The cessation of payments date binding on an executive facing sanction proceedings is the one set by the opening judgment (jugement d'ouverture), or by a postponement judgment. The commercial chamber departs from its earlier case law, which left the judge ruling on sanctions free to adopt another date. The failure to declare the state of cessation of payments within the time limits is therefore assessed by reference to that date alone.
Important: the decision discussed here applies legislation specific to French Polynesia. Some of the rules discussed in this article do not apply to mainland France.
Key points
- The judge ruling on an executive's contribution to the insufficiency of assets (insuffisance d'actif) or on a personal sanction must adopt the cessation of payments date set by the opening judgment.
- Only a postponement judgment can substitute another date for that of the opening judgment.
- In French Polynesia, personal bankruptcy (faillite personnelle) may be pronounced against an executive who is alleged to have failed to declare the state of cessation of payments within the prescribed time limits.
- An executive can no longer be criticised for a late declaration calculated from a date that the opening judgment did not adopt.
Which cessation of payments date applies when sanctioning an executive?
The judge hearing sanction proceedings must adopt the cessation of payments date set by the opening judgment, or by a postponement judgment (Com., 15 April 2026, No. 24-13.960). The commercial chamber quashes the court of appeal decision which had adopted another date in order to hold an executive liable. The decision is given on the basis of Articles L. 624-3 and L. 625-5 of the Commercial Code of French Polynesia.
A tribunal mixte de commerce placed a company into compulsory liquidation (liquidation judiciaire) on 28 August 2017. The same judgment set the cessation of payments date at 26 July 2017. On 7 May 2019, the liquidator applied for an order requiring the executive to contribute to the insufficiency of assets and for personal bankruptcy to be pronounced.
The court of appeal (CA Papeete, 11 January 2024, No. 22/00264) held that the company had been in a state of cessation of payments since 3 August 2015. It inferred from this mismanagement (faute de gestion) and a failure to declare within the statutory time limit. It ordered the executive to bear all of the admitted liabilities and imposed personal bankruptcy for fifteen years.
The commercial chamber censures this reasoning: the cessation of payments date had been set at 26 July 2017 by the opening judgment, and the court of appeal had to assess the consequences of the failure to declare by reference to that date alone. The quashing extends to all the provisions of the decision, and the case returns to the court of appeal of Papeete, differently constituted. The Court did not rule on the other complaints.
It therefore appears necessary now to interpret the aforementioned provisions as meaning that the failure to declare the cessation of payments within the statutory time limit, which may constitute mismanagement or justify the imposition of a personal sanction, is to be assessed by reference solely to the cessation of payments date set in the opening judgment or in a postponement judgment.
What the executive can raise against the liquidator
An executive can no longer be criticised for a late declaration measured from a date that the opening judgment did not adopt. The point of reference becomes a single one: the date appearing in the opening judgment, or the date substituted by a postponement judgment. The time limit is assessed by reference to that date alone, and not to a date reconstructed by the judge ruling on sanctions.
To criticise the executive for an earlier delay, the cessation of payments date must have been postponed by a judgment. Failing that, the judge cannot set an earlier date of their own motion when examining whether the executive was at fault. A discussion of the company's financial health before the date adopted is therefore no longer sufficient to establish the failure to declare.
The solution applies to both grounds pursued against the executive: contribution to the insufficiency of assets and the personal sanction. In both cases, the failure to declare is measured only from the date set by the opening judgment or by a postponement judgment.
What this reversal of case law changes
The commercial chamber abandons the rule under which the judge ruling on sanctions was not bound by the cessation of payments date set in the opening judgment. The decision recalls the solution applied until then, citing a 1996 decision (Com., 11 June 1996, No. 94-14.844). It expressly rules out maintaining it: "This solution is, however, a source of legal uncertainty and lacks coherence".
The incoherence stems from the duality of dates that the former solution permitted. One date served to determine the suspect period (période suspecte) and to rule on the nullity of transactions entered into during it. Another could serve to assess the executive's conduct, for the contribution to the insufficiency of assets or for a personal sanction. The decision unifies the reference around the date set at the opening, or postponed by judgment.
The scope of the decision must be measured precisely. The decision interprets Articles L. 624-3 and L. 625-5 of the Commercial Code of French Polynesia, whose substance it reproduces. The quashing does not settle the executive's fate: the court to which the case is remitted will resume the assessment of the alleged facts. The Court also held admissible the criticism, characterised as a pure point of law ground, since it did not rest on factual considerations extraneous to the findings of the lower court judges.
What steps to take when facing sanction proceedings?
The cessation of payments date set at the opening becomes the central element of the debate on late declaration. The first step is to re-read the opening judgment in order to identify the date it adopts. The second is to check whether a postponement judgment has altered that date. The third is to compare that date with the date of the declaration actually made or of the application filed.
A liquidator relying on late declaration must ensure that the date adopted by the judge opening the proceedings supports that criticism. Failing that, the action shifts to other instances of mismanagement, which require proof of a contribution to the insufficiency of assets. That proof is built on dated and documented facts, independent of the mere chronology of the declaration.
The checks to carry out on the date adopted
- Identify in the opening judgment the cessation of payments date adopted, since it governs the assessment of any late declaration.
- Check whether a postponement judgment exists, as it is the only decision able to substitute another date for that of the opening.
- Compare that date with the declaration made, the time limit being assessed by reference to that date alone.
- Distinguish, among the alleged facts, what relates to late declaration and what relates to other instances of mismanagement having contributed to the insufficiency of assets.
Frequently Asked Questions
Can a liquidator rely on an earlier cessation of payments date than the one in the opening judgment?
No, unless a postponement judgment has been given. Since the decision of 15 April 2026, the failure to declare alleged against an executive is assessed by reference solely to the date set by the opening judgment or by a postponement judgment. A judge hearing an application for contribution to the insufficiency of assets or for a personal sanction may no longer freely adopt an earlier date. Absent postponement, the opening date prevails.
What are the consequences of failing to declare the state of cessation of payments?
In French Polynesia, a personal bankruptcy order may be made against a person accused of failing to file a declaration of insolvency within the prescribed time limits (Articles L. 624-3 and L. 625-5 of the French Polynesian Commercial Code). In mainland France, the same omission is subject to a disqualification from managing a business (Article L. 653-8, paragraph 3, of the Commercial Code).
Does the quashing put an end to the proceedings brought against the executive?
No. The quashing extends to all the provisions of the appeal decision, but the case is remitted to the court of appeal of Papeete, differently constituted. The executive may still be held liable following that fresh examination. Any late declaration will, however, have to be assessed by reference to the date of 26 July 2017 adopted by the opening judgment.
What documents help challenge a company's cessation of payments date?
The discussion generally rests on the company's financial records: bank statements, trial balances, payment schedules, moratoria granted by creditors and reminder correspondence. These items help pinpoint the moment when the company stopped meeting its commitments. An executive is well advised to keep such documents from the first cash-flow strains, since they later serve to challenge the date adopted and the existence of wrongful conduct.
Does an executive automatically pay the debts of a liquidated company?
No. Compulsory liquidation does not, in itself, transfer the company's debts to the executive's personal assets. An order generally requires mismanagement to be identified and proof that it contributed to the insufficiency of assets. The judge also assesses the share of the liabilities placed on the executive. Personal sanctions are subject to separate conditions, which must be established independently.