petition must be filed with the Tribunal de Commerce, or theFrench Chamber of Commerce. This is the competent court for commercial matters. The application must be filed within 45 days of cessation des paiements, unless your company has already initiated recovery proceedings (procédure de sauvegarde).

Step 4: Appear in court.

After filing, a hearing will be scheduled at which you, the business owner, are required to attend. The judge will assess your financial situation and may ask questions about the causes of the bankruptcy. After this, the judge will decide whether to approve the application and declare bankruptcy.

Step 5: Appointment of a receiver (liquidator judiciaire)

If the judge decides to grant bankruptcy, a curator (liquidator judiciaire) will be appointed. This person takes charge of the company and will try to liquidate the assets to pay off as many debts as possible. The liquidator will notify all creditors and coordinate the settlement of the bankruptcy.

Step 6: Liquidation of assets and closure of proceedings.

The trustee will sell the company’s assets, including real estate, inventory and other valuable assets. The proceeds will be used to repay creditors as much as possible. Once the liquidation is complete and there are no further assets, the court will close the proceedings and officially dissolve the company.