Hotel restructuring lawyer — France

Q: Can the landlord terminate the hotel lease during proceedings?

The opening judgment bars termination based on rent arrears predating it. For post-judgment rent, the landlord may seek termination only after three months from the opening judgment, and payment made before that date defeats the claim (article L. 622-14 of the French Commercial Code).

Q: When must a hotel operator file for insolvency in France?

Within 45 days of becoming unable to pay debts as they fall due with available assets, unless conciliation is requested within the same period (article L. 631-4 of the French Commercial Code). Seasonality does not suspend that deadline.

Mac Mahon Avocats is a business law firm based at 33 avenue Mac-Mahon, Paris 17. Its lawyers act for hotel operators, property owners, hotel groups and investors on early-warning work, amicable proceedings, French insolvency proceedings and disposals. This page sets out the applicable legal framework; it is not legal advice.

Scope

Independent and branded hotels, tourist and serviced residences, aparthotels, hotel-restaurants, establishments operating under a brand franchise, management agreement or mandate, business leases (location-gérance), property-owning vehicles (SCI, OPCI, listed and unlisted property companies) and hotel investment structures.

Sector context

Hotel operations combine a high fixed-cost base — rent or property debt service, payroll, energy, brand fees — with strongly seasonal revenue that is sensitive to the economic cycle. A few points of occupancy or RevPAR translate quickly into pressure on available assets, while liabilities (rent, loan instalments, VAT, social security contributions) fall due on a fixed calendar.

Two features make distress in this sector specific. First, property and business are often split: restructuring therefore requires a multi-party negotiation involving the landlord or property lessor. Second, enterprise value is tied to the brand and to distribution channels: losing the franchise, the management agreement or platform listings immediately erodes the value of the business, which argues for confidential and early treatment of the difficulties.

Key legal issues in the hotel sector

Commercial lease and charges: turnover-linked or two-tier rent, forfeiture clauses, allocation of works and charges, landlord guarantees, protection of the lease by the opening judgment.
Hotel management agreement and mandate: legal characterisation, term, performance tests, termination clauses, treatment during the observation period.
Franchise and brand agreements: fees, standards, territorial exclusivity, consequences of downgrading or leaving the network.
Property financing: property leasing (crédit-bail immobilier), covenants (LTV, DSCR), mortgages, business pledges, Dailly assignment of rents, sale and leaseback.
Distribution: online travel agency agreements, rate parity clauses, commissions and balances, group and conference contracts, guest deposits.
Public liabilities: VAT, tourist tax collected for the local authority, social security contributions, applications to the CCSF for a payment plan.
Employment: the national collective agreement for hotels, cafés and restaurants, seasonal and casual staff, working-time arrangements, AGS intervention in insolvency proceedings.
Operating and intangible assets: star rating, alcohol licences, public-access safety authorisations, guest database and booking data.

How the firm works

Diagnosis: review of available assets, liabilities due, the seasonal calendar, banking covenants and security granted, in order to assess whether the company is unable to pay its debts as they fall due (article L. 631-1 of the French Commercial Code).
Choice of procedure: weighing confidential amicable tools — ad hoc mandate, conciliation — against insolvency proceedings, taking into account the risk of losing the brand and the timing of the season.
Negotiation: discussions with the landlord or property lessor, banks, the franchisor or operator, key suppliers, the Treasury and URSSAF, and where relevant before the CCSF.
Implementation: preparation of the filing, representation before the commercial courts, monitoring of the observation period, preparation of a continuation plan or of a disposal of the business, the shares or the property.

Overview of French proceedings

Procedure	Opening condition	Duration	Legal basis
Ad hoc mandate	No insolvency (cessation of payments)	Set by the president of the court, renewable	Art. L. 611-3
Conciliation	Actual or foreseeable difficulties; insolvency for no more than 45 days	4 months, extendable by one month (5 months maximum)	Art. L. 611-4 to L. 611-16
Safeguard	Insurmountable difficulties, no insolvency	Observation period of 6 months, renewable once	Art. L. 620-1 et seq.
Accelerated safeguard	Agreement prepared in conciliation	2 months, extendable up to 4 months	Art. L. 628-1 et seq.
Rehabilitation proceedings	Insolvency, recovery possible	Observation period up to 18 months	Art. L. 631-1 et seq.
Judicial liquidation	Insolvency, recovery manifestly impossible	Variable; continued trading authorised for 3 months, renewable	Art. L. 640-1 et seq.

Insolvency must be declared within 45 days of the company becoming unable to pay its debts as they fall due, unless conciliation is requested within the same period (article L. 631-4). Creditors have two months from publication of the opening judgment in the BODACC to file their claims (article L. 622-24).

Frequently asked questions

Can a hotel management agreement continue during insolvency proceedings?

Ongoing contracts continue by operation of law; only the court-appointed administrator may require performance or waive continuation (articles L. 622-13 and L. 631-14). The characterisation retained — mandate or service contract — also governs termination and any compensation.

Can the landlord terminate the hotel lease during proceedings?

The opening judgment bars any termination based on rent arrears predating it. For post-judgment rent, the landlord may only seek termination after three months from the opening judgment, and payment made before that date defeats the claim (article L. 622-14).

Can a hotel be sold through a disposal plan?

Yes. The court may approve a disposal plan covering all or part of the business and designate the contracts required to maintain operations, in particular the lease and, where applicable, brand agreements (articles L. 642-1 and L. 642-7).

Does seasonality change the procedural timetable?

It does not affect statutory deadlines, including the 45-day rule. It does affect timing: opening amicable proceedings before the low season allows negotiation on a full cash-flow forecast and protects the following season.

Contact

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