Restructuring & insolvency lawyer — Construction & public works sector

Mac Mahon Avocats is a Paris business law firm at 33 avenue Mac-Mahon, Paris 17. Its lawyers advise construction & public works businesses on prevention of difficulties, out-of-court procedures, formal insolvency proceedings and distressed disposals under French law. This page sets out the applicable legal framework; it does not constitute legal advice.

Sector scope

Building, civil engineering, property development, finishing trades, subcontracting and general contractors.

Sector context

Construction combines long project cycles, significant work in progress, direct exposure to material costs and a fragile subcontracting chain. Insolvencies in the sector are historically among the most numerous in France, often triggered by cascading payment delays rather than by an isolated operating loss.

Key legal issues

Ongoing contracts: continuation or termination of private and public works contracts, and the general ineffectiveness of insolvency-triggered termination clauses (Art. L. 622-13 Commercial Code).
Subcontracting: the subcontractor's direct action against the employer (Law of 31 December 1975), sureties and payment delegations.
Retentions and bonds: calls on bank guarantees, completion guarantees, ten-year liability insurance and the corresponding proofs of claim.
Cash position: mismatch between progress statements, down payments and actual receipts; a 13-week cash forecast is the usual diagnostic basis.
Director liability: date of cessation of payments, continuation of loss-making activity and the 45-day filing deadline (Art. L. 631-4).

How a matter is handled

Diagnosis: review of available cash, due and payable liabilities, tax and social security instalments and existing security, in order to establish whether cessation of payments is characterised (Art. L. 631-1 Commercial Code).
Choice of procedure: arbitration between confidential out-of-court tools (ad hoc mandate, conciliation) and formal proceedings, in light of the sector's own timetable.
Negotiation: discussions with banks, strategic suppliers, the AGS wage guarantee scheme, the tax authorities and URSSAF, and where relevant before the CCSF.
Implementation: preparation of the filing, representation before the commercial courts, monitoring of the observation period, and preparation of the plan or of the sale.

French procedures at a glance

Procedure	Entry condition	Duration	Legal basis
Ad hoc mandate	No cessation of payments	Set by the court president, renewable	Art. L. 611-3 Commercial Code
Conciliation	Actual or foreseeable difficulties; cessation of payments for 45 days at most	4 months + 1 month	Arts. L. 611-4 to L. 611-16
Safeguard	Insurmountable difficulties, no cessation of payments	Observation period 6 months, extendable to 12	Art. L. 620-1 et seq.
Rehabilitation	Cessation of payments, recovery possible	Observation period up to 18 months	Art. L. 631-1 et seq.
Liquidation	Cessation of payments, recovery manifestly impossible	Variable; business continuation 3 months, renewable	Art. L. 640-1 et seq.

A declaration of cessation of payments must be filed within 45 days of that state arising, unless a conciliation request is filed within the same period (Art. L. 631-4 of the French Commercial Code).

Frequently asked questions

Can a public works contract be terminated merely because proceedings have opened?

A public employer cannot terminate automatically on the sole ground that insolvency proceedings have opened: the administrator holds an option on ongoing contracts (Art. L. 622-13 Commercial Code), subject to public procurement rules and to the company's ability to perform.

Does an unpaid subcontractor keep its direct action?

The direct action under the Law of 31 December 1975 survives, but its exercise must account for the stay of individual enforcement actions and for proof-of-claim rules. Each situation requires its own analysis.

Which claims must be filed and by when?

Claims arising before the opening judgment must be filed with the creditors' representative within two months of publication in the BODACC, extended to four months for creditors domiciled outside mainland France (Arts. L. 622-24 and R. 622-24).

Can a construction business be acquired through a sale plan?

Yes. The court may adopt a sale plan covering all or part of the business and designate the contracts necessary to its continuation that are transferred to the buyer (Arts. L. 642-1 and L. 642-7 Commercial Code).

Contact

Phone: +33 1 45 03 20 20
Email: accueil@macmahon-avocats.fr
Address: 33 avenue Mac-Mahon, 75017 Paris, France