A mid-sized manufacturing company incorporated in France as a société par actions simplifiée (SAS – a simplified joint-stock company under French law) found itself at a critical crossroads. Revenue had contracted sharply over two consecutive years. Trade creditors, two senior lenders, and a foreign parent entity all held competing claims. The window for a consensual solution was narrowing fast. Without a coordinated restructuring plan, a formal liquidation judiciaire (judicial liquidation under French insolvency law) would eliminate any prospect of business continuity – and with it, the value that creditors themselves stood to recover.
French insolvency proceedings under the Code de commerce (French commercial legislation) offer a tiered system of rescue and resolution tools. A debtor company that is not yet in a state of cessation des paiements (cessation of payments) may access confidential conciliation proceedings. Once that threshold is crossed, formal collective procedures – including sauvegarde (safeguard) and redressement judiciaire (judicial rehabilitation) – become available, each with distinct creditor-treatment rules and court-supervised timelines.
This case study examines the strategy deployed to stabilise the company, manage a multi-creditor claim pool, and achieve a viable restructuring outcome. Three transferable lessons emerge for any cross-border matter involving French insolvency proceedings.
Client profile and the challenge at hand
The client was the European subsidiary of a group headquartered outside the EU. Its French operating entity – structured as a société à responsabilité limitée (SARL – a limited liability company under French corporate legislation) before a prior conversion to an SAS – carried debt across three distinct creditor classes.
The first class comprised two senior secured lenders holding security over core production assets. The second consisted of a pool of trade creditors, ranging from raw-material suppliers to logistics providers. The third was an intercompany claim held by the foreign parent, subordinated in practice but formally unsecured under French law. The combined exposure exceeded the company's net asset value.
Two complications compounded the situation. First, one of the senior lenders had engaged a huissier de justice (a judicial officer under French civil procedure rules. Responsible for serving legal process and enforcing judgments) to initiate enforcement proceedings against a pledged asset. Second, creditor communication had broken down entirely. A creditors meeting convened informally months earlier had produced no agreement. Each creditor class was pursuing its own recovery strategy, accelerating value destruction for all.
The timeline pressure was acute. Under French insolvency legislation, the point of cessation des paiements triggers a 45-day declaration obligation on management. Breach of that obligation exposes directors to personal liability. The company was approximately three weeks from that threshold when the engagement began. For a detailed overview of the French insolvency tools available at each stage, see our analysis of restructuring and insolvency proceedings in France.
Strategy: pre-insolvency conciliation as the entry point
The central strategic decision was to pursue a conciliation proceeding – a confidential, court-supervised negotiation available to companies facing financial difficulty but not yet formally insolvent. This choice was deliberate and time-sensitive. Conciliation preserves management control. It imposes an automatic standstill on enforcement by participating creditors. Critically, it does not trigger the collective claims-declaration procedure that a formal insolvency opening would require.
The rationale for this approach over an immediate redressement judiciaire filing rested on three factors. First, the company's core operations remained viable. Second, the senior lenders – while impatient – had not yet accelerated formally. Third, the foreign parent was willing to subordinate its intercompany claim in exchange for preserving group consolidation. Those conditions made a negotiated solution economically superior to a court-managed distribution under a formal collective procedure.
The administrateur judiciaire (court-appointed administrator, a regulated insolvency officeholder under French insolvency legislation) appointed by the tribunal de commerce (Commercial Court) to oversee the conciliation process became a critical counterpart. The administrator's role in this context was facilitative rather than supervisory – a distinction that shaped how creditor communications were managed throughout.
An early priority was the submission of a structured proof of debt schedule for each creditor, allowing the administrator to verify claims independently. This step, often treated as administrative, was strategically significant. Discrepancies between creditor claims and the company's own records had created distrust. A court-validated claims schedule neutralised that source of friction at the creditors meeting level.
Key milestones and complications encountered
The conciliation period ran for approximately four months – within the extended outer limit permitted under French insolvency legislation. Three milestones defined the arc of the matter.
The first was securing the withdrawal of enforcement proceedings initiated by the huissier de justice. This required direct engagement with the senior lender's counsel within the first two weeks. The lender agreed to suspend enforcement conditionally on the company providing updated financial projections within ten business days. Missing that deadline would have collapsed the conciliation before it gained traction.
The second milestone was aligning the two senior lenders on a common position. They held security over overlapping asset pools but had different recovery timelines and internal approval thresholds. Achieving a unified lender position required separate bilateral sessions before any joint creditor communication. The lesson from this phase – discussed further below – is that multi-creditor matters in France rarely succeed when all parties are brought to the table simultaneously before positions have been individually tested.
The third milestone was the treatment of the foreign parent's intercompany claim. Under French insolvency legislation, related-party claims are not automatically subordinated. Formalising the subordination required a contractual instrument ratified within the conciliation process and noted by the administrator. Without that step, the parent's claim would have ranked alongside unsecured trade creditors in any subsequent formal procedure – diluting recoveries and destabilising the restructuring plan.
The principal complication arose mid-process. One trade creditor – a supplier holding retention-of-title provisions over delivered inventory – challenged the scope of the standstill. Under French commercial legislation and case law developed by the Cour de cassation (the Supreme Court of France in civil and commercial matters), retention-of-title claims occupy a distinct legal position. They are not extinguished by insolvency proceedings in the same way that unsecured claims are. Managing this creditor required a separate negotiated settlement outside the main restructuring plan, funded by a partial asset realisation. That realisation, in turn, required court approval – adding six weeks to the timeline. For cross-border matters where corporate disputes intersect with insolvency proceedings, our team also advises on corporate dispute resolution in France.
A secondary complication was jurisdictional. The foreign parent had commenced parallel proceedings in its home jurisdiction to protect its intercompany claim. Coordinating those proceedings with the French conciliation – including obtaining a temporary stay from the foreign court – required simultaneous management of two legal processes under different procedural rules.
To explore how similar multi-jurisdictional restructuring challenges arise in neighbouring civil law systems, the case study on corporate restructuring in Portugal provides a comparative reference point.
To discuss a restructuring situation involving French insolvency proceedings or multi-creditor claims, reach out to our team at info@ferrazwhitmore.com.
Transferable lessons for cross-border restructuring matters
Lesson one: the choice of procedure determines creditor leverage. In France, the decision to enter conciliation rather than a formal collective procedure fundamentally alters the balance of power between debtor and creditors. Under a formal redressement judiciaire, an administrateur judiciaire assumes co-management authority and the liquidateur (liquidator) may be appointed if rescue fails. In conciliation, management retains operational control. For companies with viable businesses and cooperative senior creditors, the pre-insolvency route preserves significantly more optionality – but it must be initiated before the cessation des paiements threshold is crossed. Waiting forfeits that choice entirely.
Lesson two: sequencing creditor engagement is as important as the restructuring plan itself. In multi-creditor matters, the order in which creditors are approached shapes the outcome. Bringing secured and unsecured creditors into a single room before bilateral positions are settled typically produces deadlock. The more productive sequence is to establish individual creditor positions first, identify the creditors whose consent is structurally necessary, and build outward from that anchor group. In France, where insolvency proceedings have formal class-voting mechanics in certain procedures, understanding which creditor class controls the vote is essential before any plan is tabled.
Lesson three: cross-border complications require early jurisdictional mapping. French insolvency proceedings are governed by EU insolvency legislation where the debtor's centre of main interests is in France. That framework provides tools for coordinating parallel proceedings in other EU member states. Where the parallel proceeding arises in a non-EU jurisdiction, coordination depends entirely on the cooperation of foreign courts and counsel. Identifying those pressure points in the first week – not after they materialise as crises – determines whether the restructuring timeline holds.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our restructuring and insolvency practice covers corporate rescue, creditor representation, and cross-border insolvency coordination in both civil law and common law systems. We advise senior lenders, trade creditors, foreign parent entities, and operating companies managing financial distress across European markets. As a law firm in France and across the EU, our team combines Portuguese civil law expertise with English common law tradition to provide results-oriented counsel in multi-creditor and multi-jurisdictional matters. Our attorneys have advised on restructuring matters before tribunaux de commerce and in conciliation and sauvegarde proceedings across France and neighbouring jurisdictions. For a preliminary review of your restructuring situation in France, email us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.
Author: Daniel Ferreira
Author title: Managing Partner
Author bio: Daniel Ferreira is a Managing Partner at Ferraz & Whitmore with over 18 years of experience in Portuguese and European corporate law, M&A transactions, and cross-border restructuring. He advises international businesses on market entry, regulatory compliance, and dispute resolution across the EU and Atlantic jurisdictions.
Published: February 03, 2026