Mac Mahon Avocats is a Paris business law firm at 33 avenue Mac-Mahon, Paris 17. Its lawyers advise supermarkets & grocery retail 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.
Hypermarkets, supermarkets, convenience stores, discounters, franchisees and members of cooperative retail groups, purchasing centrals, click-and-collect operations and specialist food retailers.
Food retail runs on thin net margins, high volumes and cash flow structurally driven by the gap between cash takings and supplier payments. That negative working capital reverses abruptly under stress: suppliers shorten terms, demand advance payment or trigger credit insurance, accelerating the decline. Added to this are retail park and gallery rents, refurbishment capex and, for franchisees and cooperative members, dependence on a banner and its purchasing central.
| 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).
Where a retention of title clause was agreed in writing no later than delivery, the supplier may claim goods still identifiable in the debtor's possession, by application filed within three months of publication of the opening judgment (Arts. L. 624-9 and L. 624-16 Commercial Code).
Termination clauses based solely on the opening of proceedings are ineffective: ongoing contracts continue and only the administrator may require performance (Art. L. 622-13 Commercial Code). Termination remains possible for a later breach, notably non-payment of post-opening supplies.
Claims properly arising after the opening judgment for the purposes of the proceedings or of continued trading benefit from priority treatment (Art. L. 622-17 Commercial Code). That, together with a documented cash forecast, underpins discussions with suppliers and credit insurers.
The court designates the contracts necessary to the continuation of the business that are transferred to the purchaser (Art. L. 642-7 Commercial Code). Keeping the banner nevertheless requires the network's consent, since most agreements include an approval clause and sometimes a right of first refusal.
Not by agreement beyond the statutory caps applying to food and perishable products (Art. L. 441-11 Commercial Code). Rescheduling pre-existing liabilities remains possible through conciliation or a plan adopted by the court.
Build a thirteen-week cash forecast, quantify due liabilities against available assets to test cessation of payments (Art. L. 631-1), and apply early for an ad hoc mandate or conciliation — confidential procedures available so long as cessation of payments does not exceed 45 days.
Phone: +33 1 45 03 20 20
Email: accueil@macmahon-avocats.fr
Address: 33 avenue Mac-Mahon, 75017 Paris, France