Simplified judicial liquidation: conditions and steps

Updated March 2026 - Simplified judicial liquidation is a simplified collective procedure, reserved for very small companies whose recovery is clearly impossible. It aims to accelerate the realization of assets and the clearance of liabilities, while reducing the costs of the procedure.

Simplified judicial liquidation is a variant of classic judicial liquidation, provided for by articles L641-2 and D641-10 of the Commercial Code. It applies when the company does not present any particular complexity and its assets can be realized quickly without requiring prolonged management.

**Unlike ordinary liquidation, which can be spread over several years, the simplified procedure is designed to be completed in a few months. The supervising judge has extensive powers to speed up operations, and certain formalities are simplified.

The simplified regime is reserved for companies which combine several conditions of size and simplicity. For a company, the following three criteria must be met simultaneously:

• No real estate assets: the company must not own any real estate. The presence of real estate automatically leads to the switch to the common law procedure, because the sale of a building requires deadlines and formalities incompatible with the simplified regime.
• At most 5 employees during the six months preceding the opening judgment. This threshold is assessed in terms of average numbers over the reference period.
• A turnover excluding taxes of less than or equal to 750,000 euros for the last closed financial year.

For the individual entrepreneur, the determining condition is the absence of real estate in the professional assets. The salary and turnover thresholds do not apply to it in the same way.

These thresholds are assessed on the date of the opening judgment. If the company exceeds one of these criteria, even marginally, the court will order judicial liquidation under common law.

The distinction is based on two main aspects: the duration and the cost of the procedure. In a classic liquidation, the liquidator may have several years to realize the assets, particularly when there are complex assets to be sold or ongoing litigation. Simplified judicial liquidation imposes a more sustained pace. The receiver sets short deadlines and can authorize the liquidator to proceed with the sale of assets without certain onerous formalities provided for in common law.

On the financial level, the liquidator's fees are generally lower under the simplified regime, which further preserves the funds available to creditors.

The manager is required to declare the cessation of payments to the competent court within 45 days from the date on which the company can no longer meet its payable liabilities with its available assets.

This deadline of 45 days is a major point of vigilance. Going aside exposes the manager to several risks:

• Management fault: the court may uphold a fault which contributed to the insufficient assets, with the consequence of a personal conviction on social debts.
• Prohibition from managing: an additional sanction may be imposed, prohibiting the director from directing, managing or controlling a company for a specific period.
• Liability for insufficient assets: if late management has aggravated the liabilities, the manager may be required to make up the deficit from his personal funds.

An exception exists: if a conciliation procedure has been opened within this 45-day period, the declaration obligation is suspended. The conciliator then has a negotiated framework to try to resolve the difficulties.

The competent court is the commercial court for commercial enterprises and commercial companies, or the judicial court for crafts, liberal professions and individual entrepreneurs falling into these categories.

Territorial jurisdiction is determined by the location of the company's head office. For the individual entrepreneur, it is the place of the main activity which takes precedence.

It is essential to refer the matter to the correct court from the outset. An erroneous referral results in a decline in jurisdiction and a detrimental delay in processing the file.

Simplified judicial liquidation follows a precise sequence:

1. Opening judgment The court rules at the request of the debtor, a creditor or the public prosecutor. He notes the status of cessation of payments, appoints a judge-commissioner and appoints a judicial representative as liquidator. The judgment is published in BODACC.

2. Inventory and realization of assets The liquidator draws up an inventory of the company's assets and proceeds to their realization. Under the simplified regime, he can sell personal property over the counter or at public auction without having to obtain prior authorization from the bankruptcy judge for each act, which considerably speeds up the process.

3. Verification of receivables Creditors declare their claims to the liquidator. He checks them and establishes the distribution project. Debts not declared within the legal deadlines are foreclosed, except for exceptions provided for by law.

4. Distribution of proceeds from sale The proceeds from the sale of assets are distributed among the creditors according to the legal order of priority: salaried creditors, Public Treasury, creditors with security, then unsecured creditors.

5. Closure of the procedure Once the operations are completed, the liquidator reports to the insolvency judge. The court orders the liquidation to be closed. The legal entity is then removed from the trade and companies register.

Simplified judicial liquidation has direct consequences on the manager:

• End of functions: the manager is relieved of the management of the company upon the opening judgment. The liquidator alone exercises management and disposal powers.
• Obligation of cooperation: the manager must provide the liquidator with all accounting documents, contracts, registers and information necessary for the proper conduct of the procedure.
• Possibility of personal conviction: in the event of a serious management error, confusion of assets or fictitious accounting, the court may order compensation of liabilities against the manager.
• Possible remaining in the premises: the court may authorize the manager to remain in the professional premises for the purposes of the liquidation, but this authorization is strictly regulated and temporary.

It is common for leaders to confuse temporary difficulties with an irreversible situation. In some cases, shareholders' equity less than half of the share capital may constitute a red flag before reaching the liquidation stage.

Several alternatives exist before considering liquidation:

• Conciliation: amicable and confidential procedure, open to companies which are not yet in a state of cessation of payments or which have been for less than 45 days. It makes it possible to negotiate payment deadlines, debt forgiveness or waivers of debts with the main creditors.
• Judicial recovery: if the company is in cessation of payments but recovery is possible, the court can open judicial recovery rather than liquidation. A continuation or transfer plan may be adopted.
• The amicable transfer of the company or part of its activity can also constitute a way out, provided that it takes place before the opening judgment.

Each situation deserves an individualized analysis. An accountant or a specialist lawyer can help you identify the most suitable route, particularly on any tax or social issue linked to the cessation of activity.

The quality of the file presented to the court directly influences the speed of processing. Here are the essential pieces to gather:

• The last three financial years (balance sheet, forecast income statement if available)
• The declaration of cessation of payments with the precise date and the factual elements justifying it
• The state of receivables and debts, distinguished by nature and due date
• The list of employees with their employment contracts and pay slips
• Inventory of movable and real estate assets
• Current contracts (leases, financial leases, insurance, service contracts)
• The state of bank accounts and means of payment

Rigorous preparation helps avoid delays and additional requests from the court. It also testifies to the good faith of the manager, an element that the judge assesses when examining the case.

Hayot Expertise Advice: the key issue is often upstream: documenting the cash flow situation, identifying the correct date for stopping payments and avoiding waiting too long. The later the declaration, the more the risks for the manager increase.