Buying a business in difficulty: court-approved sales, pre-packs and timing

By Noria Bacha, founding partner of Big4PM · Updated 10 November 2026 · 4 min read

In brief. Nearly 72,000 French businesses failed in the twelve months to September 2026, a level never seen before. For an owner or a family looking to grow, buying a business in difficulty means acquiring activity, customers and teams without taking on its debts. But the timetable is very short, the court chooses, and the buyer must fund the restart. For the owner of a business in difficulty, preparing a sale or an investor early is often what saves the activity.

Why it matters now

In the third quarter of 2026, 14,652 insolvency proceedings were opened in France: 9,744 direct liquidations, 4,576 judicial reorganisations and 332 safeguard proceedings, affecting 50,510 jobs. Over twelve months, nearly 72,000 businesses failed. Two proceedings in three are direct liquidations: many businesses reach court too late to be saved as they are, but their activity can often be taken over. In England and Wales, 1,882 companies entered insolvency in September 2026.

French procedures, from the most discreet to the most constraining

How a court sale works in France

The court sets a deadline for offers. Under article L.642-2 of the French Commercial Code, each offer must state at least: activity and financing forecasts, the price and payment terms, the completion date, the level and outlook for jobs, guarantees, asset sales planned within two years and the duration of each commitment.

• The buyer chooses the assets it takes: business, equipment, stock, brands, part of the workforce and the contracts needed for the activity, which the court can transfer.
• It takes over the activity without the company's debts, with exceptions (goods sold under retention of title, some assets financed by secured loans).
• The court chooses the offer that best secures lasting employment, payment of creditors and continuity of the activity. Price is only one criterion.
• The failing company's managers, their relatives and those who control it cannot, in principle, bid (article L.642-3), unless the court grants an exception.
• Timing is short: a few weeks between the call for offers and the hearing. Offers can be improved until shortly before the hearing.

Prices are often low relative to the revenue taken over: a KPMG study of 2017 and 2018 put the average price at around 6% of revenue. The real cost of a takeover lies elsewhere: funding the restart.

Prepack: preparing the sale before court

In a French prepack cession, the search for a buyer takes place confidentially during a mandat ad hoc or a conciliation. The appointed officer contacts buyers, opens a data room after a confidentiality undertaking and receives offers. The company then asks for proceedings to open, and the court can approve the sale without a new call for offers if publicity was sufficient. Other bidders may still come forward up to eight days before the hearing.

The aim is to preserve value: customers, suppliers and staff do not learn of the difficulties through public proceedings, and the business does not deteriorate for months. The court remains free not to approve the prepared offer. In the UK, pre-pack administration follows the same logic: the sale is agreed beforehand and completed as soon as the administrator is appointed; a sale to a party connected with the former management requires an independent evaluator's opinion.

Who does what (France)

What a buyer must check in a few days

1. Restart cash: suppliers will often require payment up front, so working capital must be funded from day one.
2. Key customers: will they stay? Can their contracts be transferred?
3. People: who is essential, and the cost of the staff taken over.
4. Assets: actual ownership, retention of title, condition of equipment, stock.
5. Permits, licences and certifications needed to operate.
6. The cause of the difficulties: if it lies in the business model rather than the debt, a takeover will not fix it.

If you run a business in difficulty

Acting early changes everything. While the company has not been insolvent for more than 45 days, mandat ad hoc and conciliation allow negotiation with creditors, bringing in an investor or preparing a sale, confidentially. Saving the business may mean joining a group, opening the capital or selling a division. A rapid cash diagnostic tells you how many weeks are left to decide.

United Arab Emirates

Federal Decree-Law No. 51 of 2023, in force since 1 May 2024, provides for preventive settlement, restructuring and bankruptcy, overseen by a specialised division of the courts. It does not provide for a prepack in the French sense.

This guide is general information. It is not investment, legal or tax advice. The rules quoted must be checked by your advisers before any decision.