Declaration of insolvency

A declaration of insolvency (déclaration de cessation des paiements) is the formal act by which directors of a French company notify the commercial court of the company's inability to meet its due obligations with available assets, triggering the opening of formal insolvency proceedings (judicial rescue or judicial liquidation). It must be filed within 45 days of the cessation of payments date — delay exposes directors to personal civil and criminal sanctions. In financial due diligence, verifying the absence of an undisclosed or regularised past declaration is a standard legal compliance check.

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Example: due diligence on a French SME reveals a judicial rescue procedure closed 4 years earlier. The analyst verifies the conditions of closure (completion plan executed, creditors discharged) and searches for any residual liabilities — historical insolvency proceedings are integrated into the risk assessment and inform the scope of warranties and indemnities requested in the SPA.

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Hectelion systematically reviews historical insolvency proceedings in financial due diligence on French acquisition targets.