Mac Mahon Avocats is a business law firm based at 33 avenue Mac-Mahon, Paris 17. Its lawyers advise French IT services companies (entreprises de services du numérique, ESN), IT consultancies, systems integrators, managed service providers and digital agencies facing financial difficulties. This page sets out the applicable legal framework; it does not constitute legal advice.
IT services companies combine a largely fixed payroll with revenue that depends on consultant utilisation. Bench time, the seasonality of client budgets and long payment terms from large accounts and public bodies create structural cash-flow gaps.
Fixed-price projects add a distinct risk: scope creep, delayed acceptance, contractual penalties and disputes over deliverable conformity. A significant share of the difficulties observed stems from a handful of loss-making contracts combined with revenue concentration on a limited number of clients.
Cascading subcontracting, common in the sector, also creates exposure to French rules on undeclared work, unlawful labour lending and labour-only subcontracting, as well as to the due-diligence duties of principals.
The opening of insolvency proceedings does not allow a client to terminate on that ground alone: such clauses are deemed unwritten (art. L. 622-13 French Commercial Code, applicable in rehabilitation proceedings by reference in art. L. 631-14). Continuation of ongoing contracts is decided by the court-appointed administrator, upon formal notice from the counterparty.
In practice the challenge is as operational as it is contractual: maintaining client confidence, securing continuity of on-site assignments and avoiding the departure of key consultants during the observation period.
| Procedure | Opening condition | Duration | Legal basis |
|---|---|---|---|
| Mandat ad hoc | No cessation of payments | Set by the president of the court, renewable | Art. L. 611-3 Com. C. |
| Conciliation | Actual or foreseeable difficulties; cessation of payments for no more than 45 days | 4 months + 1 month | Art. L. 611-4 to L. 611-16 |
| Safeguard | Insurmountable difficulties, without cessation of payments | 6-month observation period, 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; continued trading 3 months, renewable | Art. L. 640-1 et seq. |
A cessation of payments must be declared within 45 days of its occurrence, unless conciliation is requested within the same period (art. L. 631-4 French Commercial Code). IT services companies carrying out a commercial activity fall within the jurisdiction of the commercial court, renamed economic activity court in the twelve districts covered by the experiment launched on 1 January 2025 (Act no. 2023-1059 of 20 November 2023; Decree no. 2024-674 of 3 July 2024; Order of 5 July 2024).
The model combines a largely fixed payroll with revenue that depends on consultant utilisation rates. Rising bench time, longer payment terms from large accounts and the public sector, fixed-price projects overrunning their budget and revenue concentration on a few clients are the most frequent sources of strain.
Article L. 622-13 of the French Commercial Code, which also applies in rehabilitation proceedings, deems unwritten any termination clause based solely on the opening of proceedings. Continuation of ongoing contracts is decided by the court-appointed administrator, upon formal notice from the counterparty. Termination for a separate earlier breach remains arguable on a case-by-case basis.
Employment contracts continue by operation of law during the observation period. On a sale of business, article L. 1224-1 of the French Labour Code transfers the contracts attached to the autonomous economic entity acquired. Direct hiring of consultants by the client is governed by the applicable contractual clauses and general liability rules.
It depends on the contracts: assignment of rights, licences granted to clients, ownership of bespoke developments, source code escrow arrangements and resold vendor licences. These rights are among the assets to be identified at the assessment stage, as they often drive the value of any acquisition offer.
Most French IT services companies fall under the national collective bargaining agreement for technical design offices, consulting engineers and consultancies, known as Syntec (IDCC 1486). It governs job classifications, day-rate working arrangements and bench periods, all of which are systematically reviewed in a restructuring context.
Phone: +33 1 45 03 20 20
Email: accueil@macmahon-avocats.fr
Address: 33 avenue Mac-Mahon, 75017 Paris, France
An initial confidential discussion helps identify the appropriate procedure (mandat ad hoc, conciliation, safeguard, rehabilitation) and the applicable timeline.
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Firm registered with the Paris Bar — 33 avenue Mac-Mahon, 75017 Paris. Work across mainland France and the overseas territories.