Cessation of payments

Cessation of payments (cessation des paiements) is the legal threshold in French insolvency law at which a company can no longer meet its due and payable obligations with its available assets. It triggers the mandatory obligation for directors to file for formal insolvency proceedings within 45 days — failure to do so exposes directors to personal liability. The Swiss equivalent (over-indebtedness, CO art. 725a) compares total assets to total liabilities and requires the board to notify the court. In financial due diligence, verifying the absence of undeclared past cessation of payments is a standard compliance check.

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Example: due diligence on a French SME reveals three months of cumulative supplier payment delays of CHF 320,000 in the prior year. Although no formal proceedings were opened, this cash tension signal is integrated into the risk assessment and prompts a request for a solvency attestation from the statutory auditor as a condition to closing.

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Hectelion verifies historical solvency status and compliance with insolvency declaration obligations in every financial due diligence on French targets.