This article is provided for information purposes only and describes French statutory law. It does not constitute individualised legal advice and does not create an attorney-client relationship.
A note on terminology: French insolvency law has no direct equivalent in common-law systems. It combines three separate regimes with distinct triggers and effects — unlike, for instance, the single "director disqualification" framework under UK company law or fraudulent/wrongful trading claims under UK and US law. This article uses the closest working English translations while keeping the French legal terms alongside them, since precision on the underlying French concept matters more than a smooth English label.
Three distinct regimes can trigger the personal liability of a company director (dirigeant) facing their company's judicial reorganisation or judicial liquidation in France: personal bankruptcy (faillite personnelle), director disqualification (interdiction de gérer), and liability for insufficient assets (responsabilité pour insuffisance d'actif) — historically known as comblement de passif. Each has its own conditions, duration, and remedies, set out in articles L. 653-1 to L. 653-11 and L. 651-1 to L. 651-4 of the French Commercial Code (Code de commerce). This page gives an overview of all three.
Personal bankruptcy is the most severe sanction. Under article L. 653-2 of the Commercial Code, it carries a total ban on directing, managing, administering or controlling, directly or indirectly, any commercial, craft, agricultural or independent business, and any legal entity. The ban is comprehensive: it is not limited to the company that failed.
It may be ordered against individuals trading in their own name and against de jure or de facto directors of private-law legal entities. Articles L. 653-3 to L. 653-6 list the grounds, which include:
The claim is time-barred after three years from the judgment opening the insolvency proceedings (art. L. 653-1). Once ordered, the sanction carries automatic effects: loss of the right to vote and stand in professional elections, and disqualification from holding an elected public office, in addition to the management ban itself.
In a ruling of 12 June 2025 (Cass. com., 12 June 2025, no. 24-13.566, F-B), the French Supreme Court's commercial chamber held that ordering personal bankruptcy or director disqualification on the grounds listed in articles L. 653-4 and L. 653-5 does not require proof that the company's assets were insufficient to cover its debts. Lower courts cannot add a condition the statute does not impose: this purely conduct-based regime remains independent from the liability for insufficient assets under article L. 651-2, which alone requires proof of a quantified shortfall.
The Commercial Code frames director disqualification as an alternative to personal bankruptcy: for the same facts, the court chooses one or the other — the two do not combine for a single course of conduct. Its scope is more flexible, however: the court may limit it to a specific activity or type of company or business, rather than imposing a general and absolute management ban.
Certain failings can, on their own, justify a director disqualification order without the level of fraud required for personal bankruptcy: failing to keep accounts, failing to file for insolvency within the legal deadline, or refusing to cooperate with the court-appointed administrator or liquidator. Case law is consistent on one point: the court must specifically justify both the decision to impose the sanction and its duration, in light of the severity of the misconduct and the director's personal circumstances, or risk having the judgment overturned (Cass. com., 17 April 2019, no. 18-11.743).
The order is published in the BODACC official gazette and recorded in the National Register of Disqualified Managers (Fichier national des interdits de gérer, FNIG, arts. L. 128-1 et seq. of the Commercial Code), maintained by the National Council of Commercial Court Clerks. This registration allows the relevant court clerk to refuse the registration of a company whose declared director is subject to an active order.
Historically known as the action en comblement de passif under the former article L. 624-3, this claim is now governed by article L. 651-2 of the Commercial Code under the name liability for insufficient assets. It is the most directly financial sanction: it can result in a director personally bearing, out of their own assets, all or part of the debts the company's assets cannot cover.
Bringing the claim requires four cumulative conditions:
Since the 2016 "Sapin II" reform, mere negligence in management can no longer, on its own, support a finding of liability — an exemption extended in 2021 to directors of non-profit associations. The court sets the amount payable by the director in proportion to the number and severity of the faults found; where several directors are at fault, the court may hold them jointly and severally liable by a reasoned decision.
Under article L. 651-3, the claim is reserved to the court-appointed liquidator and the public prosecutor. A majority of creditors appointed as supervisors (contrôleurs) may bring it as a subsidiary matter, but only where the liquidator has failed to act following formal notice left unanswered for two months. The claim is time-barred after three years from the judgment ordering the judicial liquidation (art. L. 651-2, last paragraph).
French insolvency law builds in a "right to a fresh start." Article L. 653-11, first paragraph, sets the common ceiling for both personal bankruptcy and director disqualification at fifteen years, with the court fixing the exact duration within that limit.
Before that period expires, a sanctioned director may petition the court (art. R. 653-4) to be released, in whole or in part, from the disqualifications and incapacities imposed:
Separately, a closing judgment for extinction of the debt automatically restores the director's full rights and releases them from any remaining disqualification.
No, in principle: director disqualification is an alternative to personal bankruptcy for the same set of facts. Personal bankruptcy carries a total management ban; director disqualification can be limited to a specific activity.
Fifteen years at most (art. L. 653-11, para. 1), with the court fixing the exact duration within that limit based on the severity of the misconduct and the director's personal situation.
The court-appointed liquidator and the public prosecutor; a majority of creditor-supervisors only where the liquidator has failed to act after unanswered formal notice (art. L. 651-3).
Yes, by petitioning the court that issued the order, if they have contributed sufficiently to paying the debts or can show guarantees of their renewed ability to manage (art. L. 653-11).
Phone: +33 1 45 03 20 20
Email: accueil@macmahon-avocats.fr
Address: 33 avenue Mac-Mahon, 75017 Paris, France
Our lawyers review your situation and advise on the appropriate protective measures.
Confidential consultation Call +33 1 45 03 20 20
Law firm registered with the Paris Bar — 33 avenue Mac-Mahon, 75017 Paris.