• Sole proprietorship with unlimited liability of the owner with their business and private funds.

An entreprise individuelle is a sole proprietorship where the owner's liability extends to both business and personal assets.

Simple structure but high personal financial risk.

• Sole proprietorship with no minimum capital and liability limited to company capital.

EURL (Entreprise Unipersonnelle à Responsabilité Limitée) is a sole proprietorship with limited liability and no minimum capital requirement.

Limited liability protection, suitable for solo entrepreneurs.

• Sole proprietorship with no minimum capital and liability limited to company capital.

SASU (Société par Actions Simplifiées Unipersonnelle) offers limited liability and no minimum capital requirement.

Flexible and scalable business structure with limited liability.

• A company with two to 100 partners, no minimum capital and liability limited to company capital.

SARL (Société à Responsabilité Limitée) involves 2-100 partners and offers limited liability with no minimum capital.

Ideal for small to medium-sized enterprises, limited liability.

• A general partnership company with a minimum of two partners, no minimum capital and unlimited liability of partners.

SNC (Société en Nom Collectif) requires at least 2 partners with unlimited liability and no minimum capital.

High personal risk, suitable for trusted partners.

• A public limited liability company with a minimum of seven partners, a minimum capital of EUR 37,000 and liability limited to company capital.

SA (Société Anonyme) is a public company requiring at least 7 partners, EUR 37,000 minimum capital, and limited liability.

Suitable for larger enterprises and offers investor confidence.

• A simplified joint stock company with no minimum capital and liability limited to company capital.

SAS (Société par Actions Simplifiée) offers flexible management and limited liability with no minimum capital.

Great for growing businesses needing flexibility and protection.

• Available at Infogreffe, the Register of Commerce.

Corporate information is available at Infogreffe: www.infogreffe.com.

Access basic corporate information easily online.

• Financial state information available.
• Provided by Infogreffe and private agencies.

You can obtain information on the financial state of affairs for companies and industry at Infogreffe. There are also numerous private reporting agencies offering credit checks.

Utilise credit checks to assess the financial health of potential clients.

• Credit reports provide judgment information.

Normally you can obtain judgment information as part of a credit report from private reporting agencies.

Check for any legal judgments against potential business partners.

• Necessary documents for legal proceedings include contracts, invoices, and communication records.

To begin legal proceedings, you will need:

• Copies of the contract(s)
• Copy invoices and a full statement of account (including payments and credit notes that have been allocated against the outstanding invoices)
• Any contracts or terms and conditions binding both parties

In the case of a regular lawsuit procedure, copies of the complete contractual documentation should be available starting with the contract, orders, confirmations, delivery notes, and invoices.

Every step of the trading relationship between the debtor and the creditor should be provable by documentation.

Maintain detailed records and documentation for legal proceedings.

• Allows seller to retain ownership over goods supplied until certain conditions are met.

When included in trade contracts, retention of title allows the seller to retain ownership over the goods supplied until certain contractually defined conditions are met, providing the seller with security against the buyer's default or insolvency.

Understand and enforce retention of title clauses.

• Requires acknowledgment from the debtor of the clauses.

To enforce retention of title clauses, there must be acknowledgment from the debtor of the clauses, which may come in the form of a signed contract or signature on the general trading conditions prior to the first delivery of goods.

Ensure debtor acknowledges ROT clauses for enforceability.

• Warning notice to the debtor is mandatory.

A warning notice to the debtor is mandatory before filing any enforcement claims. The warning notice should include:

• Creditor name and overview of the claim
• The total amount of the claim, including penalties (interest)
• Payment method required
• A warning that the claim will be enforced through the enforcement authority in case the claim is not settled by the required date
• Information on how to dispute the claim

If this measure has been taken and the payment still has not been made after the two-week notice period, the creditor may file for enforcement.

Send a mandatory warning notice before taking legal action.

• Applicable if specified in the contract or by statutory default.

If the contracting parties have not agreed this in the contract, then statutory default interest and collection costs are applicable. The creditor may also apply a penalty interest of 10%, which is not culturally expected by French debtors.

Ensure terms specify interest and collection costs.

• Proceedings begin with a creditor instructing a bailiff to execute an assigned writ of summons based on creditor claims.
• Proceedings can be brought either by the service of a writ of summons or by a joint application filed by both parties.

For commercial courts and main first instance civil courts, proceedings begin by serving a writ of summons. The creditor's counsel will file an official copy of the served writ with the court. This process is crucial for the initiation of legal proceedings.

In commercial courts, the writ must be served at least 15 days before the hearing and filed at the registry of the relevant commercial court no later than 8 days before the hearing. For urgent cases in the main first instance civil courts, a creditor can expedite a ruling through filing a request demonstrating urgency.

Ensure that the initiation of proceedings is timely and follows the specific requirements of the type of court handling the case.

• An accelerated procedure can be initiated through a writ of summons at short notice in commercial courts.
• The procedure is exclusively oral in commercial courts but involves written pleadings in civil courts.

Once the writ of summons is filed, a judge is assigned to ensure fair proceedings, including tracking and managing evidence and documentation. The judge schedules a date for the filing of briefs and, eventually, a closing date after which no additional filings are authorised.

After the closing of the proceedings, the supervising judge sets the date of the trial hearing, marking the final phase of pre-trial procedures.

Be prepared for the specific procedural nuances of each court type, especially the need for swift action in commercial courts and the more detailed written pleadings required in civil courts.

• A signed power of attorney is often required to represent a party in court.

A signed power of attorney authorizes a representative, typically a lawyer, to act on behalf of a party in legal proceedings. This document is essential for the representative to take legal actions and make decisions in court.

Ensure that a signed power of attorney is in place before proceeding to ensure that your legal representation is authorized to act on your behalf.

• Statement of claim must be filed with appropriate supporting documents.

Proceedings begin with a creditor instructing a bailiff to execute an assigned writ of summons based on creditor claims requesting to see the debtor in court with the appropriate supporting documents. The creditor's counsel will then file an official copy of the served writ with the court.

In the commercial courts (tribunaux de commerce) and main first instance civil courts (tribunaux de grande instance), proceedings can be brought either by the service of a writ of summons or by a joint application filed by both parties.

Ensure the statement of claim is filed with appropriate documents.

• Simple cases may take up to ten months; appeals up to two years.

Simple, undisputed commercial cases may take up to ten months to be addressed. An appeal may take up to two years.

For those disputes within any commercial court cases, the writ of summons must be served at least 15 days before the hearing and must also be filed at the registry of the relevant commercial court no later than 8 days before the hearing.

In the main first instance civil courts, a creditor can expedite a ruling through filing a request demonstrating that the case is urgent. In the commercial courts, an accelerated procedure can be initiated through a writ of summons at short notice.

Plan for potential delays if the debtor appeals.

• Costs vary; some remain with the prosecuting party.

Charged-back costs are often a result of the judicial procedures, notifications and extra-judicial costs are applied to the debtor. Some costs however, remain with the prosecuting party such as lawyer's fees. Although this may also be put to the judge as a request that the debtor settle the outstanding costs of the creditor should the creditor prove successful.

"No-win no-fee" agreements are prohibited in France. However, it is possible to agree with a lawyer a contingency or success fee combined with another method of remuneration (such as hourly rates or task-based fees).

Budget for the costs associated with court proceedings.

• Judgment must be notified to the unsuccessful party and its lawyers.

For any enforcement claims, judgment must be notified both to the unsuccessful party and its lawyers (for rulings issued by the main first instance civil courts (tribunaux de grande instance) and the courts of appeal (cours d'appel)). Once complete and notified to the debtor, the debtor reserves the right to appeal for a one-month period. Without an appeal, the judgement is declared executive which permits bailiff execution. Here, the debtor is forced to pay or declare bankruptcy.

Ensure proper notification of judgments for enforcement.

• Allows debtor to continue operations and pay creditors through dividends.

Receivership may be converted into bankruptcy with 90% of cases doing so. Creditors are likely to receive a payment of dividends as the activities of the debtor are permitted to continue.

Receivership allows for continued operations and creditor payments through dividends.

• Assets are liquidated, often resulting in little-to-no payment to creditors.

Bankruptcy results in the liquidation of the debtor's assets, often providing little-to-no payment to creditors through dividends.

Understand the process and implications of bankruptcy.

• Claims must be lodged within two months for French creditors, four months for foreign creditors.

Claims may be lodged two months from the date of the publication in the official journal (BODACC) for French creditors. However, the timeframe is four months for foreign creditors.

Ensure timely filing of claims within the stipulated timeframes.

• Credit institution and supplier committees provide input on insolvency recovery plans.

Committees containing credit institutions (e.g. banks) and suppliers (often non-preferential creditors) are required to give their input on an insolvency recovery plan, offering their declarations to the judge handling the case. They alone are empowered to perform acts in the collective interests of the creditors.

Understand the role of committees in insolvency recovery plans.