The special liquidation status provided for by Article 239 bis B of the French Tax Code is designed to promote the liquidation of inactive or economically doomed French commercial firms.

In order to avoid abuse, the legislator made it mandatory for the firm to request approval of the application for special liquidation status from the relevant French authorities.

In a decision dated June 26, 1996, the Supreme Administrative Court ruled that approval is granted by relevant authorities on a discretionary basis.

By virtue of this decision, the Supreme Court also confirmed the Tax Administration's commentaries according to which the special status is intended exclusively for firms whose liquidation results from events which, from the shareholders' standpoint, are characterized by economic Force Majeure. Consequently, firms who have sold their assets under normal conditions and under no economic constraint cannot benefit from the special status.

The content of this article is intended to provide a French guide to the subject matter. Specialist advice should be sought for your specific circumstances.

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