Your French company has stopped paying its suppliers, the landlord is threatening to terminate the lease, URSSAF — the French body that collects employers’ social security contributions — has sent a formal demand for unpaid charges, and you live in London, New York or Dubai. The French bank account is nearly empty, the accountant warns that the next payroll cannot be met, and you wonder whether you can simply walk away, dissolve the company quietly, or wait for things to improve. French law gives a blunt answer: once your company can no longer pay its due debts with its available cash, you have forty-five days to ask the court to open insolvency proceedings, unless you have asked for conciliation — a confidential court-supervised negotiation with creditors — within the same period. Missing that deadline does not merely delay the process; it exposes you personally to an order to pay the company’s shortfall and to a ban on managing any business in France.

This guide explains, for a foreign founder or foreign parent company running a French SAS (société par actions simplifiée, the flexible joint-stock company most foreigners choose), a SARL (société à responsabilité limitée, the limited liability company with stricter statutory rules), or a French subsidiary or branch, how French law decides that filing is mandatory, where and how to file from abroad, which procedure fits your situation — sauvegarde (safeguard), redressement judiciaire (judicial reorganisation) or liquidation judiciaire (judicial liquidation) — and how to limit your personal exposure as a director. Every acronym is explained, every decisive rule is quoted from the official text, and every step can be taken through French counsel without boarding a plane. Our companion guides on choosing between a SAS, a SARL, a subsidiary and a branch and on hiring your first employee in France describe the healthy company; this one describes what the law demands when the money runs out.

The stakes are concrete and immediate. The date the court assigns to the cessation of payments determines which past payments can be cancelled, which employee departures follow which rules, and whether your own conduct in the months before filing will be examined. Filing late, paying one creditor in preference to the others once you are insolvent, or continuing a loss-making business with no prospect of recovery are the three patterns that most often bring foreign directors before the French courts. The sections below give you the legal test, the filing file, the choice of procedure and the personal-liability defences, in that order.

I. How French law decides your company must file and how to file on time from abroad

A. Your company cannot pay its due debts with available cash: spotting cessation des paiements and counting the 45-day deadline

French law defines the trigger in Article L631-1 of the Commercial Code, and the definition deserves a full quotation because everything else flows from it: « Il est institué une procédure de redressement judiciaire ouverte à tout débiteur mentionné aux articles L. 631-2 ou L. 631-3 qui, dans l’impossibilité de faire face au passif exigible avec son actif disponible, est en cessation des paiements. » A reorganisation procedure is open to any listed debtor who, being unable to meet its due liabilities (passif exigible) with its available assets (actif disponible), is in cessation des paiements — the French term for cash-flow insolvency. In plain business English: compare what must be paid now — overdue supplier invoices, rent arrears, tax and URSSAF demands that have fallen due, wages due at month end — with what is immediately available — cash in the bank, drawable credit lines confirmed in writing, receivables collectable at once. Future orders, the value of stock and promises of a future fundraising round do not count. If the first column exceeds the second, the company is in cessation des paiements, even if the balance sheet still shows valuable fixed assets or a strong brand.

The same Article L631-1 adds a narrow lifeline that foreign founders often misunderstand: « Le débiteur qui établit que les réserves de crédit ou les moratoires dont il bénéficie de la part de ses créanciers lui permettent de faire face au passif exigible avec son actif disponible n’est pas en cessation des paiements. » A debtor who proves that credit reserves or payment extensions granted by its creditors allow it to meet its due liabilities with its available assets is not in cessation des paiements. A vague promise from a shareholder to inject money later is not a credit reserve. A documented overdraft facility confirmed in writing by the bank, or a signed payment schedule from URSSAF or the tax office deferring specific due dates, can be. Keep these documents in writing, because the court will ask for them, and an oral assurance given from abroad will carry no weight at the hearing.

The Cour de cassation — France’s supreme court for civil and commercial matters, whose commercial chamber hears insolvency appeals — has tightened this test in a reported decision that every foreign director should know. In Cass. com., 9 December 2020, No. 19-14.437, the court held: « Il résulte des articles L. 631-1 et L. 631-8 du code de commerce que la date de cessation des paiements ne peut être reportée qu’au jour où le débiteur était déjà dans l’impossibilité de faire face à son passif exigible avec son actif disponible. » The date of cessation of payments can only be set at a day on which the debtor was already unable to meet its due liabilities with its available assets. The same ruling adds a second sentence with major practical weight: « ne peut être incluse dans le passif exigible une dette incertaine, comme faisant l’objet d’un recours. » A disputed debt that is still under appeal cannot be counted among the due liabilities. For a foreign-owned company fighting a large French tax reassessment while paying everything else normally, that distinction can move the insolvency date by months — but it cuts both ways, because a tax bill that has become enforceable, with no suspension of payment granted, counts in full even while you still contest the principle before another court.

Once the test is met, the clock starts. Article L631-4 of the Commercial Code states the duty in one sentence that should be read literally: « L’ouverture d’une procédure de redressement judiciaire doit être demandée par le débiteur au plus tard dans les quarante-cinq jours qui suivent la cessation des paiements s’il n’a pas, dans ce délai, demandé l’ouverture d’une procédure de conciliation. » The opening of reorganisation proceedings must be requested by the debtor no later than forty-five days after the cessation of payments, unless the debtor has within that period requested the opening of conciliation proceedings. Day one is the day the company first became unable to pay, not the day you discovered it from abroad and not the day the accountant confirmed it. A director who learns in London on 10 October that the company has been unable to pay since 20 September does not have forty-five days from 10 October; the period already runs and expires in early November. Ask your accountant to date the cash-flow comparison in writing each month, so the starting point can be proved rather than guessed.

Conciliation, the alternative mentioned in that article, is a confidential negotiation managed with the help of a court-appointed conciliator, and it is only available early. Article L611-4 of the Commercial Code provides: « Il est institué, devant le tribunal de commerce, une procédure de conciliation dont peuvent bénéficier les débiteurs exerçant une activité commerciale ou artisanale qui éprouvent une difficulté juridique, économique ou financière, avérée ou prévisible, et ne se trouvent pas en cessation des paiements depuis plus de quarante-cinq jours. » Conciliation is open before the commercial court to commercial or craft debtors facing a proven or foreseeable legal, economic or financial difficulty, provided they have not been in cessation of payments for more than forty-five days. Beyond that line, the confidential door closes and only the public procedures — redressement or liquidation — remain. For a foreign owner, the practical lesson is to seek advice at the first missed payroll or the first unpaid URSSAF deadline, when conciliation is still available and the negotiations stay out of the BODACC — the Bulletin officiel des annonces civiles et commerciales, the official gazette where insolvency judgments are published and which every counterparty checks.

B. Where and how to file for redressement judiciaire from abroad: commercial court, papers and who signs

The court with jurisdiction is the tribunal de commerce (commercial court) of the place where the company’s registered office sits — in practice Paris for a Paris-registered SAS or SARL — or the tribunal judiciaire (general court) for non-commercial entities. You do not file at the INPI Guichet unique (the online single portal used for routine company filings) and you do not file by post from abroad without a representative: the filing, called a déclaration de cessation des paiements, is lodged at the greffe (the court registry, the administrative office of the court that receives filings and issues the Kbis, the official company identity certificate) by the company’s legal representative or by a lawyer holding a written power of attorney. A foreign président of SAS, gérant of SARL, or overseas parent-company representative can sign the power of attorney abroad; French counsel then appears, files and speaks at the hearing. The hearing itself is short and factual: the court verifies the cash-flow position, hears the debtor’s observations, and sets the opening judgment with the date of cessation of payments.

The contents of the filing file are fixed by decree, and an incomplete file is the most common cause of delay for foreign filers. Article R631-1 of the Commercial Code requires that « La demande d’ouverture de la procédure de redressement judiciaire est déposée par le représentant légal de la personne morale ou par le débiteur personne physique au greffe du tribunal compétent. » The request is filed by the legal representative of the company at the registry of the competent court. It continues: « A cette demande sont jointes, outre les comptes annuels du dernier exercice, les pièces ci-après », followed by a numbered list of exhibits. In business terms, you must attach the last annual accounts plus: a statement of due liabilities and available assets with a signed declaration of cessation of payments; the company’s registration number (SIREN); a cash-flow statement less than one month old; headcount with names, addresses, turnover and unpaid wage totals; a quantified list of receivables and debts with each creditor’s name and address; a statement of securities and off-balance-sheet commitments; a summary inventory of assets; where relevant the list of members jointly liable for company debts; the names of employee representatives already appointed; and a sworn statement that no conciliator or conciliation proceedings touch the same assets in the previous eighteen months, or the details if there were any. The article closes with a warning worth quoting: « Ces documents sont datés, signés et certifiés sincères et véritables par le demandeur. » Every document must be dated, signed and certified as sincere and true by the applicant. From abroad, organise this file with your accountant and counsel at least two weeks before the forty-five days expire: bank statements, the aged creditor list and the payroll extract take longer to assemble across borders than founders expect.

The date the court writes in the opening judgment matters far beyond symbolism. Article L631-8 of the Commercial Code provides: « Le tribunal fixe la date de cessation des paiements après avoir sollicité les observations du débiteur. » The court sets the date of cessation of payments after seeking the debtor’s observations. It adds three limits: « A défaut de détermination de cette date, la cessation des paiements est réputée être intervenue à la date du jugement d’ouverture de la procédure. » Failing determination, cessation is deemed to have occurred on the opening judgment date. Further: « Elle peut être reportée une ou plusieurs fois, sans pouvoir être antérieure de plus de dix-huit mois à la date du jugement d’ouverture de la procédure. » The date can be moved back one or more times, but never more than eighteen months before the opening judgment. And: « La demande de modification de date doit être présentée au tribunal dans le délai d’un an à compter du jugement d’ouverture de la procédure. » Any request to change the date must reach the court within one year of the opening judgment. Why does this concern a foreign director? Because payments made after the assigned date — a repayment to the parent company, a security granted to one supplier, a set-off arranged with a friendly creditor — can be annulled as belonging to the suspect period, while wages, new financing properly authorised and acts approved by the court-appointed administrator stay protected. Repaying your foreign parent’s shareholder loan the week before filing, while leaving French suppliers unpaid, is the classic payment a liquidator later attacks.

II. Which rescue or winding-up route fits your case and how to limit personal exposure as a foreign director

A. Sauvegarde, redressement judiciaire or liquidation judiciaire: which door is still open and what you keep or lose in each

The three doors look similar from abroad but open under different conditions and cost you different levels of control. The first door, sauvegarde, is available before insolvency. Article L620-1 of the Commercial Code states: « Il est institué une procédure de sauvegarde ouverte sur demande d’un débiteur mentionné à l’article L. 620-2 qui, sans être en cessation des paiements, justifie de difficultés qu’il n’est pas en mesure de surmonter. » A safeguard procedure is open at the debtor’s request where, without being in cessation of payments, the debtor shows difficulties it cannot overcome. Its purpose follows: « Cette procédure est destinée à faciliter la réorganisation de l’entreprise afin de permettre la poursuite de l’activité économique, le maintien de l’emploi et l’apurement du passif. » It exists to ease reorganisation so the business can continue, jobs can be preserved and liabilities cleared. A foreign owner who sees a major contract loss coming, a lease renewal that will double the rent, or a tax reassessment that will fall due in three months can file for sauvegarde while the company still pays its bills — and stay in charge, with an administrator supervising rather than replacing management. Once cessation is established, this door is shut.

The second door, redressement judiciaire, opens after cessation and aims at rescue. Article L631-1 of the Commercial Code continues after the definition quoted above: « La procédure de redressement judiciaire est destinée à permettre la poursuite de l’activité de l’entreprise, le maintien de l’emploi et l’apurement du passif. » Reorganisation proceedings exist to allow the business to continue, employment to be preserved and liabilities to be cleared. The court opens an observation period — usually six months, renewable — during which an administrateur judiciaire (court-appointed administrator who assists or supervises management) and a mandataire judiciaire (court-appointed representative who represents creditors and inventories claims) are appointed, enforcement actions are frozen, and a recovery plan with debt rescheduling of up to ten years can be negotiated. The director stays in place in most small cases but cannot sell assets, pay old debts or grant securities without the administrator’s or the judge’s approval. For a foreign-owned SAS with a viable French client base but a temporary cash hole, redressement offers breathing room that a private workout cannot: the freeze binds even hostile creditors, employee claims for wages are advanced by the AGS (the French wage-guarantee scheme that pays employees when the employer is insolvent), and the plan, once approved by the court, binds all creditors including those who voted against it.

The third door, liquidation judiciaire, ends the business. Article L640-1 of the Commercial Code provides: « Il est institué une procédure de liquidation judiciaire ouverte à tout débiteur mentionné à l’article L. 640-2 en cessation des paiements et dont le redressement est manifestement impossible. » Judicial liquidation is open to any listed debtor in cessation of payments whose recovery is manifestly impossible. Its purpose is equally blunt: « La procédure de liquidation judiciaire est destinée à mettre fin à l’activité de l’entreprise ou à réaliser le patrimoine du débiteur par une cession globale ou séparée de ses droits et de ses biens. » It exists to end the company’s activity or to realise its assets through a sale of the business as a whole or of individual assets. A liquidateur judiciaire (court-appointed liquidator who sells the assets and distributes the proceeds) replaces the directors, employment contracts are terminated under a fast-track procedure with AGS advances, the Kbis — the official extract from the Trade and Companies Register that proves the company’s legal existence — is annotated with the liquidation judgment, and every new development is published in the BODACC. Foreign founders sometimes ask whether they can skip all this and simply let a dormant French company sit idle from abroad. The answer is no: an unfunded company with debts that is never liquidated keeps generating directors’ exposure, tax late-filing penalties and the risk of a court-ordered liquidation on a creditor’s petition, where the director’s late filing is then held against them.

Costs and control differ sharply between the doors, and the comparison should drive your decision. Sauvegarde keeps management in place, stays largely confidential at first, and costs mainly administrator and counsel fees over the observation period. Redressement adds the mandataire’s claim-verification work and longer court supervision, but preserves the chance of a court-approved plan that writes down or reschedules debt while the business trades on. Liquidation removes the directors from management on day one, sells the assets, and closes with either enough to pay creditors or a judicial finding of insufficiency of assets — the accounting shortfall that opens the personal-liability cases described below. In each procedure, from the opening judgment, the company’s Kbis shows the proceedings, banks freeze the old accounts and open procedure accounts, and suppliers check the BODACC before delivering. Filing early therefore protects commercial reputation better than filing late: counterparties forgive a sauvegarde or a redressement with a plan far more readily than a liquidation forced by a creditor’s writ.

B. What you pay if you file late or keep trading while insolvent: contribution for shortfall, management ban and how to defend yourself

The heaviest personal risk for a foreign director is the action for insufficiency of assets. Article L651-2 of the Commercial Code provides: « Lorsque la liquidation judiciaire d’une personne morale fait apparaître une insuffisance d’actif, le tribunal peut, en cas de faute de gestion ayant contribué à cette insuffisance d’actif, décider que le montant de cette insuffisance d’actif sera supporté, en tout ou en partie, par tous les dirigeants de droit ou de fait, ou par certains d’entre eux, ayant contribué à la faute de gestion. » Where judicial liquidation of a company reveals a shortfall of assets, the court may, where a management fault contributed to that shortfall, order that all or part of the shortfall be borne by all or some of the de jure or de facto directors who contributed to the fault. The same article sets the boundaries: « Toutefois, en cas de simple négligence du dirigeant de droit ou de fait dans la gestion de la personne morale, sa responsabilité au titre de l’insuffisance d’actif ne peut être engagée. » For mere negligence in management, liability for the shortfall cannot be imposed. And: « L’action se prescrit par trois ans à compter du jugement qui prononce la liquidation judiciaire. » The action is time-barred three years after the judgment opening judicial liquidation. A dirigeant de droit is the appointed director — the président of a SAS, the gérant of a SARL; a dirigeant de fait is anyone who actually runs the company without formal appointment, a category that can catch a foreign parent company or its owner who gives detailed daily orders to the French team from abroad.

The Cour de cassation has given foreign directors a genuine shield here, and its wording should be quoted exactly. In Cass. com., 13 April 2022, No. 20-20.137, the court stated: « Il résulte de ce texte qu’en cas de simple négligence dans la gestion de la société, la responsabilité du dirigeant au titre de l’insuffisance d’actif est écartée. » It follows from the statute that for mere negligence in managing the company, the director’s liability for the shortfall is excluded. Applying that rule, the court quashed a judgment that had condemned a director to pay 300,000 euros for the shortfall on the sole ground that he had shown a lack of vigilance by tying the company to a single client without securing the relationship: « En statuant par de tels motifs tirés seulement d’un manque de vigilance de M. [P], impropres à établir que celui-ci aurait commis une faute de gestion non susceptible d’être analysée en une simple négligence, la cour d’appel n’a pas donné de base légale à sa décision. » By ruling on mere lack of vigilance, incapable of proving a management fault distinct from simple negligence, the appeal court gave no legal basis for its decision. For a foreign founder, the message is practical: an honest business mistake — betting on one big French client, expanding too fast, trusting a local manager — is not enough to make you pay the shortfall. The liquidator must prove a real management fault that contributed to it: keeping deliberately defective accounts, continuing doomed trading for months, stripping cash for the parent, or ignoring repeated written warnings from the auditor.

Beyond money, the court can strike at the director’s future. Article L653-4 of the Commercial Code lists the conduct that can lead to faillite personnelle (personal bankruptcy, a sanction that bans the individual from managing and carries civic disqualifications): « Le tribunal peut prononcer la faillite personnelle de tout dirigeant, de droit ou de fait, d’une personne morale, contre lequel a été relevé l’un des faits ci-après », then five cases, including « Avoir disposé des biens de la personne morale comme des siens propres » (using company assets as one’s own), « Avoir poursuivi abusivement, dans un intérêt personnel, une exploitation déficitaire qui ne pouvait conduire qu’à la cessation des paiements de la personne morale » (wrongfully continuing, in one’s personal interest, a loss-making operation that could only lead to the company’s cessation of payments), and « Avoir détourné ou dissimulé tout ou partie de l’actif ou frauduleusement augmenté le passif de la personne morale » (diverting or hiding assets or fraudulently increasing liabilities). A lighter but still career-ending sanction, the interdiction de gérer (ban on directing, managing or controlling any business), can replace personal bankruptcy. Article L653-8 of the Commercial Code states: « Dans les cas prévus aux articles L. 653-3 à L. 653-6 , le tribunal peut prononcer, à la place de la faillite personnelle, l’interdiction de diriger, gérer, administrer ou contrôler, directement ou indirectement, soit toute entreprise commerciale ou artisanale, toute exploitation agricole et toute personne morale, soit une ou plusieurs de celles-ci. » In those cases the court may impose, instead of personal bankruptcy, a ban on directing or managing any commercial business or company. The same article then names the foreign director’s nightmare precisely: « Elle peut également être prononcée à l’encontre de toute personne mentionnée à l’article L. 653-1 qui a omis sciemment de demander l’ouverture d’une procédure de redressement ou de liquidation judiciaire dans le délai de quarante-cinq jours à compter de la cessation des paiements, sans avoir, par ailleurs, demandé l’ouverture d’une procédure de conciliation. » The ban can also be imposed on anyone who knowingly failed to request reorganisation or liquidation within forty-five days of cessation of payments without requesting conciliation. Knowing failure to file on time is, by itself, a ground for a management ban of up to fifteen years, published and enforceable across the European Union.

How do you defend yourself from abroad if the liquidator sues you two years later? Four lines of defence work in practice, and each should be prepared from the day you sense trouble. First, file on time and keep the receipt: a filing within forty-five days, or a conciliation request within that period, removes the automatic late-filing ground for a ban and shows good faith against any fault allegation. Second, stop preferential payments the moment cessation is likely: pay wages, which the AGS guarantees and the court expects, but freeze repayments to the parent, security grants to one supplier and set-offs with friendly creditors until counsel approves them. Third, document every rescue attempt in writing: board minutes noting the cash-flow review, emails seeking new financing, the auditor’s alerts and your written replies, the conciliation request and the plan drafts. Courts distinguish the director who monitored the situation and sought help from the one who looked away across the Channel. Fourth, separate your roles: if you lead the foreign parent and the French subsidiary, make clear which hat you wear in each decision, because a parent that micromanagers its French subsidiary can be qualified as a de facto director and sued alongside the appointed manager. Our guide on opening and funding a French corporate bank account from abroad explains how clean capital and loan documentation, set up before any crisis, also protects you when the liquidator later reviews every transfer between parent and subsidiary.

Conclusion

A French company that cannot pay is not a company you can quietly abandon from abroad. Identify the cessation date with the cash-flow test of Article L631-1, count forty-five days under Article L631-4, and file at the greffe with the full Article R631-1 bundle — or request conciliation under Article L611-4 while the confidential door is still open. Choose sauvegarde before insolvency under Article L620-1, redressement to reorganise, or liquidation under Article L640-1 when recovery is manifestly impossible, knowing the court will fix the cessation date under Article L631-8 and review the suspect period. Above all, protect yourself as a director: mere negligence cannot make you pay the shortfall under Article L651-2 as confirmed in Cass. com., 13 April 2022, No. 20-20.137, but wrongful continuation, misuse of assets and knowing late filing can bring personal bankruptcy under Article L653-4 and a management ban under Article L653-8. The forty-five days run whether you are in Paris or abroad; instruct French counsel at the first missed payment, not at the first writ.

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