The definition of “payment failure situation” is found in the section of the
Commercial Code dealing with judicial reorganisation at article L.631-1.12 The
debtor is in a payment failure situation if he finds himself “unable to meet his
current liabilities out of his disposable assets.” Total liabilities are, of course,
the sum total of a person’s debts, whether an individual or a company. Debts,
or a part of them, are current where they have reached their due date for payment.
It is therefore only when debts are due and owing that there can be a payment
failure situation. As well, the debt must be considered both certain