Summoning a Debtor to Judicial Reorganisation in France

(“Redressement judiciaire à l’initiative d’un créancier”)

1. A right granted to creditors to summon debtors to a judicial reorganisation (a type of insolvency proceedings)

French law allows the opening of collective insolvency proceedings not only at the initiative of the debtor or the public prosecutor, but also at the initiative of a creditor. Judicial reorganisation (redressement judiciaire) or judicial liquidation (liquidation judiciaire) may therefore be ordered following a summons issued by a creditor, provided the statutory conditions are met (French Commercial Code, arts. L. 631-5, para. 2 and L. 640-5, para. 2).

A creditor may summon its debtor who is in a state of cessation of payments either:

• directly to judicial liquidation, or

• to judicial reorganisation, with liquidation sought in the alternative.

The court is not bound by the creditor’s legal characterisation. Judges may order liquidation even where the summons seeks reorganisation if they consider that any recovery is manifestly impossible. Conversely, where liquidation is sought, the court may open reorganisation proceedings if it appears that a recovery plan may realistically be implemented.

This procedural freedom reflects the court’s exclusive authority to assess the economic situation of the debtor and to determine the appropriate collective procedure.

The creditor may conduct this procedure without mandating a lawyer (French Code of Civil Procedure, art. 853, para. 3). In practice, however, the strategic and evidentiary stakes of such proceedings often justify professional assistance.

Exclusion of safeguard proceedings

Among the collective procedures available under French law, safeguard proceedings (sauvegarde) are strictly reserved for the debtor. A creditor has no standing to seek the opening of safeguard proceedings against its debtor. Any summons attempting to do so would be dismissed as inadmissible (CA Metz, 1st Civil Chamber, 17 April 2007, no. 07-00015).

A prohibition that must be strictly observed

A creditor may not structure its summons so as to seek, as its principal claim, payment of its debt, and as a subsidiary claim, the opening of collective proceedings. French law expressly prohibits such a procedural strategy (French Commercial Code, art. L. 631-2, para. 2).

If the creditor does not yet hold a judicial decision ordering payment, it must first bring proceedings solely to obtain such a decision, before considering collective insolvency proceedings.

Failure to comply with this rule exposes the creditor to dismissal of its application and, in certain circumstances, to liability for abusive proceedings.

Time limits when the debtor has ceased activity

Where the debtor has ceased its professional activity, the creditor’s right to summon is subject to a strict time limit. The summons must be issued within one year of one of the following events (French Commercial Code, art. L. 631-5, para. 2):

• deregistration from the Trade and Companies Register (for legal entities, following publication of the closing of liquidation operations);

• cessation of activity for craftsmen, farmers, or self-employed individuals;

• publication of the completion of liquidation for non-registered legal entities.

Thus, an individual lawyer who ceased independent practice more than one year earlier in order to join a firm as a partner may no longer be summoned to judicial reorganisation (Cass. com., 9 February 2010, no. 08-15191).

Similarly, where a trader requests deregistration “with retroactive effect”, the one-year time limit runs from the actual registration date of deregistration at the Trade and Companies Register, not from the date on which activity effectively ceased (Cass. com., 18 January 2023, no. 21-21.748).

European cross-border insolvency proceedings

In addition to domestic French law, cross-border insolvency proceedings within the European Union are governed by Regulation (EU) 2015/848 of 20 May 2015, supplemented in French law by Ordinance no. 2017-1519 of 2 November 2017 (French Commercial Code, arts. L. 690-1 to L. 696-1).

Under this framework, main insolvency proceedings opened in another Member State must be recognised in France, provided French-domiciled creditors were able to challenge the jurisdiction of the foreign court (Cass. com., 15 February 2011, no. 09-71.436), even where the debtor had previously seized a French court (Cass. com., 27 May 2014, no. 13-14.956).

The detailed treatment of cross-border insolvency proceedings falls outside the scope of the present article.

2. The practical interest for the creditor

At first sight, summoning a debtor to judicial reorganisation may appear counter-intuitive. Statistics consistently show that creditors recover only a very small fraction of their claims in collective proceedings.

On average, recovery rates hover around 5%. While certain institutional creditors fare better—such as the tax authorities or social security bodies, with recovery rates approaching 11%—studies commissioned by the Ministries of Economy and Justice have long acknowledged that recovery for unsecured creditors (créanciers chirographaires), in practice suppliers, is often non-existent (Report on the organisation and functioning of commercial courts, July 1998).

The deterrent effect of the summons

Despite these figures, the effectiveness of insolvency summonses has long been recognised. As Balzac famously wrote:

Where the debtor still has access to liquidity, the mere service of a summons seeking judicial reorganisation frequently results in full payment before the hearing.

Severe consequences for the debtor

From the debtor’s perspective, the opening of judicial reorganisation proceedings entails particularly serious consequences:

• potential loss of management control, with the appointment of a judicial administrator;

• disclosure of financial difficulties to business partners and competitors;

• the possibility of takeover bids or asset disposals imposed by the court.

These risks explain why many debtors choose to settle rapidly once a summons is served.

3. Debtors who may be summoned to judicial reorganisation

A creditor may summon to judicial reorganisation any debtor falling within the scope of Article L. 631-2 of the French Commercial Code. This includes:

• traders (commerçants),

• craftsmen,

• farmers,

• natural persons carrying on an independent professional activity, including regulated liberal professions,

• and all legal entities governed by private law, regardless of their legal form.

Accordingly, companies (commercial or civil), associations, professional civil partnerships, economic interest groupings, works councils (comités sociaux et économiques), and similar entities may all be subject to judicial reorganisation proceedings.

This broad scope reflects the objective of French insolvency law: not to sanction a particular legal form, but to address a situation of financial distress affecting an economic actor operating within the private sector.

4. Which court has jurisdiction?

Commercial Court or Judicial Court

Jurisdiction depends primarily on the nature of the debtor’s activity.

The Commercial Court (or, where applicable, the Tribunal des activités économiques) has jurisdiction where the debtor carries on a commercial or artisanal activity.

In all other cases, jurisdiction lies with the Judicial Court (French Commercial Code, arts. L. 621-2, L. 631-7 and L. 641-1).

Territorial jurisdiction

The competent court is that within whose jurisdiction the debtor has:

• the registered office of its business,

• or the address of its activity,

• or, failing any establishment in France, the centre of its main interests located in France
  (French Commercial Code, art. R. 600-1).

A lawyer registered with the Paris Bar, for example, must be summoned to liquidation or reorganisation proceedings before the Judicial Court of Paris, regardless of his personal residence (CA Versailles, 3rd Chamber, 1 March 2007, no. 06-07.624).

Large enterprises and specialised courts

Only 18 specialised commercial courts are competent to hear collective proceedings involving large enterprises, defined as entities:

• employing at least 250 employees with a net turnover of at least €20 million, or

• achieving a net turnover of at least €40 million
  (French Commercial Code, art. L. 721-8).

These courts are listed in Annex 7-1-1 to the Commercial Code and include Paris, Nanterre, Lyon, Marseille, and several others.

Tribunals of economic activities

Law no. 2023-1059 of 20 November 2023 introduced, on an experimental basis, the Tribunaux des activités économiques (TAE), which replace certain commercial courts and are granted broader economic jurisdiction.

Since 1 January 2025, twelve courts (including Paris, Lyon, Marseille and Nanterre) have been designated as TAEs for a four-year experimental period. These courts now hear certain collective proceedings previously within the jurisdiction of judicial courts, particularly those involving associations and farmers, though proceedings concerning members of regulated legal professions remain under the authority of the judicial courts.

5. Drafting the summons to a judicial reorganisation of the debtor

The creditor’s summons must strictly comply with statutory requirements.

It must specify:

• the nature of the claim,

• its amount,

• and all factual and documentary elements capable of establishing the debtor’s state of cessation of payments
  (French Commercial Code, art. R. 631-2).

A list of supporting documents must be appended in the form of a schedule of exhibits (French Code of Civil Procedure, art. 56, 3°).

The summons is served by a commissioner of justice, who sets the date, time and place of the hearing.

6. Conditions the creditor must strictly observe

Holding a valid and exigible claim

A creditor contemplating a summons for judicial reorganisation must proceed with particular caution.

A creditor may summon its debtor where it relies on a due and uncontested claim which the debtor is unable to pay using its available assets (Cass. com., 19 April 2023, no. 20-19.401).

The safest course of action is to hold a final judicial decision ordering payment and to have served a formal demand to pay (commandement de payer) that has remained unsuccessful.

The insolvency summons must never be used as a pressure tactic.

An illustration of abusive conduct is provided by a decision in which a social security body summoned a company to judicial reorganisation solely to obtain payment of unpaid contributions. The Court of Cassation censured the approach, holding that:

• judicial reorganisation cannot be used as a coercive payment tool,

• appropriate amicable or judicial recovery procedures existed and had not been used
  (Cass. com., 1 October 1997, no. 95-13.262).

Effect of injunction to pay proceedings

Where a creditor has obtained an injunction to pay (injonction de payer) and the debtor has filed an opposition, the creditor cannot rely on the injunction to summon the debtor to judicial reorganisation until the opposition has been decided.

Thus, where a debtor contested the injunction and proceedings were still pending, the creditor’s summons was dismissed (Cass. com., 17 January 1995, no. 93-18.016).

Indeed, an injunction to pay does not constitute an enforceable title until it has been served and the opposition period has expired without challenge.

Absence of an enforceable title does not always bar action

The absence of an enforceable title does not necessarily prevent a creditor from summoning its debtor.

Where a creditor obtained a first-instance judgment and an appellate decision ordering payment, but failed to serve the appellate judgment within the statutory six-month period, the appellate decision became ineffective for enforcement purposes. The creditor nevertheless summoned the debtor to judicial reorganisation.

The Court of Cassation upheld the summons, holding that the creditor was not required to hold an enforceable title, provided the claim was certain, liquid and due. The annulment of the appellate decision restored the effects of the first-instance judgment, even though it had not been served (Cass. com., 28 June 2017, no. 16-10.025).

Establishing cessation of payments

The decisive criterion is not the debtor’s refusal to pay, but its state of cessation of payments, defined as the inability to meet due liabilities with available assets (French Commercial Code, art. L. 631-1, para. 1).

The burden of proof lies with the creditor.

A mere dispute over the amount owed does not establish cessation of payments. Thus, a salaried employee who summoned his employer after partial payment failed, as the non-payment resulted from a disagreement over the calculation, not financial insolvency (CA Toulouse, 22 June 2000).

Conversely, cessation of payments may be inferred where:

• enforcement measures prove fruitless,

• bank accounts are empty,

• assets are of no realisable value,

• and the debtor maintains artificial liquidity by failing to pay social contributions
  (Cass. com., 16 June 2004, no. 01-16.926).

Immovable property is excluded from available assets, even if it could theoretically be sold rapidly. A company may therefore be insolvent despite a positive balance sheet (Cass. com., 27 February 2007, no. 06-10.170).

Loans granted by family or friends constitute available assets only where immediate repayment is not required (Cass. com., 14 December 2022, no. 21-17.706).

The creditor must demonstrate that the debtor’s available assets are insufficient to cover due liabilities. A decision was quashed where judges improperly shifted this burden onto the debtor (Cass. com., 5 May 2015, no. 14-11.381).

Prior formal demand to pay

Although not legally mandatory, serving a formal demand to pay before issuing a summons is strongly recommended.

It evidences the creditor’s good faith and reduces the risk of allegations of abuse.

Courts have consistently held that a creditor does not misuse insolvency proceedings where it legitimately believed the debtor to be insolvent, after payment demands and failed negotiations (CA Pau, 23 March 2000).

Considering enforcement measures

Where the creditor holds an enforceable title and knows the debtor’s bank details, a bank account seizure may be more appropriate.

However, the failure of enforcement measures does not preclude a subsequent insolvency summons. Importantly, the opening of insolvency proceedings is not an enforcement measure pursued at the creditor’s risk (Cass. civ. 2nd Chamber, 30 January 2014, no. 12-29.726).

7. Settlement before the hearing

If the debtor settles the debt or a transaction is concluded before the hearing, the creditor must immediately notify the court by filing a formal withdrawal (désistement).

Failure to do so may result in the opening of proceedings despite settlement, exposing the creditor to adverse cost orders or damages.

Courts have sanctioned creditors who negligently failed to inform the court of settlement, leading to unnecessary insolvency proceedings (CA Aix-en-Provence, 2 April 1992; CA Paris, 17 February 1988).

Decision of the court

Once the creditor’s summons has been served and the hearing held, the court rules after hearing the debtor, the creditor (if present), the public prosecutor and, where applicable, the employee representatives. The court is not bound by the creditor’s request and retains full discretion as to the outcome of the proceedings.

Opening of judicial reorganisation

If the court finds that the debtor is in a state of cessation of payments and that the continuation of the business is not manifestly impossible, it opens judicial reorganisation proceedings pursuant to Articles L. 631-1 et seq. of the French Commercial Code.

The judgment specifies in particular:

• the date of cessation of payments, which may be set retroactively within the statutory limits;

• the appointment of one or more judicial administrators, if required by the size or complexity of the business;

• the appointment of a judicial representative (mandataire judiciaire) responsible for representing creditors;

• the opening of an observation period, during which the debtor’s situation is assessed.

The creditor who initiated the proceedings does not acquire any preferential status by reason of having summoned the debtor. From that point onward, all unsecured creditors are subject to the collective discipline of insolvency law.

Opening of liquidation instead of reorganisation

Although summoned in judicial reorganisation, the debtor may be placed directly into judicial liquidation if the court considers that recovery is manifestly impossible (French Commercial Code, art. L. 631-15).

This situation frequently arises where:

• the business has ceased operating,

• liabilities are overwhelmingly disproportionate to assets,

• or no realistic recovery plan can be envisaged.

The court may also pronounce liquidation even where the creditor requested reorganisation as its principal claim and liquidation only as a subsidiary request. The inverse is equally true: the court may order reorganisation despite a summons seeking liquidation.

8. Effects of the opening judgment

Immediate stay of individual enforcement actions

From the opening judgment, all individual enforcement actions are stayed pursuant to Article L. 622-21 of the French Commercial Code.

This includes:

• seizures of bank accounts,

• seizures of movable or immovable property,

• enforcement of judgments,

• and any legal action aimed at obtaining payment of a pre-opening claim.

The creditor who initiated the proceedings therefore loses the ability to pursue individual recovery and must comply with the collective framework.

Obligation to declare claims

All creditors holding claims arising prior to the opening judgment must file a declaration of claim with the judicial representative within the statutory time limits (French Commercial Code, arts. L. 622-24 and R. 622-21).

Failure to declare a claim within the applicable period generally results in the creditor being barred from distributions, subject to limited exceptions.

The initiating creditor is not exempt from this obligation and must file its declaration like any other creditor.

9. Risks incurred by the creditor

Summoning a debtor to judicial reorganisation is a powerful tool, but it is not without risk.

Risk of abusive proceedings

Where a creditor misuses insolvency proceedings as a means of coercion or pressure, courts may characterise the action as abusive and award damages to the debtor.

This risk materialises particularly where:

• the creditor knew, or should have known, that the debtor was not in cessation of payments;

• the claim was seriously disputed;

• or the creditor deliberately failed to use appropriate recovery procedures.

The jurisprudence consistently recalls that insolvency proceedings are not a substitute for ordinary debt recovery mechanisms.

Risk linked to settlement mismanagement

As already noted, failure to notify the court of a settlement or payment prior to the hearing may result in the opening of proceedings despite the absence of insolvency.

In such cases, courts have not hesitated to order the negligent creditor to bear:

• procedural costs,

• appellate costs,

• and, in certain circumstances, damages for disloyal conduct.

10. Procedural incidents and creditor conduct during proceedings

Once proceedings are opened, the creditor’s role becomes more limited. Nevertheless, the creditor may still:

• challenge the date of cessation of payments if it adversely affects its interests;

• lodge observations concerning the debtor’s situation;

• intervene in hearings relating to the continuation or termination of proceedings.

However, the creditor must strictly comply with the procedural framework and avoid any unilateral action likely to undermine the collective process.

11. Strategic considerations for creditors

From a practical standpoint, summoning a debtor to judicial reorganisation is rarely intended to obtain payment through the proceedings themselves. As statistical data and institutional reports confirm, recovery rates for unsecured creditors are extremely low.

The true effectiveness of the procedure lies elsewhere.

A powerful deterrent effect

The prospect of judicial reorganisation represents a significant threat to a debtor:

• loss of control over management,

• public disclosure of financial difficulties,

• scrutiny by judicial officers,

• potential takeover offers,

• and reputational damage.

Where the debtor still has access to liquidity, payment frequently occurs before the hearing, thereby achieving the creditor’s objective without the need for further litigation.

A procedure to be used selectively

This remedy must be reserved for situations where:

• the debtor’s insolvency is credible,

• traditional recovery avenues have failed or are manifestly ineffective,

• and the creditor is prepared to accept the consequences of collective proceedings if payment does not occur.

Used improperly, the procedure exposes the creditor to liability. Used appropriately, it remains one of the most effective tools available to creditors facing persistent non-payment by distressed debtors.

Conclusion

Summoning a debtor to judicial reorganisation is one of the most consequential actions a creditor may undertake under French law. It requires a precise understanding of insolvency rules, strict compliance with procedural requirements, and a careful assessment of the debtor’s financial position.

When these conditions are met, the procedure offers a uniquely effective means of addressing entrenched non-payment and confronting genuine insolvency. When misused, it carries significant legal and financial risks.

In all cases, the creditor must approach this mechanism not as a routine recovery tool, but as a strategic legal measure governed by strict statutory and judicial safeguards.