Criminal law for companies in difficulty

Receivership, liquidation and the risk of fraudulent bankruptcy: securing the decisions taken when a company is going through a crisis.

A company that can no longer pay its debts is not a criminal company.

It is a company in difficulty.

French law provides precise means of protecting it, negotiating with its creditors and, where still possible, preserving its business and its jobs.

Yet the period preceding receivership or judicial liquidation is also the one in which the director’s decisions become particularly sensitive.

An ordinary transaction may take on a different meaning. A payment may be challenged. A shareholder loan, an asset transfer, an intra-group sale or an accounting entry may be re-examined several years later, out of context, by an administrator, a liquidator, a judge or an investigator.

Criminal risk therefore does not necessarily arise from the failure itself.

It often arises from the way in which the company and its directors tried to respond to it.

Many business failures, but tools still used too late

More than 70,000 business failures were recorded in France over the twelve months to the end of May 2026.

Behind this figure lie very different realities: the loss of a contract, a breakdown in financing, rising costs, the failure of a major customer, a dispute between shareholders, a tax audit, an industrial accident or a sudden downturn in a sector.

There are also several procedures that make it possible to act before the situation becomes irreversible.

The mandat ad hoc and conciliation procedures make it possible to negotiate confidentially with the main creditors. Safeguard proceedings make it possible to reorganise a company that is not yet insolvent. Receivership aims to continue the business where it remains viable despite insolvency.

Economic difficulty therefore calls for more than an accounting response.

It requires a legal strategy put in place early enough.

Insolvency: a decisive date

A company is insolvent (in cessation des paiements) when it can no longer meet its due liabilities with its available assets.

This definition seems simple. Applying it is much less so.

Immediately available cash, maintained bank facilities, moratoriums obtained, available receivables and debts actually due must all be analysed precisely.

The date adopted is decisive. It determines the period within which the director must apply for receivership or judicial liquidation, unless conciliation proceedings have been initiated under the conditions laid down by law. It also defines the “suspect period”, during which certain transactions may be called into question.

Exceeding the forty-five-day deadline is not, in itself, a criminal offence.

But knowingly failing to apply for proceedings to be opened may lead to a disqualification from managing a company. It may also become an important element of the analysis when other facts are alleged against the director.

Identifying and documenting the date of insolvency is therefore as much an act of defence as an act of management.

When management decisions meet criminal law

Cash-flow difficulties often force the director to make trade-offs.

They choose which suppliers they can pay. They look for new financing. They sell certain assets. They move cash between companies in the same group. They try to preserve a site, a contract or an essential activity.

These choices are not fraudulent by nature.

They may, however, expose the director when their effect is to conceal the company’s real situation, deplete its assets or favour certain interests to the detriment of the company and its creditors.

Criminal risk may arise in particular where facts could be classified as:

• fraudulent bankruptcy;
• misappropriation or concealment of assets;
• fraudulent increase of liabilities;
• use of ruinous means to delay the opening of proceedings;
• keeping fictitious, manifestly incomplete or irregular accounts;
• misuse of corporate assets or breach of trust;
• fraud against a lender or supplier;
• tax or social security fraud;
• money laundering;
• fraudulent organisation of insolvency;
• obstructing the work of the statutory auditor or the insolvency officials.

The classification always depends on the circumstances, the chronology and the intention pursued.

In criminal law, the difficulty is not only knowing what was done. It is understanding why, when and in whose interest the decision was taken.

Transactions that call for particular vigilance

Certain decisions should be examined before they are implemented or, if they have already been taken, documented immediately.

This applies in particular to:

• repayments of shareholder current accounts;
• payments made to the director, their relatives or a related company;
• asset sales at a price that may be disputed;
• transfers of contracts, customers, staff or cash between companies;
• upstreaming of dividends or exceptional remuneration;
• guarantees given for the benefit of a third party;
• continuing a structurally loss-making activity;
• recourse to particularly expensive financing;
• late changes to the accounts;
• the disappearance or destruction of documents;
• statements made to banks, investors, insurers or insolvency officials.

A director with a credit balance on their current account may, for example, consider themselves a legitimate creditor of their company. Yet withdrawals made after the opening of proceedings, in disregard of their effects, have already been classified as fraudulent bankruptcy by misappropriation of assets.

The economic context therefore does not erase the applicable rules. But it must be reconstructed precisely to prevent a survival decision from being artificially presented as a fraudulent one.

What the investigation will seek to reconstruct

A criminal investigation opened after insolvency proceedings rarely concerns an isolated act.

It reconstructs a chronology.

Investigators compare bank statements, accounts, emails, minutes of corporate bodies, intra-group agreements, the statutory auditor’s alerts and exchanges with the company’s advisers.

In particular, they seek to determine:

• when the director understood the seriousness of the situation;
• what information was available at the time of each decision;
• which creditors were paid and on what criteria;
• whether any assets left the company’s estate;
• whether the accounts gave a true picture of the situation;
• whether the director was pursuing the company’s interest or a personal interest;
• whether the difficulties were concealed from shareholders, lenders or insolvency officials.

The defence must work on the same material, but with an additional requirement: to restore the context in which the decisions were actually taken.

Acting before the difficulty becomes a criminal crisis

The best protection rarely consists in multiplying explanations after the event.

It consists in organising decision-making early enough.

As soon as serious tensions appear, the company must be able to establish a reliable cash position, identify the possible date of insolvency, preserve its documents and supervise sensitive transactions.

Coordinated action by the insolvency lawyer, the chartered accountant, the statutory auditor and the criminal lawyer makes it possible to deal simultaneously with business continuity and the director’s personal exposure.

White-collar crime is first and foremost a matter for criminal lawyers.

Their role is not to replace restructuring professionals. It is to identify, among the economic solutions under consideration, those that could later be challenged on criminal grounds.

How Vouland Avocats can help

Vouland Avocats assists companies, their directors and their finance directors when an economic difficulty presents, or may give rise to, a criminal risk.

We act in particular to:

• analyse the criminal risk before proceedings are opened;
• secure sensitive transactions and their documentation;
• reconstruct the financial and decision-making chronology;
• coordinate strategy with restructuring advisers and accounting professionals;
• prepare directors for their dealings with insolvency officials;
• assist the company during an interview, police custody, a search or an investigation;
• defend the legal entity and its directors before the criminal courts.

Because insolvency proceedings do not turn an economic failure into a criminal fault.

But because they require every decision taken while the company was still looking for a way out to be explained, and sometimes defended.

Frequently asked questions

Does the opening of receivership or liquidation lead to a criminal investigation?

No. Insolvency proceedings are not criminal proceedings, and their opening does not mean that an offence has been committed. However, facts that could be classified as criminal may be reported to the public prosecutor by the insolvency officials.

Does a director risk conviction if they declare insolvency late?

Delay does not automatically constitute a criminal offence. A deliberate omission may, however, justify a disqualification from managing a company. Transactions carried out during this period may also be examined in relation to other offences.

Can a company in difficulty continue to pay certain suppliers?

Before the opening judgment, payments must be assessed in the light of the company’s interest and the rules on the suspect period. After the judgment, the director’s powers and the conditions for payment are strictly regulated. It is prudent to have any unusual transaction validated.

Can the director repay their own shareholder current account?

Having a claim on a current account does not allow the director to repay themselves freely, particularly after proceedings have been opened. Such a payment may be challenged and, in certain circumstances, be classified as a criminal offence.

What should be done if an investigation is opened after the company has been liquidated?

All documents must be preserved immediately, the chronology of decisions reconstructed and any late alteration of documents avoided. The assistance of a criminal lawyer from the first summons makes it possible to prepare a coherent defence before statements set an incomplete reading of the case in stone.

When should a criminal lawyer be consulted?

As soon as a decision necessary for the survival of the company could affect its assets, its accounts or equal treatment between its creditors. Assistance is particularly useful before an asset sale, an intra-group transfer, a repayment to the director or a declaration of insolvency.