Working with a company in reorganisation proceedings: 2026 guide

Working with a company in court-supervised reorganisation proceedings (redressement judiciaire) may seem risky, but this situation does not necessarily mean a commercial dead end. Many companies continue to trade during this procedure and may even recover on a lasting basis. Understanding the legal mechanisms and adopting good practice make it possible to maintain business relations while protecting one's interests.

The fundamentals of redressement judiciaire

What is redressement judiciaire?

Redressement judiciaire is a collective insolvency procedure intended to allow the company to continue trading, to maintain employment and to clear its liabilities. This procedure applies to companies that have ceased to pay their debts as they fall due and whose position is not irretrievably compromised.

Length of the observation period: six months at most, renewable once for six months, and exceptionally extended by a further six months at the request of the public prosecutor (procureur de la République), that is, eighteen months at most (Articles L. 621-3 and L. 631-7 of the French Commercial Code). The length of the reorganisation plan, set by the court, may not exceed ten years (Article L. 626-12, applicable by reference from Article L. 631-19).

The opening of the procedure has several immediate consequences: • The director remains in office; the court-appointed administrator (administrateur judiciaire), whose mission is set by the court, assists the director or administers the company alone (Article L. 631-12) • The company benefits from a stay of individual enforcement proceedings • Prohibition on paying debts arising before the opening judgment (Article L. 622-7) • Interest, whether statutory or contractual, stops running, except for loans concluded for a term of at least one year and contracts providing for deferred payment of at least one year (Article L. 622-28)

The participants in the procedure

Several participants take part in the redressement judiciaire (Articles L. 621-4 and L. 621-10, applicable by reference from Article L. 631-9):

• The court, which opens the procedure, rules on continuation of the observation period, adopts the plan or orders compulsory liquidation (liquidation judiciaire)
• The supervising judge (juge-commissaire), responsible for ensuring the procedure runs quickly and for protecting the interests involved
• The court-appointed administrator, responsible for assisting the debtor or administering the company; appointment is not mandatory below the thresholds set by decree
• The creditors' representative (mandataire judiciaire), who represents the creditors and receives proofs of debt
• The employees' representative
• The creditors' supervisors (contrôleurs), one to five creditors appointed by the supervising judge at their request
• The public prosecutor's office

This organisation guarantees a balance between the continuation of trading and the protection of creditors, which are essential elements for working safely with a company in reorganisation.

Assessing risks and opportunities

Analysing the financial position

Before entering into or continuing a collaboration, an in-depth analysis is necessary. The key steps are as follows:

Priority sources of information: • Consultation of the registry of the commercial court (greffe) • Publication in the Bodacc (French official gazette of civil and commercial announcements) • Annual accounts filed, unless the confidentiality option has been exercised • Extracts and documents available from the registries

The free sources for finding out whether a partner is in redressement judiciaire are listed in our article on checking free of charge whether a company is in reorganisation proceedings.

Dedicated monitoring tools

Private providers offer services for monitoring legal notices and for financial rating of companies. Their cost and scope vary; they supplement, but do not replace, direct consultation of the Bodacc and the registry.

Identifying existing security

Debts arising regularly after the opening judgment for the needs of the procedure, or in return for a service supplied to the debtor during the observation period, receive preferential treatment (Article L. 622-17, applicable by reference from Article L. 631-14): • They are paid when due • Failing that, they are paid in priority ahead of other debts, subject to the super-priority of wages, subsequent legal costs and the conciliation privilege • This priority is lost if the unpaid debt is not brought to the attention of the administrator or, failing that, the creditors' representative within one year from the end of the observation period

Securing new contractual relationships

Negotiating suitable terms

Possible payment terms: • Payment in cash or a short payment period • Deposit on ordering • On-demand bank guarantee • Personal guarantee from the director: an individual guarantor must write the statement provided for in Article 2297 of the French Civil Code personally, on pain of nullity of the undertaking; notarial form is not required

Contractual clauses: • A termination clause based solely on the opening of the procedure or the making of a compulsory liquidation order has no effect (Articles L. 622-13, I, and L. 641-11-1, I) • Where an ongoing contract is continued, the performance owed by the debtor is paid in cash, unless the counterparty agrees to time to pay (Article L. 631-14); failing payment, the contract is terminated automatically (Article L. 622-13, III, 2°) • Retention of title clause (réserve de propriété), agreed in writing no later than the time of delivery; the claim to recover goods applies to goods that are found in kind and, where they have been incorporated, to those that can be separated without damage (Article L. 624-16) • Right to information on performance of the contract

Documenting the agreements

Useful documents: • Contract signed by the debtor and, depending on the administrator's mission, by the court-appointed administrator or with the administrator's assistance • Date of conclusion, which establishes that the debts arose after the opening of the procedure • Proof of debt filed for earlier debts, which may not be paid (Article L. 622-7) • Amendment to the general terms of sale

Ongoing contracts: the counterparty may send the administrator a formal notice to decide whether to continue the contract; failing a reply within one month, the contract is terminated automatically. The supervising judge may set a shorter period or grant an extension that may not exceed two months (Article L. 622-13, III, 1°). No text provides for tacit approval of a new contract by the administrator.

Managing earlier debts

Filing proofs of debt

Filing procedure: • Time limit: two months from publication of the opening judgment in the Bodacc, increased by two months for creditors not resident in metropolitan France where the procedure is opened there (Article R. 622-24); for creditors holding a published security or party to a published contract, the period runs from personal notice (Article L. 622-24) • Addressee: the creditors' representative • Form: written declaration, preferably by registered letter with acknowledgement of receipt • Documents enclosed: supporting documents listed in a schedule, which may be produced as copies (Article R. 622-23)

Mandatory particulars: • Exact amount on the date of the judgment • Breakdown of principal and ancillary sums • Nature of the debt and date it arose • Any security or priority rights

The rate of recovery of earlier debts depends on the plan adopted or on the proceeds of the liquidation. The critical time limits and the errors to avoid in this formality are set out in our article on filing a proof of debt in collective proceedings.

Following the progress of the procedure

Participation of creditors: • Supervisors: the supervising judge appoints one to five supervisors from among the creditors who request it (Article L. 621-10) • Classes of affected parties: constituted in the cases provided for by law, in particular where the thresholds set by decree are reached or at the request of the debtor or the administrator, they vote on the draft plan (Articles L. 626-29, L. 626-30 and L. 631-1)

Plan payment schedule: failing agreement of the creditors, the court imposes uniform payment periods. The first payment may not fall due more than one year after the plan; from the third annual instalment, each instalment may not be less than 5% of each of the admitted debts and, from the sixth year, 10% (Article L. 626-18). The court may impose write-offs only on creditors who have accepted them, subject to the vote of the classes of affected parties.

Optimising the secured collaboration

Putting enhanced monitoring in place

Warning indicators to watch: • Compliance with due dates: zero tolerance for late payment • Changes in monthly turnover • Absenteeism rate and staff turnover • Banking incidents or unpaid cheques • Late social security and tax filings

Internal monitoring tools: • Weekly dashboard of outstanding amounts • Monitoring of Bodacc publications and of court decisions relating to the procedure • Site visits where the contract so provides

Diversifying security

Security available: the retention of title clause makes it possible to reclaim delivered and unpaid goods that are found in kind, within three months of publication of the opening judgment (Articles L. 624-9 and L. 624-16). The independent guarantee and the bank guarantee shift the risk to a credit institution. A personal guarantee from an individual, in particular the director, is subject to the statement required by Article 2297 of the French Civil Code. Credit insurance covers the risk of non-payment within the limits of the insurance contract.

Anticipating possible developments

Preparing for the outcome of the procedure

Possible outcomes: • Reorganisation plan adopted by the court, with a maximum term of ten years (Articles L. 626-12 and L. 631-19) • Sale of all or part of the business ordered at the request of the administrator (Article L. 631-22) • Compulsory liquidation ordered where reorganisation is manifestly impossible (Article L. 631-15, II) • End of the procedure where the debtor has sufficient funds to pay the creditors and meet the costs (Article L. 631-16)

Maintaining vigilance after the plan

Post-reorganisation warning signs: • Delays in performing the plan (>30 days) • Fall in turnover of more than 20% compared with forecasts • Departures of senior executives • Recruitment difficulties or industrial disputes • Payment deferrals, even occasional ones

Practical points and recommendations

Organising recovery

What to do in the event of non-payment of a later debt: a debt arising regularly after the opening judgment must be paid when due. Failing that, the creditor brings it to the attention of the administrator or, failing that, the creditors' representative within one year from the end of the observation period, in order to keep its priority (Article L. 622-17, IV). The counterparty to a continued contract that is unpaid benefits from the automatic termination provided for in Article L. 622-13, III, 2°. Compulsory liquidation may be ordered at the request of the debtor, the administrator, the creditors' representative, a supervisor or the public prosecutor's office, or of the court's own motion (Article L. 631-15, II); a creditor who is not a supervisor cannot apply for it.

Adapting commercial strategy

Commercial opportunities: • Renegotiation of pricing terms • Partnerships with the reorganised company • Submission of takeover offers to the administrator as soon as the procedure opens (Article L. 631-13) • Building loyalty in the relationship after the plan is adopted

Working with a company in redressement judiciaire is therefore not to be ruled out systematically. A methodical approach, securing the contractual relationships and rigorous monitoring make it possible to minimise risks while seizing any commercial opportunities. The key lies in the balance between caution and commercial pragmatism.