Declaring cessation of payments: what the 45 days expose for the manager and what they open for the creditor

A manager who finds, one Monday morning, that he or she can no longer meet the social security contributions (URSSAF) payment or the month's rent has a short time in which to choose between amicable prevention and collective proceedings. An institutional creditor who sees its debtor multiplying promises to pay has a procedural lever whose effect is immediate: a summons for court-supervised reorganisation (redressement judiciaire). Both positions turn on the same figure, the forty-five days of Article L. 631-4 of the French Commercial Code, but with opposite logics: for the manager, a decision timetable whose overrun feeds personal exposure; for the creditor, a window in which to bring about the opening of proceedings and freeze the debtor's position before the assets evaporate. This guide sets out both readings: the exact conditions of the declaration of cessation of payments (cessation des paiements), the effects of the date adopted on the suspect period (période suspecte), the real contours of liability for shortfall of assets (insuffisance d'actif), and the mechanics of the creditor's summons.

What cessation of payments exactly covers

The starting point of the period is not an impression of difficulty, it is a defined legal state. Article L. 631-1 of the Commercial Code opens court-supervised reorganisation to a debtor who, unable to meet its due liabilities with its available assets, is in cessation of payments.

Two notions therefore face each other. Due liabilities are not the total liabilities on the balance sheet: they are the debts whose payment can be demanded immediately. Available assets are not the net book assets: they are cash and whatever can be mobilised without delay. An office building shown among the assets is not an available asset until it is sold or refinanced. The precise contours of these two aggregates, in particular the treatment of disputed debts or de facto time allowed by a social security body, are a matter for the courts' assessment and not for the text itself.

The same article lays down an exception that the debtor must establish:

A debtor who establishes that the credit reserves or the moratoria that it enjoys from its creditors enable it to meet its due liabilities with its available assets is not in cessation of payments.

The burden of proof rests on the debtor. For a manager, this means that an authorised overdraft facility or a rescheduling agreement must be formalised and documented. An oral agreement with a supplier, not recorded, will not constitute a credit reserve that can be relied on before the court.

Since Law No. 2022-172 of 14 February 2022, Article L. 631-1 adds that this condition is assessed, where appropriate, solely in respect of the assets committed to the professional activity or activities. The clarification directly concerns the sole trader subject to the status created by that Law: the analysis of the state of cessation of payments is confined to the professional assets.

The forty-five days: an obligation to apply to the court, not a tolerance

The text is free of ambiguity. Article L. 631-4 states that the opening of court-supervised reorganisation proceedings must be requested by the debtor no later than forty-five days after cessation of payments if it has not, within that period, requested the opening of conciliation proceedings. Article L. 640-4 repeats the same rule for compulsory liquidation (liquidation judiciaire).

The period is therefore not a forty-five-day reprieve granted to find a solution before declaring. It is a period for applying to the court, which runs from the date of cessation of payments, and which ends in only two ways: the declaration to the court registry, or the request to open conciliation proceedings.

Conciliation, the only alternative provided for within the window

Article L. 611-4 reserves conciliation for debtors who experience a legal, economic or financial difficulty, actual or foreseeable, and have not been in cessation of payments for more than forty-five days. Article L. 611-5 extends the benefit to private-law legal entities and to individuals carrying on an independent professional activity, the tribunal judiciaire then having jurisdiction, with the exception of farmers falling under the agricultural amicable settlement procedure.

The forty-fifth day thus constitutes the operational boundary between prevention and collective proceedings. Beyond that point, the confidential amicable route closes and the manager has only an application to the court available. That is why the date of cessation of payments must be fixed early, and internally, with counsel: it determines which toolbox remains open. How these confidential amicable procedures work is presented in our article on conciliation and the ad hoc mandate.

One clarification is needed, because the opposite belief remains widespread: the current wording of L. 631-4 and L. 640-4, resulting from Ordonnance No. 2014-326 of 12 March 2014, no longer provides for the court to take up the case of its own motion where conciliation fails. That mention appeared in the earlier version of the texts. Reasoning on it leads to a misreading of procedural strategy.

The concrete content of the insolvency filing

The declaration of cessation of payments is not a letter. Article R. 631-1 of the Commercial Code, in the wording resulting from Decree No. 2022-890 of 14 June 2022, requires a file lodged at the registry of the competent court by the legal representative of the legal entity or by the individual debtor, accompanied by the annual accounts for the last financial year and, in particular:

• the statement of due liabilities and available assets and a declaration of cessation of payments, supplemented, where the business in difficulty is carried on by an individual entrepreneur, by the list of the other claims whose payment is pursued against the assets concerned
• a cash position dated less than one month earlier
• the quantified statement of claims and debts, identifying the creditors
• the statement of assets and liabilities in respect of security interests and of off-balance-sheet commitments
• the summary inventory of the debtor's property or, if assets have been allocated to the business in difficulty, of the property allocated to that business
• a sworn statement as to the absence, or existence, of an ad hoc mandate or a conciliation concerning the assets in question in the preceding eighteen months

These documents are dated, signed and certified as true and accurate by the applicant. A point of timing that is often overlooked: the documents referred to at 1°, 5°, 6°, 7° and 8° must be drawn up on the date of the application or within the seven days preceding it. A file prepared a month earlier and lodged as it stands must therefore be redone. Where a document cannot be produced, or only incompletely, the application must state the reasons preventing its production.

The quality of the statement of due liabilities and available assets is nothing like a formality. It is the document on which the court will fix the date of cessation of payments, and therefore the starting point of the suspect period.

What overrunning the period exposes, on the manager's side

The immediate risk: liquidation ordered in the same decision

Article L. 631-7, paragraph 3, authorises the court, seised of an application for court-supervised reorganisation, to move directly to liquidation where the situation of the debtor who has declared itself to be in cessation of payments appears manifestly incapable of recovery. Where the debtor has made no alternative request, the court invites it to submit its observations on whether the conditions of Article L. 640-1 are met, and then rules in the same decision on the application for reorganisation and, where appropriate, on the opening of liquidation.

Each week of delay erodes the available assets and the order book, and therefore the likelihood that a plan will be credible. A manager who declares on the ninetieth day no longer chooses between reorganisation and liquidation: he or she is subject to the court's decision.

The management ban: a power, subject to a knowingly committed omission

Article L. 653-8, paragraph 3, allows the court to order a ban on directing, managing, administering or controlling against any person referred to in Article L. 653-1 who knowingly failed to request the opening of reorganisation or liquidation proceedings within the forty-five-day period from cessation of payments, without having, moreover, requested the opening of conciliation proceedings.

Two points of drafting deserve attention. The adverb “knowingly” was introduced by Law No. 2015-990 of 6 August 2015: a mere objective omission is no longer enough, awareness of the delay must also be established. And the verb is “may”: it is a power left to the court's assessment, not an automatic sanction. The action is time-barred after three years from the judgment opening the proceedings, under paragraph II of Article L. 653-1.

For the manager, the line of defence is therefore built beforehand: board minutes, exchanges with the chartered accountant, requests for moratoria addressed to public creditors, consultation of counsel. These documents evidence an active approach and weigh on the assessment of the intentional element.

Shortfall of assets: the text says less than its reputation suggests

Article L. 651-2 makes the manager's liability subject to three cumulative conditions: compulsory liquidation of a legal entity, a shortfall of assets that the liquidation reveals, and a management fault that contributed to that shortfall of assets. The court may then decide that the amount of that shortfall will be borne, in whole or in part, by all the de jure or de facto managers, or by some of them, who contributed to the management fault. Where there are several managers, it may, by reasoned decision, declare them jointly and severally liable.

The third paragraph sets a decisive filter:

However, in the case of mere negligence on the part of the de jure or de facto manager in the management of the legal entity, his or her liability for the shortfall of assets cannot be engaged.

Since Law No. 2022-172 of 14 February 2022, the text also covers the individual entrepreneur subject to the status defined in Section 3 of Chapter VI of Title II of Book V, the sum charged to that person then being set against his or her personal assets, as well as the sole trader with limited liability (EIRL), for whom the charge is set against the non-allocated assets. The action is time-barred after three years from the judgment ordering compulsory liquidation.

A point of method is needed: no text states that late filing is in itself a management fault within the meaning of L. 651-2. That characterisation is a matter for the trial courts' assessment, and in any event it requires showing the link of contribution between the delay and the shortfall of assets, that is, the increase in liabilities during the period in which loss-making activity continued. A properly defended manager discusses these two elements separately: the characterisation of the fault, then its quantified contribution to the shortfall. The conditions of this action are covered separately in our article on the manager's liability for shortfall of assets in liquidation.

There remains the question of standing to act, too often misunderstood by creditors. Under Article L. 651-3, the court is seised by the liquidator or the public prosecutor. It may also be seised, in the collective interest of creditors, by the majority of the creditors appointed as controllers where the liquidator has not brought the action, after a formal notice that went unheeded within a period and on conditions set by decree of the Conseil d'État. An individual creditor has no standing to act. The useful route, for a bank or an exposed institutional landlord, is therefore to be appointed as a controller and to build a majority.

The date of cessation of payments and its deferral: the real tipping point

Article L. 631-8 governs how that date is fixed. The court fixes it after seeking the debtor's observations; failing determination, cessation of payments is deemed to have occurred on the date of the judgment opening the proceedings.

It may then be deferred once or several times, without being more than eighteen months earlier than the date of the opening judgment. The court is seised by the administrator, the creditors' representative (mandataire judiciaire) or the public prosecutor, and rules after hearing or duly summoning the debtor. The request for modification must be made within one year of the opening judgment. Except in cases of fraud, the date may not be set earlier than the final decision approving an amicable agreement under paragraph II of Article L. 611-8.

Three operational consequences.

For the manager first: the date adopted mechanically determines the extent of the suspect period and the credibility of any allegation of abusive continuation of activity. The observations sought by the court are not a formality, they are the first act of defence.

For the creditor next: it has no standing to ask for deferral. Its influence lies in the information it gives to the organs of the proceedings, in particular where it holds material showing that the debtor was no longer meeting its due liabilities well before the judgment.

Finally, for the creditor that has been paid: an eighteen-month deferral can bring back into the suspect period a payment collected more than a year before the opening, or a security taken during the relationship.

The suspect period: what gets unwound

Article L. 632-1, I, strikes down as null by operation of law thirteen categories of acts occurring since the date of cessation of payments. Among those most often encountered in finance and property practice:

• gratuitous acts transferring ownership of movable or immovable property
• any commutative contract in which the debtor's obligations significantly exceed those of the other party
• any payment, whatever the means, of debts not yet due on the day of payment
• any payment of debts that are due made otherwise than in cash, bills of exchange, transfers, Dailly assignment slips or any other means of payment commonly accepted in business relations
• any contractual security interest in property (sûreté réelle) or contractual right of retention created over the debtor's assets or rights for previously incurred debts, unless they replace an earlier security of at least equivalent nature and base
• any statutory mortgage attached to judgments of conviction created for previously incurred debts
• any protective measure, unless the registration or the instrument of seizure predates the date of cessation of payments
• any transfer of assets or rights into a fiduciary estate, unless made as security for a debt contracted at the same time, and any amendment to a fiducie contract allocating assets already transferred to the security of earlier debts
• the declaration of unseizability (déclaration d'insaisissabilité)

Item 12°, in the wording resulting from Law No. 2022-172, now covers any allocation or change in the allocation of an asset that resulted in an impoverishment of the assets covered by the proceedings to the benefit of another set of the entrepreneur's assets, subject to payment of the income it has generated.

Paragraph II of the same article adds an optional nullity: the court may annul the gratuitous acts at 1° and the declaration of unseizability at 13° made within the six months preceding the date of cessation of payments. The period of vulnerability therefore extends, for those acts, beyond the suspect period stricto sensu.

Article L. 632-2 opens a second front, this time subject to knowledge: payments of debts that are due made from the date of cessation of payments and transactions for value carried out from that same date may be annulled if those who dealt with the debtor knew of the cessation of payments. The text also covers any administrative seizure, any attachment of debts (saisie attribution) or any objection served or made by a creditor from the date of cessation of payments and with knowledge of it. On what a creditor that has been paid or secured may lose on this basis, see our analysis of the nullities of the suspect period.

This is the major point of vigilance for a bank creditor or a well-informed landlord: knowledge of the situation, which reminder exchanges often reveal, is precisely what weakens a payment obtained under pressure. The most energetic recovery steps can turn into an action for nullity.

Law No. 2025-1403 of 30 December 2025 added to L. 632-2 a paragraph excluding from the scope of these nullities the acts carried out for the payment or collection of the pre-deducted contribution referred to in the first paragraph of Article L. 243-1 of the Social Security Code and in Article L. 741-20 of the Rural and Maritime Fishing Code, of value added tax, and of the withholding tax provided for in Article 204 A of the General Tax Code. The application note specifies that the provisions resulting from paragraph II of Article 4 of that Law apply to collective proceedings opened and to compulsory liquidations ordered from 1 January 2027. The interplay with proceedings opened before that date calls for the greatest caution and must be checked case by case.

Finally, the action for nullity is brought, under Article L. 632-4, by the administrator, the creditors' representative, the commissioner for the performance of the plan or the public prosecutor, and its effect is to rebuild the debtor's assets. Here again, no creditor brings it individually.

The creditor's side: the summons as the entry point

Conditions of admissibility

Article L. 631-5 allows court-supervised reorganisation to be opened on a creditor's summons, whatever the nature of its claim, but subject to an express reservation: where no conciliation proceedings are under way. Article L. 640-5 carries the mechanism over to compulsory liquidation. The existence of a conciliation, confidential by nature, therefore blocks the summons, which explains why some debtors seek a conciliation in order to neutralise an announced procedure.

Where the debtor has ceased its professional activity, the summons must be issued within one year from, depending on the case, its removal from the trade and companies register, the cessation of activity for the craftsman, farmer or individual carrying on an independent activity, or the publication of the completion of the liquidation for a legal entity not subject to registration. For a legal entity, the period runs from the removal that follows publication of the closure of the liquidation operations. This period is strict: a creditor who discovers its debtor's removal late loses the route of the summons.

A particular rule concerns a debtor carrying on an agricultural activity that is not constituted as a commercial company: proceedings may be opened only if the president of the tribunal judiciaire has been asked, before the summons, to appoint a conciliator under Article L. 351-2 of the Rural and Maritime Fishing Code.

Form: a classic procedural trap

Article R. 631-2 requires the summons to state the nature and amount of the claim and to contain any evidence capable of characterising the debtor's cessation of payments. The creditor therefore cannot be content with establishing its unpaid debt: it must adduce proof of the impossibility of meeting due liabilities with available assets. In practice, this means gathering external indicators: registered liens, unpaid cheques, protests, other known defaults, unsuccessful enforcement proceedings.

The second trap is harsher:

The application for the opening of court-supervised reorganisation proceedings is, on pain of inadmissibility, which must be raised of the court's own motion, exclusive of any other application relating to the same assets, with the exception of an application for the opening of compulsory liquidation proceedings made in the alternative.

Combining, in the same instrument, the summons for reorganisation and a claim for payment results in inadmissibility, which the judge must raise of his or her own motion. A choice must be made: either recovery or opening. The only additional application allowed is for the opening of compulsory liquidation made in the alternative, an option that a seasoned creditor systematically inserts where the debtor's situation appears compromised.

What opening brings, and what it costs

The summons is a double-edged weapon, and the trade-off must be weighed coolly before the instrument is served. By the cross-reference in Article L. 631-14, court-supervised reorganisation carries the effects of Articles L. 622-7 and L. 622-21.

On the cost side: the opening judgment carries by operation of law a prohibition on paying any claim arising earlier, except payment by set-off of related claims, and any act or payment made in breach of that text is annulled at the request of any interested party or the public prosecutor, within three years of the conclusion of the act or the payment. The judgment interrupts or prohibits actions seeking an order against the debtor to pay a sum of money and rescission of a contract for non-payment of a sum of money. It stops or prohibits any enforcement procedure against movable and immovable property, as well as any distribution procedure that had not produced an attributive effect before the opening judgment. Finally, since Ordonnance No. 2021-1193 of 15 September 2021, it prohibits by operation of law any increase in the base of a contractual security interest in property or of a contractual right of retention.

The creditor must then declare its claim to the creditors' representative within periods set by decree of the Conseil d'État, in accordance with Article L. 622-24, creditors holding a registered security or bound to the debtor by a registered contract being warned personally, the period then running from notification of that warning.

On the benefit side: opening freezes the debtor's position, prohibits preferential payments to other creditors, triggers the inventory and valuation of assets, and sets up organs with the power to pursue the nullities of the suspect period and, in liquidation, the action for shortfall of assets. For a creditor whose ranking is good and whose security is sound, the summons stops the race for speed between creditors and prevents the dissipation of the asset base. For an unsecured creditor without guarantee, it often confirms the conversion of a difficult claim into a virtually irrecoverable one, in exchange for equal treatment from which it has nothing to expect.

Conclusion: two timetables, a single reference date

The forty-fifth day is not a penalty, it is a point of inflection. Before it, the manager retains the choice between the confidentiality of conciliation and declaration; after it, only the second, with a growing risk that the court will order liquidation directly, and a personal exposure that is built less on the delay itself than on what that delay has cost the liabilities. The text does not make late filing an automatic management fault, and mere negligence is expressly outside the scope of Article L. 651-2: it is on that ground, and on the link of contribution to the shortfall of assets, that the defence is won.

On the creditor's side, the summons for court-supervised reorganisation remains the only lever for bringing about the opening of proceedings, and therefore for setting in motion the nullities of the suspect period and the review of the acts entered into by the debtor. It is not served out of a recovery reflex: it is decided after a calculation of ranking, security and the likelihood of rebuilding the assets, and it is drafted in strict compliance with the exclusivity imposed by Article R. 631-2.

Two operational recommendations. If you run a business whose cash position is tightening, have a statement of due liabilities and available assets drawn up as at date, time-stamped, before considering any negotiation: that document will fix your room for manoeuvre and, later, your defence. If you are a creditor of a defaulting debtor, have your receipts and the security you have taken over the last eighteen months audited before serving a summons: you might discover that the date of cessation of payments that you are about to have established takes in your own payments.

Frequently asked questions

Does the 45-day period run from the finding of cessation of payments or from its occurrence? Article L. 631-4 makes the period run “from cessation of payments”, that is, from the occurrence of the objective state defined by Article L. 631-1, and not from the manager's becoming aware of it. The precise rules of computation are not settled by the text. In practice, it is the court that fixes that date, after seeking the debtor's observations, under Article L. 631-8. Hence the value of documenting internally, as at date, the state of due liabilities and available assets.

Does a late insolvency filing automatically lead to a management ban? No. Article L. 653-8, paragraph 3, provides that the management ban “may” be ordered against a person who “knowingly” failed to request the opening of proceedings within the forty-five-day period, without having requested a conciliation in the meantime. Since Law No. 2015-990 of 6 August 2015, the intentional element must be established: a mere objective omission is no longer enough. The action is time-barred after three years from the opening judgment (L. 653-1, II).

How far back can the date of cessation of payments be deferred? Article L. 631-8 authorises deferral, once or several times, without the date being more than eighteen months earlier than the date of the opening judgment. The request must be made to the court within one year of the opening judgment. Except in cases of fraud, the date may not be set earlier than the final decision approving a conciliation agreement under paragraph II of Article L. 611-8.

Can a creditor itself ask for deferral of the date of cessation of payments? No. Article L. 631-8 reserves the application to the court to the administrator, the creditors' representative or the public prosecutor. A creditor does not have standing to act. Its influence lies in passing to the organs of the proceedings the material showing that the debtor was no longer meeting its due liabilities before the date adopted.

Can a creditor alone bring the action for shortfall of assets against the manager? No. Under Article L. 651-3, the court is seised by the liquidator or the public prosecutor. It may also be seised, in the collective interest of creditors, by the majority of the creditors appointed as controllers where the liquidator has not brought the action following a formal notice that went unheeded. An institutional creditor wishing to carry weight must therefore be appointed as a controller and form a majority with other controllers.

Can one issue a summons for court-supervised reorganisation and at the same time seek an order for the debtor to pay? No. Article R. 631-2 states that the application for opening is, on pain of inadmissibility to be raised of the court's own motion, exclusive of any other application relating to the same assets. The only exception is the application for the opening of compulsory liquidation made in the alternative. Combining the summons with a claim for payment therefore exposes the creditor to inadmissibility, and to the loss of the element of surprise against the debtor.

Can a payment received before the opening be challenged? Yes, depending on its date and nature. If it was made since the date of cessation of payments and concerns a debt not yet due, or if it was made for a debt that is due otherwise than by a means of payment commonly accepted in business relations, it is null by operation of law under Article L. 632-1, I. If it concerns a debt that is due and was settled by a normal means, it may be annulled under Article L. 632-2 if the creditor knew of the cessation of payments. The action is brought by the organs of the proceedings or the public prosecutor (L. 632-4).