Mac Mahon Avocats is a Paris business law firm at 33 avenue Mac-Mahon, Paris 17. Its lawyers advise family offices & family holding companies 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.
Single and multi-family offices, active and passive holding companies, French civil property and securities companies, family groups holding operating stakes, family governance structures and private investment vehicles.
Family groups often hold assets through layers of holding companies and civil-law entities financed by acquisition debt serviced by subsidiary dividends. Where an operating stake stops distributing, the holding company faces its own covenant breach and cessation-of-payments risk, separate from that of its subsidiaries. The issues then concern the interaction between holding-level debt restructuring, family governance and protection of managers who have given personal guarantees.
| 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).
Yes. Safeguard, rehabilitation and liquidation proceedings apply to any private-law legal entity (Arts. L. 620-2, L. 631-2 and L. 640-2 Commercial Code), including holding companies and civil-law companies, where the opening conditions are met.
No. Each company retains its own legal personality; proceedings opened against one company may be extended to another only where commingling of estates or a sham entity is established (Art. L. 621-2 Commercial Code).
In safeguard, individuals who are co-obligors or have given a personal security benefit from the stay of interest and of enforcement during the observation period and may rely on the terms of the plan (Arts. L. 622-28 and L. 626-11 Commercial Code). This protection is narrower in rehabilitation proceedings.
A waiver granted by a shareholder may validly include a better-fortune clause. However, transactions entered into during the suspect period may be set aside under Arts. L. 632-1 and L. 632-2 Commercial Code, which requires review of the cessation-of-payments date fixed by the court.
Ad hoc mandate (Art. L. 611-3) and conciliation (Arts. L. 611-4 et seq. Commercial Code) allow acquisition debt and covenants to be renegotiated without publicity, with a conciliation agreement either acknowledged or approved by the court depending on the level of legal certainty sought.
Phone: +33 1 45 03 20 20
Email: accueil@macmahon-avocats.fr
Address: 33 avenue Mac-Mahon, 75017 Paris, France