You have spotted a French company to buy: good products, real customers, a skilled team in Lyon, Lille or Paris, but the business is in redressement judiciaire or liquidation judiciaire and the court is selling it to the highest-quality bidder through a plan de cession, the French court-ordered sale procedure. Buying here has almost nothing in common with an ordinary acquisition. There is no seller negotiating warranties with you, no garantie d’actif et de passif to cover hidden debts, no data room polished by an investment bank, and no price haggling: you file a written takeover bid with the court, the judges pick the offer that best protects jobs and pays creditors, and your bid binds you until the judgment, with no right to walk away if you change your mind. From London, New York, Dubai or Singapore, you can absolutely win such a sale, and foreign buyers often do, but only if you understand what the tribunal is really selling, what your offer must contain to be admissible, and what you inherit on day one, starting with the employees. This guide walks you through the court sale from a foreign buyer’s seat: the bidding rules, the staff transfer, and what happens if you default after winning. If instead you are looking at a healthy French target, our companion guide on buying a French company and enforcing the seller’s warranty from abroad covers the classic deal, where a negotiated warranty protects you against debts that surface after closing, a protection that simply does not exist in a court sale.

I. How a French Court Sells a Distressed Company and How You Bid From Abroad

A. What the Tribunal Is Selling: the Business or a Branch, and the Nine Points Your Offer Must Cover

The court sale exists for one purpose, stated in article L. 642-1 of the Commercial Code: “La cession de l’entreprise a pour but d’assurer le maintien d’activités susceptibles d’exploitation autonome, de tout ou partie des emplois qui y sont attachés et d’apurer le passif.” The sale can be total or partial, and in the partial case it must concern “un ensemble d’éléments d’exploitation qui forment une ou plusieurs branches complètes et autonomes d’activités”. Three consequences follow for a foreign bidder. First, you cannot cherry-pick the profitable contracts and leave the rest: you bid for the business as the court defines it, or for a complete autonomous branch, and the court, not you, draws the perimeter. Second, the price you pay does not go to a seller but to the proceedings, to pay the creditors, which means the creditors, the staff representatives and the public prosecutor all examine your offer and are heard before the judges decide. Third, the company’s debts do not transfer to you: you buy assets, contracts and jobs free of the old liabilities, which stay in the insolvent estate, and that clean-break effect is precisely what makes court sales attractive to buyers who would never touch the same company through a share deal.

Every offer must be written and must contain nine mandatory items listed in article L. 642-2 of the Commercial Code: “Toute offre doit être écrite et comporter l’indication : 1° De la désignation précise des biens, des droits et des contrats inclus dans l’offre ; 2° Des prévisions d’activité et de financement ; 3° Du prix offert, des modalités de règlement, de la qualité des apporteurs de capitaux et, le cas échéant, de leurs garants. Si l’offre propose un recours à l’emprunt, elle doit en préciser les conditions, en particulier de durée ; 4° De la date de réalisation de la cession ; 5° Du niveau et des perspectives d’emploi justifiés par l’activité considérée ; 6° Des garanties souscrites en vue d’assurer l’exécution de l’offre ; 7° Des prévisions de cession d’actifs au cours des deux années suivant la cession ; 8° De la durée de chacun des engagements pris par l’auteur de l’offre ; 9° Des modalités de financement des garanties financières envisagées lorsqu’elles sont requises au titre des articles L. 516-1 et L. 516-2 du code de l’environnement.” For a buyer based abroad, points 2, 3 and 6 decide admissibility in practice: activity and financing forecasts must be credible and documented, the identity and quality of the capital providers must be disclosed, and any bank borrowing must be presented with its terms, because a bid backed by vague promises of future fundraising from the parent group is routinely discarded. The administrator or liquidator deposits the offers received at the greffe, the clerk’s office of the court, “où tout intéressé peut en prendre connaissance”, so rival bidders, creditors and unions will read your business plan: draft it as a public document from the start, with employment figures you can actually deliver.

Timing is court-driven and unforgiving. Once the tribunal considers a sale possible, it authorises continued trading and “fixe le délai dans lequel les offres de reprise doivent parvenir au liquidateur et à l’administrateur”, and the Paris court’s official bidder notice confirms the practice: the business is for sale from the opening judgment, spontaneous offers can be filed immediately, and where proceedings convert to liquidation the court can examine existing offers and admit new ones within very short windows, sometimes eight days. From abroad, this means you must organise before the deadline appears: retain French counsel near the competent court, line up financing with written term sheets, prepare the employment plan with a French HR adviser, and arrange for a representative who can attend the hearing, because the judges may question the bidder in person and an empty chair counts against you. One French specificity works in favour of well-prepared foreigners: the pre-pack sale. Where offers were collected beforehand by a court-appointed mandataire ad hoc or conciliateur during confidential prevention proceedings and meet the statutory content requirements, the tribunal can adopt them directly without reopening a bidding period, as the same article L. 642-2 allows. Monitoring distressed targets early, through BODACC publications, the official gazette of commercial announcements, and the greffe, the court clerk’s office, therefore lets you negotiate a pre-pack before the competitors even learn the company is for sale.

B. How the Tribunal Picks the Winner: Jobs First, Creditors Second, Price Third

Foreign buyers raised on auctions must reset their instincts: the highest price does not win. After hearing the prosecutor, the debtor, the liquidator, the staff representatives designated by the comité social et économique, the French staff committee, and the controllers, article L. 642-5 of the Commercial Code directs that “le tribunal retient l’offre qui permet dans les meilleures conditions d’assurer le plus durablement l’emploi attaché à l’ensemble cédé, le paiement des créanciers et qui présente les meilleures garanties d’exécution”. Employment durability comes first in the sentence and first in the judges’ reasoning: an offer keeping eighty jobs with a slightly lower price beats an offer keeping twenty jobs at a higher price, and an offer whose financing is uncertain loses to a fully funded one even at equal employment. The judgment adopting the plan binds everyone, pre-emption rights cannot be exercised over assets in the plan, and where the plan includes redundancies it can only be adopted after the large-scale economic dismissal procedure has been implemented, since the statute adds that “Lorsque le plan prévoit des licenciements pour motif économique, il ne peut être arrêté par le tribunal qu’après que la procédure prévue au I de l’article L. 1233-58 du code du travail a été mise en œuvre.” A foreign bidder should therefore build the offer around a serious employment story, site by site, with investment commitments and timeframes, rather than leading with price, and should never promise job levels the forecasts cannot support, because the commitments entered in the offer become enforceable obligations monitored by the liquidator after the sale.

Your bid also transfers contracts you did not negotiate, which is an opportunity and a risk. Article L. 642-7 of the Commercial Code provides that “Le jugement qui arrête le plan emporte cession de ces contrats, même lorsque la cession est précédée de la location-gérance prévue à l’article L. 642-13 . Ces contrats doivent être exécutés aux conditions en vigueur au jour de l’ouverture de la procédure, nonobstant toute clause contraire. Par dérogation, toute clause imposant au cessionnaire d’un bail des dispositions solidaires avec le cédant est réputée non écrite.” In practice the tribunal selects the leases, equipment finance and supply contracts needed to keep the business running and transfers them to you on their existing terms, overriding change-of-control clauses, and a landlord cannot force you to remain jointly liable with the insolvent seller for old rent. List precisely in your offer which contracts you want included, because the court can only transfer what is identified, and verify each lease and key supply agreement during the data phase: a contract that looks essential on paper may carry termination rights the statute does not neutralise, and discovering this after the judgment leaves you operating a business without its premises or its main supplier.

Two prohibitions frame the process and both bite. First, certain persons cannot bid at all: article L. 642-3 states that “Ni le débiteur, au titre de l’un quelconque de ses patrimoines, ni les dirigeants de droit ou de fait de la personne morale en liquidation judiciaire, ni les parents ou alliés jusqu’au deuxième degré inclusivement de ces dirigeants ou du débiteur personne physique, ni les personnes ayant ou ayant eu la qualité de contrôleur au cours de la procédure ne sont admis, directement ou par personne interposée, à présenter une offre”, with a five-year ban on reacquiring the sold assets or shares of the acquiring vehicle. A foreign group that already controls the insolvent company, or whose executives directed it in fact, cannot therefore buy it back through a new subsidiary or a friendly intermediary, and structures designed to hide the real buyer are treated as interposed persons. Second, your offer locks you in, as article L. 642-2 states: “L’offre ne peut être ni modifiée, sauf dans un sens plus favorable aux objectifs mentionnés au premier alinéa de l’article L. 642-1, ni retirée. Elle lie son auteur jusqu’à la décision du tribunal arrêtant le plan. En cas d’appel de la décision arrêtant le plan, seul le cessionnaire reste lié par son offre.” You may only improve your bid, never water it down, you cannot withdraw while the court deliberates, and if the judgment is appealed, every other bidder walks free while you stay bound. Never file a bid to test the waters or to block a competitor: from the filing date, the offer is a commitment.

II. What You Inherit on Day One and What Happens If You Default

A. The Staff Come With the Business: Automatic Transfer and Its Limits

The single most underestimated feature of a French court sale is the workforce: it transfers automatically. Article L. 1224-1 of the Labour Code provides that “Lorsque survient une modification dans la situation juridique de l’employeur, notamment par succession, vente, fusion, transformation du fonds, mise en société de l’entreprise, tous les contrats de travail en cours au jour de la modification subsistent entre le nouvel employeur et le personnel de l’entreprise.” A plan de cession is exactly such a modification, so every employment contract in force on the transfer date continues with you on the same terms: seniority, salary, contractual benefits and pending disputes all pass to the buyer, and you cannot pick the team you want and leave the rest behind, except for redundancies organised through the plan itself under court supervision. Price your bid accordingly: the wage bill you inherit is fixed by the existing contracts, and the due-diligence question is not whether staff transfer, they do, but how many, at what cost, and with what pending claims before the labour courts, the conseils de prud’hommes.

The Cour de cassation has drawn the exact boundary of the buyer’s responsibility for those transferred employees, in a decision every foreign bidder should read before signing. In its judgment of 4 July 2018, no. 17-14.587, the Social Chamber ruled, visas of article L. 642-11 of the Commercial Code and articles L. 1224-1 and L. 1224-2 of the Labour Code, that “les obligations du cessionnaire à l’égard des salariés passés à son service demeuraient à sa charge jusqu’au jour de la résolution du plan”, while “le cédant ne pouvait être tenu des obligations qui incombaient au cessionnaire, à l’égard du personnel repris, avant la résolution du plan de cession”. In that case an employee transferred under a 2005 sale plan, dismissed by the buyer, tried after the plan’s resolution to turn against the original seller, and the Court refused: what the buyer owed the taken-over staff stayed the buyer’s burden until the resolution date, and the seller could not be billed for the buyer’s own obligations. The mirror lesson matters just as much: wage arrears born before the opening judgment are not yours to pay, since employees’ pre-proceedings claims are declared in the collective proceedings and covered by the AGS wage-guarantee scheme, whereas everything attached to contracts continuing after the transfer, salaries, accrued leave, and dismissals you pronounce, is yours. Map precisely, contract by contract, which sums predate the opening and which postdate your takeover, and have French employment counsel validate the split before you commit to a headcount in the offer.

Dismissing after the takeover follows ordinary French dismissal law, not insolvency shortcuts. Once the plan is executed, you are a normal employer: any redundancy needs a real and serious cause with the full procedure, and any dismissal for personal reasons needs documented grounds, exactly as if you had bought a healthy company. The only redundancies that benefit from the collective framework are those written into the plan itself and authorised by the tribunal after the statutory large-scale procedure, described above. Foreign buyers who assume a court purchase includes a right to clean house discover the cost structure too late: budget the full payroll from day one, add the cost of the economic dismissals already authorised in the plan where applicable, and treat any further workforce reduction as a separate project with its own timetable and severance cost, because French labour courts will examine each termination on its own merits, plan or no plan.

B. If You Default After Winning: Resolution, Lost Price and Damages

Winning the court’s decision is the beginning of the obligations, not the end. The buyer reports to the liquidator on performance of the plan, and article L. 642-11 of the Commercial Code attaches a severe sanction to failure: “Si le cessionnaire n’exécute pas ses engagements, le tribunal peut, à la demande du ministère public d’une part, du liquidateur, d’un créancier, de tout intéressé ou d’office, après avoir recueilli l’avis du ministère public, d’autre part, prononcer la résolution du plan sans préjudice de dommages et intérêts. Le tribunal peut prononcer la résolution ou la résiliation des actes passés en exécution du plan résolu. Le prix payé par le cessionnaire reste acquis.” Resolution can therefore be requested by almost anyone, it can be ordered on the court’s own motion, it unwinds the implementing acts, it opens additional damages, and above all the price you paid stays acquired by the proceedings: default on your employment or investment commitments and you lose both the business and the money. A foreign buyer must internalise this asymmetry before bidding: the tribunal has no duty to renegotiate your commitments if your group reallocates budget or your financing falls through, and the 2018 decision quoted above shows the courts applying the consequences strictly, keeping the buyer’s obligations on the buyer until the resolution date.

It helps to distinguish this sanction from the parallel regime for continuation plans, where the debtor keeps the company and repays creditors over time. In its judgment of 2 February 2022, no. 20-20.199, the Commercial Chamber recalled that “Il résulte des articles L. 626-27 et L. 631-19 du code de commerce qu’un plan de sauvegarde ou de redressement ne peut être résolu qu’en cas de cessation des paiements constatée au cours de l’exécution du plan ou d’inexécution, par le débiteur, de ses engagements dans les délais fixés par le plan”, and refused to resolve a plan that was being scrupulously performed even though the underlying business had changed. The contrast is instructive: a continuation plan survives as long as the debtor pays on time, while a sale plan binds the buyer to every employment, investment and operating commitment written in the offer, with resolution available to a much wider circle of applicants. Before filing, lock the financing with signed documents, not indicative terms, secure the parent-group guarantee where the offer names one, and cost each employment commitment over its full duration, because the tribunal will measure performance against the offer’s letter, and the liquidator’s monitoring report is the document that triggers resolution proceedings.

Two final warnings complete the picture for buyers acting from abroad. First, unlike a healthy-company deal, a court sale offers no seller warranty: the price reflects assets sold as they stand, the creditors’ claims stay behind, and there is no vendor to sue if turnover disappoints, which is the opposite of the garantie d’actif et de passif negotiated in classic acquisitions, whose enforcement from abroad is described in our guide on hidden debts surfacing after buying a French company. Your protection here is upstream due diligence, precise perimeter drafting in the offer, and conditions you control, never post-closing claims against a seller that no longer exists economically. Second, distance magnifies execution risk: appoint a French-based manager with real authority before the transfer date, register the new entity’s bank and payroll circuits so salaries run on day one, and keep counsel through the entire monitoring period, because the first liquidator’s report noting missed hiring or investment targets starts a countdown you cannot manage by email from another continent. Courts reward buyers who execute visibly and punish those who disappear after the judgment.

Conclusion

Buying a distressed French company from abroad is a court procedure before it is a negotiation: the tribunal defines what is sold, the offer must contain the nine statutory items with funded employment commitments, the judges choose durability of jobs and payment of creditors over price, the staff transfer automatically with their contracts, and default means resolution with the price lost. Prepared with locked financing, a credible jobs plan and French counsel on the ground, a foreign bid wins regularly; filed lightly, it becomes an irrevocable commitment to obligations you cannot meet. Bid only what you can execute, and execute everything you bid.