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A company is in a state of insolvency when unable to pay its debts with its available assets.

According to the Commercial code (“code de commerce”), the manager of an insolvent company must present himself to the Registry (“le greffe”) of the Commercial court (or to the civil trial court of general jurisdiction – “le TGI”) and make a declaration of insolvency.

If the head office of the company has moved within six months prior the application, the court of the place where the original head office was located is competent to deal with the case. The six-month time limit starts from the registration of the modification at the original head office’s Trade and Companies Register (RCS).

The declaration must be made within 45 days, starting at the beginning of the insolvency period.

  • Commercial companies and sole traders (Limited Liability Company, Public limited Company, General partnership, sleeping partnership, partnership limited by shares…) have to complete their declaration at the Registry of the Commercial court where they are registered.
  • Other corporate bodies (e.g.: non trading companies…) have to adress to the Registry of the TGI near the place of their y.

In Paris : Tribunal de Grande  Instance, 1 boulevard du Palais, 75004 PARIS - Tél. : 01 44 32 50 00.

 

  •   How to make a declaration of insolvency at the Registry of the Commercial court of Paris?

 

The company’s legal representative is the only person authorized to make this declaration. If any other person makes the declaration, it will be refused unless this person was granted a proxy.

 

 

  •        Specific details concerning the proxy

 

The proxy must specifically indicate:
- the agent’s capacity to apply for the commencement of a safeguard procedure.

And / or
- the agent’s capacity to sign the application

If the judicial liquidation is requested, the proxy must state it clearly.

The proxy has to be granted to a designated individual, not to a general entity or corporate body (a law firm for instance: the firm must indicate its partner’s or assistant’s name). The individual who received the proxy must be able to account for his/her identity and his/her professional y.

Download a proxy template.

 

  •   Joint-managers

 

If several managers have been appointed:
The declaration of insolvency has to be dated and signed by at least one of the joint-managers.

The applicant needs to produce a proxy dated and signed by at least one of the joint-managers.

The applicant must account for his/her identity.
 

 

 

  • Declaration of insolvency form

We recommend that you use the declaration of insolvency form provided by the Registry and that you read precisely all the sections before filing them in a precise and readable way. Download the form (in French)

The declaration of insolvency must be submitted in four original copies (including the original). The form must be completely filled. If informations are missing, it has to be mentioned by the applicant.

Each page has to be be signed.

Do not forget to fill the section page 9, dealing with judicial bankruptcy or liquidation.

Every figures appearing on the document must be added up.

These documents must be dated, signed and certified true by the applicant.

Download the instructions to fill the form (in French): click here

 

 

  •   Documents to include to the application

 

Documents required in one copy:

A copy of an identity card or passport of the trader or the legal representative of the company.
A certificate of incorporation at the Trade and Companies Register (“RCS”) (2.96€ all tax included at the counter) or at the Trade Directory (“Répertoire des metiers”).
« Un état d'endettement », id est a document stating the company’s debts, dating from the application day (46.80€ all tax included at the counter).
A copy of the annual accounts from the previous financial year
A cash position, less than one month old. 

Documents required in four copies:

An estimation of the cash position and exploitation for the following six months if an application for judicial bankruptcy proceedings was made. This estimation must be, as far as it is possible, validated by your chartered accountant (“expert comptable”). 

 

 

  •   Fees

 

The total cost of a procedure depends on the nature and the importance of the case.

 

The judicial agents appointed by the court (creditors’ representative, administrators…) are paid to carry out their missions. Their fees also depend on the nature and the importance of the case.

 

 

  •   What happens after the declaration of insolvency was made?

 

 

The company’s manager and the employees’ representative are summoned within 15 days following the declaration day. The hearing will occur in “Chambre du Conseil” id est behind closed doors. A lawyer or a chartered accountant can assist the manager.

 

The court will then familiarize itself with the company’s situation, based on the documents provided by the applicant and information provided during hearing discussions. The prosecutor’s representative will also be heard.

 

After the hearing, the court will make a decision, by either deciding the opening of judicial bankruptcy proceedings or judicial liquidation proceedings of the company that puts an end to its ies, according to what was stated in the declaration of insolvency.

 

In case of a judicial liquidation, the court will appoint a liquidator, in charge of the procedure (paying the company’s debts according to the order of priorities defined by the court and, when possible, preserving the company’s interests).

 

The liquidator undertakes the employees’ dismissal and pays the salaries owed through the “Fonds National de la Garantie des Salaires » (National Fund for Salaries’ Guarantee).

 

If the court considers that the company might be saved, a judicial reorganisation is decided. An observation period, lasting from 2 to 6 months, is opened. During this time, the company’s y is maintained, and perspectives of reorganisation are examined. This period can be renewed and extended up to 18 months.

 

The court appoints an administrator that will be in charge of assisting, supervising or managing the company. A creditors’ representative is appointed as well to preserve the creditors interests.

 

The procedure ends with a business recovery plan, including a debts refund schedule or a business takeover plan, the company being sold to a third party.

 

If the recovery turns out to be impossible, the court will decide a judicial liquidation of the company.

 

The commencement of the proceedings is published in the « BODACC » (Official Civil and Commercial Publications) and in a newspaper entitled to publish legal notices as well, to be brought to the creditors’ and third persons’ knowledge.

 

Both procedures have the effect of freezing any existing lawsuit against the company.

A supervisory judge (Juge-commissaire) will be specially appointed by the court to supervise the proceedings.

 

  •   Legal references 

 

Article L.631-1 and following, L. 640-1 and following, R.631-1 and following and R.640-1 and following of the Commercial code.

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