When a company runs into difficulties, French law provides for out-of-court, confidential procedures, the mandat ad hoc and the conciliation (confidential negotiations with creditors, with the help of a court-appointed third party), and collective proceedings: sauvegarde (safeguard proceedings), judicial reorganisation (redressement judiciaire) and judicial liquidation. The criterion that points to one or the other is insolvency (cessation des paiements).
The key criterion: insolvency
A company is insolvent when it can no longer meet its liabilities due (passif exigible) out of its available assets (actif disponible). From that moment, the company director has 45 days to apply for proceedings to be opened, unless they have applied for conciliation within that period.
The mandat ad hoc
- For whom: a company in difficulty that is not insolvent.
- How: at the director's request, the president of the court appoints a mandataire ad hoc (an independent, court-appointed negotiator), often to negotiate with the main creditors.
- Duration: set by the president of the court at the time of appointment.
- Strengths: confidential, flexible, and the director retains full powers.
Conciliation
- For whom: a company with a legal, economic or financial difficulty, actual or foreseeable, that has not been insolvent for more than 45 days.
- How: a conciliator (conciliateur) helps reach an agreement with the creditors and partners chosen by the director.
- Duration: 4 months at most, extendable by one month.
- Outcome: an agreement that is either recorded (constaté), and remains confidential, or approved (homologué) by the court, which makes it public but gives it stronger effects.
Sauvegarde (safeguard proceedings)
- For whom: a company that is not insolvent but faces difficulties it cannot overcome on its own.
- How: at the director's request; creditors' enforcement actions are stayed during an observation period of 6 months, which can be renewed.
- Outcome: a safeguard plan (plan de sauvegarde) that can last up to 10 years.
- Good to know: the procedure is public; a variant, accelerated safeguard (sauvegarde accélérée), extends an ongoing conciliation.
Judicial reorganisation
- For whom: an insolvent company whose situation is not irretrievably compromised.
- How: the court opens an observation period (6 months, renewable, 18 months at most); a court-appointed administrator (administrateur judiciaire) may assist or supervise the management.
- Outcome: a reorganisation plan of up to 10 years, or the sale of the business.
- Good to know: if reorganisation is clearly impossible, the court orders judicial liquidation.
In summary
| Procedure | Company's situation | Confidential | Duration |
|---|---|---|---|
| Mandat ad hoc | Not insolvent | Yes | Set by the president of the court |
| Conciliation | Not insolvent, or insolvent for less than 45 days | Yes (unless approved by the court) | 4 months + 1 |
| Sauvegarde | Not insolvent, difficulties it cannot overcome alone | No | Observation 6 months, renewable; plan up to 10 years |
| Judicial reorganisation | Insolvent | No | Observation up to 18 months; plan up to 10 years |
Which court?
For a commercial company, the commercial court (tribunal de commerce) where the registered office is located. Since 2025, on an experimental basis, twelve commercial courts have become economic activity courts (tribunaux des activités économiques), including those of Nanterre and Versailles (service-public.fr).
And the role of an interim manager?
The choice of procedure lies with the director and their lawyer. The interim manager works at the operational level: cash flow forecast, turnaround plan, reorganisation and day-to-day management, alongside the court-appointed administrator where applicable. See our approach to business turnaround.
This guide is for information only and is no substitute for the advice of a lawyer or a court-appointed administrator. Sources: CCI France, Bpifrance Création, Légifrance, French Commercial Code.