Business law in difficultyCompanies in difficulty and restructuring
The choice of procedure for a company in difficulty depends on three factors: has the company ceased payments, and if so, for how long, and have its creditors already taken action? If payments have not ceased, or have ceased for less than 45 days, conciliation remains possible, and an ad hoc mandate allows for discreet negotiations. Safeguard proceedings are only initiated before a cessation of payments. Once this has occurred, the company's management must request reorganization or liquidation within 45 days, unless a conciliation request is made within this timeframe.
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Are you looking for a lawyer specializing in insolvency law to anticipate a crisis, restructure debt, or support you through collective proceedings? Arst Avocats assists companies, managers, shareholders, creditors, investors, buyers, and employees facing the economic and legal consequences of a difficult situation.
Our team supports clients from the onset of initial cash flow difficulties through to the implementation of a restructuring, refinancing, sale, or liquidation solution. We intervene in amicable preventative procedures, safeguard, restructuring, and liquidation proceedings, as well as in any resulting litigation.
This practice combines insolvency law, restructuring, corporate law, finance, employment law, commercial contracts and business litigation.
What procedure should be followed depending on the company's situation?
| Situation | Procedure to be examined | Point of attention |
|---|---|---|
| Emerging difficulties, need to negotiate discreetly with creditors | Ad hoc mandate | Confidential, with no legal maximum duration, and without suspension of legal proceedings |
| Actual or foreseeable difficulties, no cessation of payments or cessation of less than 45 days | Conciliation | 4 months, extendable by one month; confidential unless the agreement is approved |
| Difficulties that the company cannot overcome alone, without ceasing payments | Backup | Request from the sole manager; observation period of 12 months maximum; plan of 10 years maximum (15 years for an agricultural activity) |
| Cessation of payments, recovery possible | Judicial reorganization | Application within 45 days; observation period of up to 18 months |
| Cessation of payments, recovery clearly impossible | Judicial liquidation | Cessation of activity in principle, temporary continuation possible; sale of assets or divestment plan |
This table provides an initial guideline. It does not replace the analysis of your accounts, your cash flow, and the situation of your creditors, which determines the truly appropriate procedure.
Our support in restructuring procedures
- Ad hoc mandate and conciliation : negotiating confidentially before collective proceedings become necessary.
- Safeguard procedure : protecting oneself from creditors as long as the cessation of payments has not been reached.
- Judicial reorganization : continue operations and develop a plan under the supervision of the court.
- Commercial lease and insolvency proceedings : dealing with the fate of the lease and rents during the proceedings.
Lawyer specializing in insolvent companies: anticipating and acting
A company's difficulties can be financial, economic, legal, social, or operational. They can result from a decline in activity, significant unpaid invoices, excessive debt, the loss of a strategic client or supplier, a conflict between partners, or the failure of an investment project.
Early intervention allows for more solutions to be retained and better protects the company, its managers and its assets.
- legal and financial situation
- causes of their difficulties
- short-term deadlines
- restructuring scenarios
- amicable or collective procedure
Arst Avocats assists companies in:
- the analysis of their legal and financial situation
- identifying the causes of their difficulties
- review of cash flow and short-term maturities
- analysis of bank, tax, social and supplier debt
- verification of the enforceability of debts
- identifying the state of insolvency
- the preparation of restructuring scenarios
- negotiations with the main creditors
- seeking extensions, debt forgiveness or rescheduling
- securing essential contracts
- the protection of assets necessary for the business
- preparing for a search for investors or buyers
- the choice of the appropriate amicable or collective procedure
We work in coordination with managers, financial departments, accountants, auditors, financial advisors and accounting professionals to propose a legally secure and economically realistic strategy.
Diagnosis and prevention of difficulties
Prevention aims to address difficulties before they become insurmountable.
- Supplierswith moratoria
- rescheduling bank loans
- Tax and social security bodiesrefer the matter to the CCSF
- Financial partnersdiscussions
Our team assists companies and their leaders with:
- to establish a legal diagnosis of the situation
- analyze contracts that carry a risk of termination
- identify the debts to be recovered
- negotiate moratoria with suppliers
- reschedule bank loans
- negotiate with tax and social security bodies
- prepare a referral to the CCSF
- to support discussions with financial partners
- examine the guarantees and surety commitments of the directors
- renegotiate rents and real estate contracts
- review the legal or operational organization of the group
- prepare for a capital increase or an investor entry
- organize a partial sale of assets or activities
- anticipating the social consequences of a restructuring
- securing the decisions of leaders
Arst Avocats also helps the manager to meet their legal obligations and to document the decisions taken during the period of difficulty.
Ad hoc mandate and conciliation
The ad hoc mandate and conciliation are confidential procedures allowing for the search for a negotiated solution under the aegis of a professional appointed by the president of the competent jurisdiction.
- request preparation
- hearing before the president of the court
- ad hoc representativeconciliator
- negotiation with creditors
- conciliation protocol
- confirmationand approval of the agreement
Arst Avocats assists the company in:
- the choice between ad hoc mandate and conciliation
- preparing the request
- the determination of the requested mission
- the preparation of the financial and legal file
- preparing for the hearing before the president of the court
- the proposal of an ad hoc representative or a conciliator
- negotiation with banking institutions
- negotiation with public and private creditors
- the restructuring of repayment deadlines
- obtaining extensions and debt waivers
- the search for new funding
- negotiation with shareholders or investors
- the resolution of a conflict between partners
- preparing for the sale of a company or a branch of activity
- drafting the conciliation protocol
- the confirmation or approval of the agreement
The ad hoc mandate allows the manager to negotiate confidentially with his main creditors while continuing to manage his company.
These procedures can also be used to prepare for a broader financial restructuring, an accelerated safeguard or a takeover operation.
Financial and operational restructuring
Arst Avocats intervenes in restructuring operations aimed at restoring the viability of the company.
Our support can cover:
- debt rescheduling
- renegotiating rates, maturities and guarantees
- debt forgiveness
- clauses for a return to better fortune
- conversion of debt into capital
- the contribution of equity or quasi-equity
- the issuance of securities
- the entry of new investors
- capital restructuring
- the reorganization of a group of companies
- the sale of non-strategic assets
- the creation of a subsidiary or the separation of an activity
- the closure of a loss-making establishment
- the renegotiation of key contracts
- cost reduction and workforce adjustments
- the search for an industrial or financial partner
Our team coordinates the corporate, contractual, social and legal aspects of the restructuring to ensure the consistency of the entire operation.
Backup and accelerated backup
The safeguard procedure is aimed at a company which, without being in default of payments, is experiencing difficulties that it is unable to overcome on its own.
We support companies in:
- analysis of the conditions for opening the backup
- preparing the application and the necessary documents
- the presentation of the case before the court
- relations with the administrator and the court-appointed representative
- the organization of the observation period
- the continuation of the activity
- management of current contracts
- the treatment of prior liabilities
- the development of activity and cash flow forecasts
- the preparation of the draft plan
- consultation with creditors
- the constitution and functioning of the classes of affected parties
- the negotiation of the terms for settling the liabilities
- the presentation and adoption of the safeguard plan
When the conditions are right, we also consider the possibility of an accelerated safeguard procedure to allow for the rapid adoption of a restructuring negotiated beforehand.
Judicial reorganization and continuation of business
Judicial reorganization should be considered when the company is in default of payments but the continuation of its activity and its recovery remain possible.
Arst Avocats assists the company and its directors in:
- determining the date of cessation of payments
- the preparation of the declaration of cessation of payments
- the request to open judicial reorganization proceedings
- the preparation for the opening hearing
- relations with the court and the procedural bodies
- maintaining activity during the observation period
- budget preparation and cash flow forecasting
- management of current contracts
- the handling of prior and subsequent claims
- the preparation of wage claim statements
- negotiations with key partners
- fundraising
- the preparation of a recovery plan
- the organization of the creditors' consultation
- the constitution of the affected part classes
- negotiating deadlines and discounts
- preparing for a total or partial transfer when it becomes necessary
Our team assists the manager during successive hearings and ensures that complete and consistent information on the prospects for recovery is presented.
Safeguard and recovery plans
Developing a plan requires demonstrating the company's ability to continue its operations and clear its liabilities over time.
- operating forecasts
- funding needs
- new funding search
- Debt relief and remissions
- organization of reimbursements
- handling of collateral
We support the company in:
- the definition of the plan's scope
- the establishment of operating forecasts
- determining funding needs
- negotiation with creditors
- the proposal for payment deferrals and debt forgiveness
- the organization of reimbursements
- the handling of collateral
- the search for new funds
- capital restructuring
- asset disposal
- the legal reorganization of the group
- the necessary social measures
- the preparation of the documentation submitted to the court
- monitoring the implementation of the plan
- requests for substantial modification of the plan
We also intervene when the execution of the plan encounters difficulties or when a new restructuring becomes necessary.
Judicial liquidation and cessation of business
When recovery is clearly impossible, judicial liquidation organizes the cessation of activity and the realization of assets.
Arst Avocats assists the company and its manager in:
- Analysis of the situation prior to liquidation
- the preparation of the declaration of cessation of payments
- the request for the opening or conversion into judicial liquidation
- preparing for the hearing
- relations with the court-appointed liquidator
- the inventory and handing over of the necessary documents
- contract and asset management
- the sale of the business or individual assets
- the processing of personal guarantees and sureties
- disputes relating to implementation operations
- closure due to insufficient assets or extinction of liabilities
- the consequences of the procedure for the manager
Our intervention also aims to anticipate the risks of personal liability for the manager and to defend his interests in any proceedings that may be initiated against him.
Advice to creditors
Arst Avocats advises suppliers, lessors, financial institutions, insurers, co-contractors and other creditors when a debtor encounters difficulties or is subject to collective proceedings.
- retention of title clause
- declare a claim
- liability verification
- to vote on or oppose a draft plan
- legal recourse
Our services include, in particular:
- analyze the debtor's situation
- secure future deliveries and services
- renegotiate the payment terms
- to establish or strengthen guarantees
- implement a retention of title clause
- negotiate an amicable agreement
- to participate in an ad hoc mandate or conciliation procedure
- declare a claim
- request a release from foreclosure
- responding to a disputed claim
- participate in the verification of liabilities
- to form an action for recovery or restitution
- invoke compensation
- to have a subsequent claim recognized
- to address the fate of an ongoing contract
- implement a bond or independent guarantee
- participate in the assigned game classes
- to vote on or oppose a draft plan
- to exercise the legal remedies available to the creditor
We define a strategy taking into account the ranking of the claim, available security, the possible continuation of the business relationship and the real prospects for recovery.
Landlords and insolvency proceedings
The tenant's insolvency proceedings place the commercial landlord in a particular situation.
Our team assists landlords with:
- declare previous rents and charges
- monitor subsequent rent payments
- determine the treatment of occupancy claims
- request the termination of the lease
- handle the continuation or transfer of the contract
- to enforce guarantees and deposits
- examine the situation of the guarantors
- contest the terms of a lease assignment
- recover the premises
- to obtain payment for repairs or damages
- defend their rights in a transfer plan
We also advise companies in difficulty on the continuation, renegotiation or termination of their commercial leases.
Sureties, guarantors and directors
The opening of collective proceedings against a company does not necessarily erase the commitments made by its directors, partners or related companies.
Arst Avocats handles cases relating to:
- to personal guarantees
- to independent guarantees
- to first-demand guarantees
- to the letters of intent
- to pledges and mortgages
- to the guarantees provided by a company in the group
- to the proportionality of the guarantee commitment
- to the annual information of the guarantor
- to the forfeiture of interest
- to the implementation of the guarantee
- to the payment deadlines requested by the guarantor
- to the guarantor's recourse after payment
We are examining the possibilities for negotiation with creditors and the means to challenge or limit the implementation of guarantees.
Taking over a struggling company
Arst Avocats assists entrepreneurs, groups, investors and funds wishing to take over a company, a business or assets within the framework of a collective procedure.
Our intervention covers, in particular:
- analysis of the opportunity for takeover
- contacting the administrator or the court-appointed liquidator
- access to the data room
- the legal audit of the activity
- identifying the necessary assets and contracts
- analysis of the commercial lease
- the examination of intellectual property rights
- identification of transferred employees
- environmental, social and regulatory risk assessment
- the definition of the scope of the takeover
- price determination and financing
- preparing the takeover bid
- drafting the candidate's commitments
- improving the supply
- preparing for the court hearing
- the implementation of the transfer plan
- the formation of the takeover company
- post-recovery support
Our team ensures that the offer complies with the requirements of the procedure and clearly outlines the means to ensure the sustainability of the business and the jobs taken over.
Business transfers and transfer plans
We also support companies in difficulty and their managers in preparing for a total or partial sale of the business.
This intervention may include:
- identifying activities that could be sold
- the preparation of information provided to candidates
- the protection of confidential data
- the organization of the data room
- the determination of essential assets and contracts
- analysis of the offers received
- the comparison of financial, social and industrial commitments
- the preparation of the leader's observations
- coordination with the Works Council and staff representatives
- preparing for the hearing to finalize the transfer plan
- the execution of actions following the judgment
When confidentiality and timing allow, a transfer prepared within the framework of an ad hoc mandate or conciliation can facilitate an organized takeover at the opening of the collective procedure.
Shareholders, investors and new funders
Our team advises partners and investors facing difficulties in a company in which they hold or are considering taking a stake.
We support them in:
- the analysis of their legal and financial exposure
- the examination of partners' current accounts
- negotiation with creditors
- the recapitalization of the company
- the contribution of new funds
- conversion of debt into capital
- the entry of an investor
- the dilution or restructuring of shareholding
- the negotiation of new shareholder agreements
- the protection of investments made
- participation in the assigned game classes
- the takeover of the company as part of a plan
We coordinate these operations with our Corporate Law, Corporate M&A team.
Employees and staff representatives
A collective procedure directly affects employees, their claims, their employment contracts and the sustainability of their employment.
Arst Avocats assists employees, senior managers and staff representatives to enable them to understand the procedure and to protect their rights.
Our services include, in particular:
- verify the recording of wage receivables on the statements
- to dispute or supplement a statement of wage claims
- examine the coverage by the AGS
- to process unpaid wages, bonuses, leave and allowances
- analyze the transfer of employment contracts
- supporting employees taken on in a transfer plan
- examine economic layoffs
- verify the order criteria and the searches for reclassification
- to control the calculation of severance pay
- supporting protected employees
- advise the CSE during the procedure
- to initiate the necessary legal proceedings before the competent courts
When the firm advises the company or another party to the proceedings, this intervention naturally remains subject to prior verification of the absence of a conflict of interest.
Disputes arising from insolvency proceedings
Arst Avocats intervenes in disputes arising during or following collective proceedings.
Our practice includes, in particular:
- the challenge to the state of insolvency
- setting or postponing its date
- requests for the opening of receivership or liquidation proceedings
- third-party objections and appeals against judgments
- disputes over claims
- the foreclosure statements
- actions for recovery and restitution
- disputes relating to current contracts
- the nullities of the suspect period
- liability actions against directors
- liability action for insufficient assets
- personal bankruptcy or disqualification procedures
- disputes relating to safeguard or recovery plans
- disputes concerning transfer plans
- appeals against decisions of the procedural bodies
- disputes concerning the realization of assets
- disputes between creditors regarding their ranking and security interests
We represent clients before commercial courts, economic activity courts, judicial courts and courts of appeal throughout France.
International insolvency proceedings and groups of companies
The difficulties of a group can affect several companies, several establishments or several states.
Our team is involved in:
- the coordination of procedures concerning several companies within the same group
- analysis of intra-group flows and agreements
- the handling of cross-guarantees
- the restructuring of the group's legal organization
- the determination of the competent jurisdiction
- the location of the center of main interests
- recognition of proceedings initiated in another State
- coordination with foreign councils
- the protection of creditors or assets located abroad
- preparing for a recovery with an international dimension
This intervention is conducted, when necessary, with the corresponding firms and international partners of Arst Avocats.
A comprehensive approach to restructuring
Addressing a company's difficulties is not simply a matter of choosing a procedure. It requires understanding the business activity, cash flow constraints, relationships with creditors, the situation of employees, shareholder expectations, and the prospects for recovery or continuation.
Arst Avocats mobilizes its teams in restructuring, corporate law, social law, commercial law and litigation in order to offer a coherent strategy to each party concerned.
Are you looking for a lawyer specializing in insolvency law to anticipate a crisis, negotiate with your creditors, prepare for insolvency proceedings, defend a claim, or take over a business? Our team is available to analyze the situation and intervene quickly.
Frequently asked questions about companies in difficulty
What is a cessation of payments?
It refers to the inability to meet liabilities as they fall due with available assets (Article L. 631-1 of the French Commercial Code). It determines the available procedures: safeguard proceedings are no longer available once the cessation of operations has occurred, while conciliation remains possible if it is less than 45 days old. From this date, a 45-day period begins for the company director.
What is the time limit for requesting the opening of collective proceedings?
The company director must file for receivership or liquidation within 45 days of the cessation of payments (Articles L. 631-4 and L. 640-4), unless they have requested the opening of conciliation proceedings within that period. If they knowingly fail to file this request, they are liable to a ban on managing a company for up to 15 years (Articles L. 653-8 and L. 653-11). Simply exceeding the deadline is not sufficient grounds for such a ban.
What is the difference between an ad hoc mandate and conciliation?
Both procedures are amicable and confidential, with conciliation remaining confidential unless the agreement is ratified by court order. The ad hoc mandate is flexible and has no legal maximum duration. Conciliation is more structured: it requires either no cessation of payments or a cessation of payments lasting less than 45 days, and lasts four months, extendable by one month. Neither procedure, in principle, suspends creditor legal action.
When to choose safeguarding rather than recovery?
Safeguard proceedings can only be initiated by the company's management, before the cessation of payments, when the company can demonstrate difficulties it is unable to overcome (Article L. 620-1). These proceedings initiate an observation period of up to 12 months and can lead to a plan lasting up to 10 years (15 years for agricultural businesses). Judicial reorganization, on the other hand, requires the cessation of payments.
Is the manager personally liable in the event of liquidation?
Not automatically. A company can be held liable for insufficient assets when mismanagement has contributed to it (Article L. 651-2), and a ban on managing a company can be imposed in certain cases. Each situation is assessed based on the specific facts. A lawyer can analyze your exposure before any decision is made regarding the legal action to be taken.
Your leading lawyers for companies in difficulty
Morgan Jamet, founding partner at the Paris Bar, and Fanny Hurreau, partner at the Hauts-de-Seine Bar, co-lead the insolvency law department at Arst Avocats. The team also includes Audrey Marie, partner, and Chaouki Gaddada, partner.
Morgan Jamet,founding partner and lawyer at the Paris Bar
Fanny Hurreau,partner lawyer at the Hauts-de-Seine bar
Audrey Marie,partner lawyer
Chaouki Gaddada,associate lawyer
Content prepared by the restructuring and insolvency department of Arst Avocats. Lead lawyer: Fanny Hurreau, partner, Hauts-de-Seine Bar. Rules verified using the official Service-Public Entreprendre fact sheets: ad hoc mandate and conciliation, safeguard proceedings, receivership, and liquidation. Updated October 2026.