What happens to contracts in progress when a collective procedure is opened?
Verified 25 September 2026 - Entreprendre Service Public / (Prime Minister)
When opening a collective procedure, theinsolvency administrator or the judicial liquidator may decide to continue contracts essential to the maintenance of the activity. Examples include a deductible contract, an insurance contract or a contract for the rental of computer equipment.
A contract shall be referred to as an ‘ongoing contract’ where the following conditions are met:
- He is concluded before the opening judgment of collective procedure.
- He is running on the day of the judgment initiating the collective proceedings.
- It must be useful to continue the activity. These may include:
- Contract of deductible
- Contract of management leasing of goodwill
- Contract for the rental of a vehicle
- Insurance contract
- Contract of leasing for computer equipment, etc.
Please note
The commercial lease may continue under certain conditions. For more information, you can consult our fact sheet on the fate of the commercial lease in case of collective proceedings.
Similarly, specific rules are applicable to employees in the event of judicial reorganization or in case of bankruptcy.
Execution of contracts in progress with the exception of the employment contract (last paragraph)
The judgment of opening a collective procedure does not end automatically contracts in the process of being executed. Indeed, in principle, ongoing contracts continue under the same conditions.
A company in difficulty must be able to pursue the execution of all contracts that are useful for maintaining its activity. For example, contracts for the rental of computer hardware or Internet subscription are contracts necessary for the activity of the company.
FYI
It is forbidden to include in a contract a clause stipulating that the opening of a collective procedure will lead to its resolution.
A supplier must comply with all the obligations laid down in the contract, even if the company in difficulty did not comply with its obligations before the opening of the collective procedure. Thus, he cannot refuse the delivery of an order on the grounds that previous deliveries have not been paid for.
The contract continued during the observation period shall continue after the expiry of that period in the event of the adoption of a recovery plan.
Contract in progress during the backup process
Absence of insolvency administrator
Contract in progress during the judicial reorganization procedure
Contract in progress during the bankruptcy procedure
The decision to continue the performance of a contract depends on the open collective procedure: backup, judicial reorganization or bankruptcy.
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Safeguard or judicial reorganization
It's the insolvency administrator appointed by the court which alone has the power to require the continuation of contracts in progress when opening a safeguard or judicial reorganization procedure.
If the court does not appoint a court administrator, it is legal representative of the company (for example, the manager of an SARL or the head of an SAS) who decides to pursue contracts that are useful for maintaining the activity. He exercises this role after agreement from judicial representative. If a disagreement appears on the continuation of the contract, the commissioner judge is referred by the court representative, the company in difficulty or the co-contractor.
The insolvency administrator or the legal representative of the company must ensure, at the time he decides to continue the contract, that he has the necessary funds, that is to say that he must ensure the immediate and predictable financial possibilities of the company.
Payment must be made cash, that is to say that the company in difficulty must be able to pay the sum in one go. However, the administrator can obtain payment terms. Where the continued contract is to be executed or paid in installments (franchise contract, equipment rental contract, etc.), the administrator must terminate it as soon as it appears to him that he will not have the necessary funds to pay the next installment.
Please note
The cash payment is not required in case of backup procedure.
Judicial liquidation
It's the judicial liquidator who has the power to require the performance of outstanding contracts or the insolvency administrator where the court has appointed one.
FYI
A judicial administrator is appointed by the court, which authorizes a provisional continuation of the activity.
The liquidator must ensure that the company has the necessary funds at its disposal at the time it requests the execution of the contracts in progress. He must therefore check in the forecast documents the financial situation of the company (for example, a schedule).
Where the supply or service provided for in the contract requires the payment of a sum of money to be borne by the company in difficulty, such payment must be made cash. This means that the amount due must be paid in one installment. However, the liquidator may obtain payment terms with the agreement of the supplier or business partner.
The liquidator must terminate the contract (e.g. an IT maintenance contract) if it appears to the liquidator that he does not have the funds to pay the next installment.
Contract in progress during the backup process
Absence of insolvency administrator
Contract in progress during the judicial reorganization procedure
Contract in progress during the bankruptcy procedure
‘Outstanding contracts’ may be terminated for the following reasons:
Decision of the administrator or liquidator not to continue the contract
THEinsolvency administrator (or the liquidator) may decide to terminate or continue the current contract.
In backup and in judicial reorganization, if there is no insolvency administrator, it is the legal representative of the company (director) who decides to stop (or continue) the contracts in progress.
In case of bankruptcywhere the contract relates to a service in kind, the liquidator cannot terminate the contract alone. He has to go to the commissioner judge.
Failure to respond to a formal notice or negative response from the administrator
The co-contractor (i.e. the supplier or business partner) of the company in difficulty may contact theinsolvency administrator (or at liquidator ) a formal notice whether or not the contract between him and the company in difficulty is being pursued.
The administrator or liquidator has one month to respond.
The contract is automatically terminated in the following 2 cases:
- Either the formal notice remained unanswered for more than a month
- Either the insolvency administrator (or liquidator or legal representative ) replied within one month that the contract concerned was not being pursued.
Failure of the company in difficulty to pay
The contract is continued terminated where, after having opted for the continuation of a contract, the administrator (or the liquidator or legal representative) notes that the company is not in a position to pay one of the contractual installments.
In this case, the termination is not automatic. It must be established by the commissioner judge.
Necessity for the safeguard, judicial reorganization or liquidation procedure
In case of backup or recovery
At the request of the insolvency administrator, termination shall be ordered by the judge-commissioner if it is necessary for the backup or recovery company in difficulty. Indeed, such termination must not bear a excessive damage the interests of the other party. This means that it must not put the other party in difficulty. For example, the termination of a commercial lease agreement to recover the rented premises or a distribution agreement to place certain distributors off the network must be justified by the administrator.
The judge-commissioner who finds the termination must fix the date of the termination.
FYI
In the absence ofinsolvency administrator, it is the head of company who shall submit the request for termination to the judge-commissioner.
In the event of bankruptcy
In case of bankruptcy, the objective is not the recovery of the company but the sale of the asset to pay the creditors.
Termination is ordered by the judge-commissioner, at the request of the liquidator, when the contract still requires performance in kind by the company in difficulty (such as maintenance or maintenance).
Before pronouncing the termination, the judge-commissioner checks whether it is necessary for the liquidation operations and whether it does not unduly harm the interests of the other party.
On the other hand, when the service has been provided by the company in difficulty and only the payment remains, the other party becomes a mere creditor of the proceedings who must then declare his claim as a liability.
Contract in progress during the bankruptcy procedure
Contract in progress during the backup process
Absence of insolvency administrator
Contract in progress during the judicial reorganization procedure
Contract in progress during the bankruptcy procedure
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Contract in progress during the backup process
Absence of insolvency administrator
Contract in progress during the judicial reorganization procedure
Contract in progress during the bankruptcy procedure
FAQ
National Council of Judicial Administrators and Proxies (CNAJMJ)