Your French company has stopped paying on time and you live abroad. The payroll for your Paris employee is due next week and the account is short, URSSAF (the social-security collection agency, Union de recouvrement des cotisations de s\u00e9curit\u00e9 sociale et d’allocations familiales<\/i>) has sent a formal demand for unpaid contributions, a supplier is threatening to serve a writ before the commercial court, and your accountant in France writes that the cash position no longer covers the debts already due. Your first reflex may be to wait for a better month, inject a little cash from abroad, and negotiate privately with each creditor. French law allows that reflex for a short time only. Once the company is unable to meet its due liabilities with its available assets, it is in cessation des paiements<\/i>, the legal state of stopped payments, and the clock starts running: the debtor must ask the court to open insolvency proceedings within forty-five days, failing which the director faces personal liability for the shortfall and, in the worst cases, a ban on managing companies. This article explains, for a foreign founder or director running a French SAS (soci\u00e9t\u00e9 par actions simplifi\u00e9e<\/i>, the flexible joint-stock company most foreign investors choose) or SARL (soci\u00e9t\u00e9 \u00e0 responsabilit\u00e9 limit\u00e9e<\/i>, the limited-liability company with a more rigid framework) from outside France, how to recognise the state of cessation of payments, what to file and where within the forty-five days, which court proceeding fits your situation, and how to protect your personal assets and your right to manage. A few reference points used below: the greffe<\/i> is the registry office of the court; the Kbis is the official company identity certificate it issues; the RCS (Registre du commerce et des soci\u00e9t\u00e9s<\/i>) is the companies register; BODACC (Bulletin officiel des annonces civiles et commerciales<\/i>) is the gazette where insolvency judgments are published; and since 1 January 2025 the commercial court of Paris has become the Paris tribunal for economic activities, the TAE (tribunal des activit\u00e9s \u00e9conomiques<\/i>), which now handles prevention and insolvency cases in the capital.<\/p>\nI. How Do You Know Your French Company Is in Cessation des Paiements, and What Must You File Within 45 Days?<\/h2>\n
Everything starts with a date, because the forty-five-day period runs from the day the company entered the state of cessation of payments, and the court will later fix that date itself if you do not identify it correctly. Foreign directors often discover this too late, after months of selective payments made from abroad in the belief that paying wages while leaving the tax bill aside keeps the company alive. French courts apply a strict cash test, and understanding it before you file determines whether you still have access to confidential rescue proceedings or whether you must declare the cessation. If you are hesitating between legal vehicles at an earlier stage, the comparison of the SAS, the SARL, the branch and the subsidiary in our guide to choosing the right vehicle for doing business in France from abroad<\/a> explains why the choice of structure also shapes who signs the declaration and who answers for it.<\/p>\n The definition sits in Article L.631-1 of the Commercial Code<\/a>, in force, which opens rehabilitation proceedings to any debtor \u00ab dans l’impossibilit\u00e9 de faire face au passif exigible avec son actif disponible, est en cessation des paiements \u00bb. In plain English, the test compares two columns at a given date: on one side the passif exigible<\/i>, the liabilities already due and payable \u2014 wages, social-security contributions, VAT owed, supplier invoices past their term, loan instalments fallen due; on the other side the actif disponible<\/i>, the assets immediately available \u2014 cash in hand, bank balances, and only those reserves of credit that are actually drawable. Real estate, equipment, unpaid share capital and future orders do not count, because they cannot pay a debt due tomorrow. A company can therefore be balance-sheet solvent and still be in cessation of payments if nothing liquid is left to meet this month’s obligations.<\/p>\n The same Article L.631-1<\/a> immediately adds the two lifelines that take a company out of the state of cessation: \u00ab Le d\u00e9biteur qui \u00e9tablit que les r\u00e9serves de cr\u00e9dit ou les moratoires dont il b\u00e9n\u00e9ficie de la part de ses cr\u00e9anciers lui permettent de faire face au passif exigible avec son actif disponible n’est pas en cessation des paiements. \u00bb A confirmed and still-undrawn bank overdraft facility counts as available assets, and a payment deferral genuinely granted by a creditor pushes the corresponding debt out of the due column. But both must be real and provable: an oral promise from a banker, a hoped-for shareholder advance from abroad that has not been wired, or a unilateral decision to pay suppliers late do not qualify. For a founder managing from another country, the practical consequence is sharp. Before deciding anything, ask your French accountant for a dated treasury statement listing, line by line, the debts due and the cash and drawable facilities available on that exact day. That single page is the document on which the court, the administrator and later possibly the liquidator will judge whether you filed on time or traded while insolvent.<\/p>\n The courts apply this comparison ruthlessly and at precise dates, as the Court of Cassation confirmed in a recent ruling. In a judgment of 30 April 2025 (Commercial Chamber, pourvoi no 24-14.159, courdecassation.fr\/decision\/6811bb1512a37cea68763c88<\/a>), the judges reviewed a case in which a court of appeal had fixed the date of cessation of a debtor company after comparing the figures at a specific day, deducing from them that the company was in cessation on that date: \u00ab l’actif disponible \u00e9tait de 64 300, 81 euros au 20 avril 2021, tandis que le passif exigible se chiffrait \u00e0 cette m\u00eame date \u00e0 la somme de 86 833,94 euros \u00bb The Court of Cassation quashed that ruling, but on a ground every foreign director should memorise: \u00ab En statuant ainsi, sans donner aucun motif \u00e0 sa d\u00e9cision d’exclure la date du 31 d\u00e9cembre 2020 invoqu\u00e9e par le liquidateur dans ses conclusions, la cour d’appel n’a pas satisfait aux exigences du texte susvis\u00e9 \u00bb, namely Article 455 of the Code of Civil Procedure<\/i>, under which every judgment must state its reasons. Two lessons follow. First, the liquidator is entitled to argue for an earlier date of cessation than the one the director admits, and the court must examine that argument with reasons. Second, the date of cessation is a judicial finding built on dated figures, not on the director’s feeling that things would improve. Keeping monthly treasury statements, bank correspondence granting or refusing facilities, and written deferrals from creditors is therefore not administrative tidiness; it is the evidence that will fix the starting point of your forty-five days.<\/p>\n Three common misunderstandings need clearing at this stage. Paying wages but not taxes still leaves the company in cessation if the tax debt is due and no moratorium covers it; French courts treat public creditors like any other creditor in the cash test. Receiving a court summons for an unpaid invoice does not by itself prove cessation, but the judgment debt it produces, once due, enters the due column \u2014 and the procedure for answering such a writ from abroad is described in our companion guide on closing and liquidating a French company from abroad<\/a> only for solvent closures, which is a different route that disappears once cessation is characterised. And injecting money from your foreign account after the event does not erase the state of cessation retroactively; it improves the cash position from the day the funds actually arrive, which is why a documented shareholder advance wired immediately is worth more than a promised one. The question is never whether the business idea is good. It is whether, today, the available assets cover the debts due.<\/p>\n Once cessation is established, Article L.631-4 of the Commercial Code<\/a>, in force, states the obligation in one sentence: \u00ab L’ouverture d’une proc\u00e9dure de redressement judiciaire doit \u00eatre demand\u00e9e par le d\u00e9biteur au plus tard dans les quarante-cinq jours qui suivent la cessation des paiements s’il n’a pas, dans ce d\u00e9lai, demand\u00e9 l’ouverture d’une proc\u00e9dure de conciliation. \u00bb The debtor \u2014 in practice the legal representative, the president of the SAS or the manager (g\u00e9rant<\/i>) of the SARL \u2014 therefore has forty-five days from the date of cessation to file either a request to open rehabilitation proceedings or a request to open conciliation, the confidential negotiated procedure. Missing both deadlines does not make the company disappear; it exposes the director to the personal-liability actions examined in Part II, and it allows any creditor or the public prosecutor to petition the court instead, at a moment the director no longer controls.<\/p>\n The filing itself is a paper procedure at the court registry, which a director living abroad can prepare without travelling if the file is complete. Article R.631-1 of the Commercial Code<\/a>, in force, lists what the declaration must contain: \u00ab La demande d’ouverture de la proc\u00e9dure de redressement judiciaire est d\u00e9pos\u00e9e par le repr\u00e9sentant l\u00e9gal de la personne morale ou par le d\u00e9biteur personne physique au greffe du tribunal comp\u00e9tent \u00bb, and attached to the request must be, besides the annual accounts for the last financial year, \u00ab L’\u00e9tat du passif exigible et de l’actif disponible ainsi qu’une d\u00e9claration de cessation des paiements \u00bb, plus the company identification number, a treasury position, the number of employees, and supporting documents that the decree details. In practice the greffe<\/i> provides a standard declaration form (d\u00e9claration de cessation des paiements<\/i>, formerly called d\u00e9p\u00f4t de bilan<\/i>), and the official service-public guide walks through the filing step by step at entreprendre.service-public.gouv.fr\/vosdroits\/F22352<\/a>. Since 1 January 2025, companies registered in Paris file before the Paris tribunal for economic activities (TAE), which replaced the Paris commercial court for prevention and insolvency matters, together with eleven other cities including Lyon, Marseille, Nanterre and Versailles. A director abroad typically signs the form, has it filed by a French lawyer with a power of attorney, and appears later only if the court summons the director to the opening hearing. What matters is the date the complete file reaches the registry, not the date of any hearing, so an incomplete file sent on day forty-four that is completed on day fifty is a late file.<\/p>\n The alternative within the same forty-five days is conciliation, and it deserves attention because it is confidential while rehabilitation is public. Article L.611-4 of the Commercial Code<\/a>, in force, opens conciliation to debtors \u00ab qui \u00e9prouvent une difficult\u00e9 juridique, \u00e9conomique ou financi\u00e8re, av\u00e9r\u00e9e ou pr\u00e9visible, et ne se trouvent pas en cessation des paiements depuis plus de quarante-cinq jours \u00bb. A conciliation is negotiated under a court-appointed conciliator, usually within four to five months, with the main creditors, and any agreement can be recorded or approved by the court; crucially, nothing is published in BODACC while negotiations run, which preserves the company’s credit and the director’s reputation. But the window is narrow by design: beyond forty-five days of cessation, conciliation is closed and only rehabilitation or liquidation remain. For a foreign director, the decision tree is therefore simple. If the difficulty is foreseeable or recent and the forty-five days have not expired, ask for conciliation first and negotiate quietly. If cessation is older, or if negotiations have no realistic chance because the cash hole is structural, file for rehabilitation within the deadline and keep the proof of filing. In both cases, stop paying some creditors selectively to favour others once cessation is known: payments made after the date of cessation can later be cancelled at the liquidator’s request, and the director who organised them answers for it.<\/p>\n One final technical point that directors abroad consistently underestimate: the court fixes the date of cessation itself. Article L.631-8 of the Commercial Code<\/a>, in force, provides: \u00ab Le tribunal fixe la date de cessation des paiements apr\u00e8s avoir sollicit\u00e9 les observations du d\u00e9biteur. \u00bb If the judgment says nothing, cessation is deemed to have occurred on the opening date, but the court may backdate it, since \u00ab Elle peut \u00eatre report\u00e9e une ou plusieurs fois, sans pouvoir \u00eatre ant\u00e9rieure de plus de dix-huit mois \u00e0 la date du jugement d’ouverture de la proc\u00e9dure. \u00bb The backdated period, called the suspect period (p\u00e9riode suspecte<\/i>), is the zone in which past payments, securities and transfers can be annulled. Every week of delay in filing therefore lengthens the period the liquidator can claw back \u2014 including repayments of shareholder advances you wired to yourself, guarantees granted to your foreign bank, and offsets arranged between group companies. Filing early shortens the suspect period; filing late extends it. That arithmetic alone should decide a hesitant director.<\/p>\n Filing the declaration does not end the story; it opens a court-supervised phase in which the director keeps or loses control depending on the proceeding, and in which the director’s own conduct before and after the filing comes under review. Foreign directors sometimes assume that living outside France puts them beyond the reach of the French insolvency court. It does not. The obligations attach to the office \u2014 president, general manager, g\u00e9rant<\/i>, de jure or de facto director \u2014 not to the director’s address, and judgments for shortfall liability or management bans are enforceable and published. The developments that follow are of general scope: they describe the checks and steps useful in any comparable situation and do not describe the situation of any particular company, about which this article makes no finding. The good news is that French law offers a ladder of proceedings matched to the seriousness of the situation, and that personal liability requires a proven management fault, not mere failure. This second part maps the ladder and then the exposure, with the concrete steps a director can take from abroad at each stage. Readers facing a tax audit in parallel should also consult our guide on answering a French tax audit notice from abroad<\/a>, because unpaid tax debts frequently trigger the very cash crisis described here.<\/p>\n Three court proceedings exist, and only one of them is available before cessation occurs. Safeguard (sauvegarde<\/i>) is the early, protective proceeding: Article L.620-1 of the Commercial Code<\/a>, in force, opens it to a debtor who \u00ab sans \u00eatre en cessation des paiements, justifie de difficult\u00e9s qu’il n’est pas en mesure de surmonter \u00bb, with the purpose of reorganising the business while activity continues under a court-approved plan. Only the debtor can request it, creditors cannot force it, and the director stays in charge with the assistance of an administrator. If your French company faces serious but not yet cash-critical difficulties \u2014 a lost major client, a disputed tax reassessment under challenge, a financing round delayed \u2014 safeguard is the proceeding to request, and it must be requested before the cash test turns negative.<\/p>\n Once cessation is established, the main road is rehabilitation (redressement judiciaire<\/i>), whose purpose Article L.631-1 of the Commercial Code<\/a> defines as allowing \u00ab la poursuite de l’activit\u00e9 de l’entreprise, le maintien de l’emploi et l’apurement du passif \u00bb through a plan adopted after an observation period. The court appoints an administrator and a creditors’ representative (mandataire judiciaire<\/i>), inventories the debts, and observes the business, typically for six months renewable. The director may continue to run day-to-day operations but needs authorisation for important acts, and the plan can reschedule debts over up to ten years, impose partial write-offs with creditor consent, or organise the sale of the business as a going concern. If recovery is plainly hopeless, the court opens liquidation (liquidation judiciaire<\/i>): Article L.640-1 of the Commercial Code<\/a>, in force, reserves it for a debtor \u00ab en cessation des paiements et dont le redressement est manifestement impossible \u00bb, and its purpose is to end the activity or sell the assets, globally or piecemeal, to pay creditors in their legal order of priority. Employees’ wage claims, secured creditors, the tax authorities and unsecured suppliers are not paid in the same rank, which is why directors should never promise one creditor full payment out of turn once proceedings loom.<\/p>\n Inside these proceedings, a foreign director needs to know who can bring claims against the management, because threats do not always come from those entitled to sue. The liquidator and the public prosecutor are the natural claimants for shortfall liability, but creditors appointed as controllers (contr\u00f4leurs<\/i>) have only a backup role. The Court of Cassation restated this hierarchy in a judgment of 9 September 2026 (Commercial Chamber, pourvoi no 24-22.135, courdecassation.fr\/decision\/6aa1386d195da062e0d12bcf<\/a>), holding that \u00ab Il en r\u00e9sulte que l’action ouverte aux cr\u00e9anciers contr\u00f4leurs est subsidiaire \u00bb, and that where \u00ab l’action en responsabilit\u00e9 pour insuffisance d’actif avait d\u00e9j\u00e0 \u00e9t\u00e9 engag\u00e9e par le liquidateur, de sorte que les contr\u00f4leurs n’avaient qualit\u00e9 ni pour agir ni pour intervenir, f\u00fbt-ce \u00e0 titre accessoire \u00bb. In practice, if a major supplier appointed as controller writes to you from France demanding payment for the shortfall or threatening a personal action, that letter has no procedural standing while the liquidator is already acting; answer through your lawyer, do not negotiate personal payments under pressure, and verify every claimed standing before paying anything. Conversely, cooperate fully with the liquidator and the court-appointed bodies: obstructing the inventory, hiding accounting records kept abroad, or moving assets out of France after the opening judgment are among the fastest routes to the sanctions described below.<\/p>\n Distance imposes practical arrangements in each proceeding. Give your French lawyer a written power of attorney covering filings, hearings and correspondence with the court-appointed officers; keep a complete set of company records \u2014 articles, shareholder decisions, bank statements, employment contracts, tax returns \u2014 accessible in France, because the administrator will ask for them within days; and centralise all creditor contact through the lawyer so that no informal promise made by phone from abroad contradicts the court file. If the company employed staff in France, the wage-guarantee institution (AGS, Association pour la gestion du r\u00e9gime de garantie des cr\u00e9ances des salari\u00e9s<\/i>) advances unpaid wages within set ceilings once the court opens proceedings, which defuses the most urgent human pressure but does not extinguish the company’s debt. And if the business can still be saved by selling it, the court can authorise a sale plan (plan de cession<\/i>) during rehabilitation: foreign buyers, including the director’s own foreign group, may bid, but the debtor-director’s own offer is subject to strict court control to prevent sales at an undervalue.<\/p>\n The sanction foreign directors fear most is the action for shortfall liability (action en responsabilit\u00e9 pour insuffisance d’actif<\/i>), which can order the director to pay the company’s debts out of personal funds. Article L.651-2 of the Commercial Code<\/a>, in force, sets three cumulative conditions: a court-ordered liquidation showing an asset shortfall, \u00ab en cas de faute de gestion ayant contribu\u00e9 \u00e0 cette insuffisance d’actif \u00bb, and a causal contribution of that fault to the shortfall; the court may then order all or some of the de jure or de facto directors who contributed to the fault to bear the shortfall in whole or in part, jointly if there are several. The same article contains the shield that honest but unsuccessful directors rely on: \u00ab Toutefois, en cas de simple n\u00e9gligence du dirigeant de droit ou de fait dans la gestion de la personne morale, sa responsabilit\u00e9 au titre de l’insuffisance d’actif ne peut \u00eatre engag\u00e9e. \u00bb Simple negligence \u2014 a late filing without aggravating conduct, an error of business judgment that hindsight makes look naive \u2014 is not enough; the claimant must prove a genuine management fault that helped dig the hole.<\/p>\nA. When Does French Law Say a Company Has Stopped Paying: the Cash Test and What It Excludes?<\/h3>\n
B. Filing the Declaration From Abroad: Where, With What Papers, and the Conciliation Alternative?<\/h3>\n
II. What Happens to a Foreign Director When the French Company Enters Insolvency Proceedings?<\/h2>\n
A. Which Proceeding Fits Your Situation: Safeguard, Rehabilitation or Liquidation, and Who Is Allowed to Sue You?<\/h3>\n
B. Your Money and Your Future: Shortfall Liability, Personal Bankruptcy and the Practical Steps From Abroad?<\/h3>\n