Judicial liquidation lawyer in Paris: filing, claiming, preparing the closure.

A company is in cessation of payments when it can no longer pay its due debts out of its available assets (Article L. 631-1 of the Commercial Code). Due liabilities cover debts that have fallen due and whose payment can be demanded immediately: rent, supplier invoices, social security contributions, taxes, bank instalments. Available assets comprise cash and whatever can be mobilised without delay. The text reserves the case of credit lines and time to pay granted by creditors: where the debtor shows that they enable it to cover the debts that have fallen due, the state of cessation is not established.

A valuable asset therefore does not, in itself, offset liabilities that have fallen due. The Court of Cassation overturned a court of appeal, recalling "that a building not yet sold does not constitute available assets" (Cass. com., 17 June 2020, No. 18-22.747) (our translation). The reasoning applies to stock that is hard to sell or to a claim that is still disputed.

Where the judgment opening proceedings is appealed, the situation is re-examined as at the date of the appeal judgment. The Paris Court of Appeal held that "cessation of payments is assessed on the day the court rules" and upheld the liquidation of a company that showed no available assets (CA Paris, pôle 5 ch. 8, 22 December 2023, No. 23/06499) (our translation). This assessment on appeal does not move the forty-five-day period, which runs from the actual cessation of payments, the date of which the court then sets. The firm reconstructs with the director the day on which the due debts ceased to be covered by the available assets.

The application is filed with the registry of the competent court by the legal representative of the legal entity or by the debtor, if an individual (Article R. 631-1 of the Commercial Code, applicable to liquidation by Article R. 640-1 of the Commercial Code). It includes the annual accounts for the last financial year and a series of documents listed in the text: a statement of due liabilities and available assets with a declaration of cessation of payments, a cash position statement less than one month old, the number of employees and turnover, an itemised statement of claims and debts with the identity of the creditors, a statement of security and off-balance-sheet commitments, and a summary inventory of assets.

A sworn statement is added on the existence or absence of an ad hoc mandate or conciliation in the preceding eighteen months. The documents are dated, signed and certified true and accurate by the applicant; several of them must be drawn up as at the date of the application or within the seven days before it.

For a liquidation, the evidence tending to show that reorganisation is manifestly impossible must be attached to the application (Article R. 640-1 of the Commercial Code). The firm checks the consistency between the list of creditors and the accounts: a creditor omitted from that list may later obtain relief from time bar more easily, and an incomplete list weakens the director's position before the liquidator.

Simplified judicial liquidation is a variant of the procedure reserved for small businesses. It applies if the debtor's assets include no real estate and if the number of its employees in the six months preceding the opening and its turnover excluding VAT do not exceed thresholds set by decree (Article L. 641-2 of the Commercial Code). Where the debtor is an individual, only the absence of real estate is required, and their rights in the main residence, which is unseizable by operation of law under Article L. 526-1 of the Commercial Code, do not prevent the simplified procedure.

If the court has the necessary information, it rules on application of the simplified procedure in the liquidation judgment itself. Otherwise, the president of the court decides on the basis of a report on the debtor's situation that the liquidator prepares within one month of appointment.

For the director, the quality of the file lodged determines this outcome: an accurate inventory, verified headcount and turnover figures and proof that there is no real estate allow the court to decide from the opening. For the creditor, the simplified procedure does not remove the need to file the claim within the two-month period. The firm checks the regulatory thresholds in force at the date of the application before indicating to the director the likely procedure.

By operation of law, from the date of the judgment the debtor is divested of the administration and disposal of the assets forming the estate engaged in the professional activity; the debtor's rights and actions concerning that estate are exercised by the liquidator throughout the proceedings (Article L. 641-9 of the Commercial Code). Where the debtor is a company, its director can therefore no longer, on its behalf, pay a supplier, collect a claim or sell equipment.

The debtor nevertheless keeps rights of its own, notably the right to challenge decisions that concern it. The Court of Cassation recalls that the debtor may appeal, and then appeal to the Court of Cassation, against the decision ordering its liquidation, provided it proceeds against the liquidator or in the liquidator's presence. It also states, to the debtor's disadvantage, that "it is not, however, admissible to bring a liability action against the lawyer it instructed to represent and assist it in exercising this right of its own" (Cass. com., 8 February 2023, No. 21-16.954) (our translation), that action concerning the estate being a matter for the liquidator.

The director also remains bound to cooperate: handing over the inventory, the list of creditors, current contracts and pending proceedings (Article L. 622-6 of the Commercial Code). A management ban may be imposed on anyone who, in bad faith, fails to provide this information within one month of the judgment (Article L. 653-8 of the Commercial Code).

Yes. Where no conciliation is under way, proceedings may be opened on a creditor's summons, whatever the nature of its claim (Article L. 640-5 of the Commercial Code). If the debtor has ceased trading, the summons must be served within a period of one year, which runs, depending on the case, from removal from the Trade and Companies Register, from the cessation of activity or from publication of the completion of the liquidation.

The summons is strictly regulated. It is inadmissible, and the judge must raise this of their own motion, if it contains any application other than for the opening of liquidation, an alternative application for judicial reorganisation being the only one allowed (Article R. 640-1 of the Commercial Code). It must also be accompanied by evidence tending to show that reorganisation is manifestly impossible.

For the creditor, this route is not a means of recovery: once proceedings are opened, it will have to file its claim like the others and will be paid according to its rank. It is justified where the assets are deteriorating and a liquidator must take control of them. For the director summoned, the debate concerns cessation of payments, assessed on the day the judge rules, and the real prospects of reorganisation. The firm examines the documents attached to the summons and the cash position evidence before the hearing.

The claim may be filed by the creditor itself or by any employee or agent of its choice. The creditor may ratify a claim filed in its name until the judge rules on admission (Article L. 622-24 of the Commercial Code). The absence of a title does not remove the need to file; a claim whose amount is not yet definitively fixed is filed on the basis of an estimate.

The Court of Cassation has stated that "no particular form is prescribed for this ratification, which may be implied" (Cass. com., 10 March 2021, No. 19-22.385) (our translation). In that case, a bank that had asked the court of appeal to admit its claim had necessarily ratified the claim filed by its employee, even though the chain of delegations of authority was incomplete.

In practice, the claim is sent to the liquidator, who is the recipient in judicial liquidation (Article L. 641-3 of the Commercial Code). It states the amount due on the day of the judgment opening proceedings, the sums falling due with their due dates, the nature and basis of any security, and it is certified true by the creditor unless there is an enforceable title (Article L. 622-25 of the Commercial Code). The firm quantifies the claim as at the date of the judgment opening proceedings, gathers the documents and checks that the signatory has authority or that ratification will take place in good time.

Where a claim is disputed, the representative notifies the creditor by registered letter with acknowledgment of receipt, which states the subject of the dispute and the amount proposed for entry, and recalls Article L. 622-27 (Article R. 624-1 of the Commercial Code). The creditor has thirty days from receipt to reply; failing this, it can no longer challenge the representative's proposal, unless the dispute concerns the regularity of the claim (Article L. 622-27 of the Commercial Code).

The sanction presupposes an accurate letter. The Court of Cassation quashed a judgment that had declared a creditor's appeal inadmissible where the letter failed to mention the exception relating to the regularity of the claim, so that "the reminder of the applicable provisions contained in the letter was not accurate" (Cass. com., 20 January 2021, No. 19-19.415) (our translation).

The sanction is also set aside where proceedings were already under way. The Court holds that these sanctions "do not apply where proceedings on the merits concerning the claim filed were under way on the day the debtor's insolvency proceedings were opened" (Cass. com., 13 February 2019, No. 17-28.749) (our translation). The firm replies within the time limit, with the documents, and then checks whether the letter received met the requirements of the text.

A creditor that has not filed its claim within the time limit is not admitted to distributions and dividends, unless the supervisory judge lifts this time bar. It must show that the delay is not attributable to it, or that the debtor forgot to include it on the list of creditors given to the representative (Article L. 622-26 of the Commercial Code). Once relieved, it shares only in distributions made after its application.

The action for relief from time bar must be brought within six months. This period runs in principle from publication of the judgment opening proceedings; for the holder of a registered security or a registered contract, it runs from receipt of the notice given to them. By way of exception, a creditor who shows that it was unable to know of the debtor's obligation before the six months expired has a starting point deferred to the day it could no longer be unaware of its claim.

Once relieved, the creditor has a new period to file, starting from the day the decision is notified to it and halved (Article L. 622-24 of the Commercial Code). The firm reconstructs the publication date, checks the list of creditors supplied by the debtor and gathers proof of the omission or of the creditor's lack of knowledge before applying to the supervisory judge.

The judgment opening proceedings prohibits payment of any pre-judgment claim, except payment by set-off of connected claims (Article L. 622-7 of the Commercial Code). Claims are connected where they arise from the performance or non-performance of the same contract: a customer who still owes a price may thus set against it a claim for penalties or construction defects arising from the same service.

The Court of Cassation has clarified the approach of a judge hearing a payment claim brought by the liquidator. The judge must first rule on whether the opposing claim is plausible and, if so, order set-off up to the amount to be fixed by the supervisory judge, "without the creditor having to prove that its claim has been admitted at this stage" (Cass. com., 30 September 2026, No. 25-18.783) (our translation). The judgment was quashed because the court of appeal had not found that plausibility.

Set-off presupposes that the claim has been filed. Separate contracts may also give rise to connected claims, provided it is shown that they form a single whole: the Court of Cassation accepted this where "the reciprocal claims resulted from the performance of several agreements constituting the elements of a single contractual whole serving as the general framework for the business relations between the parties" (Cass. com., 18 February 2003, No. 00-13.369) (our translation), a judgment quashed on another point. Without such a whole, two unrelated contracts cannot be set off against each other. The firm checks the connection, the filing and the quantification before replying to the liquidator's claim.

The proof of debt interrupts the limitation period until closure of the proceedings, removes the need for any formal notice and counts as an act of enforcement (Article L. 622-25-1 of the Commercial Code). The Court of Cassation has recalled that, made applicable by Article L. 641-3, this rule means that "the proof of debt interrupts the limitation period until closure of the judicial liquidation proceedings" (Cass. com., 4 February 2026, No. 24-20.467) (our translation).

The effect also benefits the creditor against the guarantor, a solution unfavourable to the latter: "the proof of debt in the insolvency of the principal debtor interrupts the limitation period against the guarantor" and this effect continues until closure (Cass. com., 25 October 2023, No. 22-18.680) (our translation). In that case, decided under the former wording of Article L. 622-24, the bank that had filed in 2012 could still act against the guarantor in 2018, closure having taken place in 2017.

A director who has guaranteed their company's loans must therefore expect to be pursued, including several years after the liquidation judgment. The firm checks the date of the claim, the date of closure, the validity of the guarantee deed and the defences specific to the guarantor.

The text does not set a single duration. In the judgment opening the liquidation, the court sets the time limit at the end of which closure must be examined; if it cannot order closure at that date, it may extend the term by a reasoned decision (Article L. 643-9 of the Commercial Code). The duration therefore depends on the realisation of the assets, pending proceedings and the verification of liabilities. The simplified procedure follows a shorter timetable: closure is ordered no later than six months after the decision ordering it, a period raised to one year above headcount and turnover thresholds, and extendable by three months at most by a specially reasoned judgment (Article L. 644-5 of the Commercial Code).

Closure is ordered when there are no longer any due liabilities, when the liquidator holds sufficient sums to pay the creditors, when the insufficiency of assets makes it impossible to continue the operations, or when continuing them would be disproportionate to the difficulties of realising the remaining assets. The court rules after hearing or duly summoning the debtor.

The court may be seised at any time by the liquidator, the debtor or the public prosecutor, and may act of its own motion. Once two years have elapsed from the liquidation judgment, any creditor may also apply to it for closure. The firm can prepare this application where the proceedings drag on without useful activity or, conversely, argue for an extension where an action under way may still improve the dividend.

In principle, closure for insufficiency of assets does not restore individual actions to creditors. Where the debtor has defrauded one or more creditors, the court authorises the resumption of the actions of any creditor; it rules at closure or later, at the request of any interested party (Article L. 643-11 of the Commercial Code).

The Court of Cassation holds that "even a creditor that has not filed its claim is authorised, in the case of fraud, to resume its individual actions", and that fraud does not require proof of intent to harm (Cass. com., 26 June 2019, No. 17-31.236) (our translation). The debtor had left this creditor off the list given to the liquidator and had kept it unaware of its liquidation.

Authorisation must be obtained from the court handling the proceedings. A creditor relying on fraud after closure "must be authorised to do so by the court of the insolvency proceedings if it did not give that authorisation at closure" (Cass. com., 5 February 2020, No. 18-22.569) (our translation); the trial court cannot order the debtor to pay without noting this authorisation. The firm gathers the evidence of concealment and applies to the competent court before any enforcement measure.

Yes, within the limits of the text. Co-obligors and persons who have given personal security or pledged an asset as security may pursue the debtor after closure for insufficiency of assets if they have paid in its place (Article L. 643-11 of the Commercial Code).

The Court of Cassation allowed this recourse for a wife who was co-obligor on loans taken out during the marriage, admissible to pursue the debtor "as and when her payments were made following the bank's demands, even after the closure of the judicial liquidation for insufficiency of assets" (Cass. com., 19 April 2023, No. 21-19.563) (our translation).

The recourse does not extend to all guarantors. The Court holds, to the disadvantage of the guarantor who has paid, that this text "does not allow a guarantor who has discharged the principal debt to exercise, under the conditions laid down by this text, a recourse against a co-guarantor" whose liquidation has been closed, except where assets are intermingled (Cass. com., 5 May 2021, No. 20-14.672) (our translation). The firm examines the guarantee deed, the payments made and the capacity of each obligor before bringing a recourse.