1. State of the Restructuring Market
1.1 Market Trends and Changes
State of the Restructuring and Insolvency Market
There were 27,359 insolvencies in France as of the end of September 2021, down 25.1% from the same period in 2020, and down 47.9% from September 2019. Such reduction is relatively stable across all sectors, including those most severely affected by the health-related restrictions, such as accommodation and food services (down 44.2% year-on-year) and trade (down 28.1% year on year).
Fewer Insolvencies for More Opportunities
At the end of 2021, corporate bankruptcies (for most company sizes and in most sectors) were at their lowest level compared to the pre-COVID-19 figures from 2019, with a 50% drop in insolvency proceedings and a 10% decrease in pre-insolvency situations. This was largely due to the temporary impact of government emergency measures and support, including:
Law 1676 of 2013 (Secured Interest Law), which came into effect in 2014, has substantially affected the legal scope of creditors’ rights in the context of insolvency proceedings (reorganization and liquidation). In particular, the law has potentially created a new type of creditor; the secured creditor, which has rights that differ from those creditors included in the creditor hierarchy in the Civil Code and the Corporate Insolvency Law.
The enactment of Law 1676 of 2013 (Secured Interest Law) in the context of insolvency proceedings − reorganization and liquidation − has substantially restated the legal scope of creditors’ rights in at least three aspects: (i) the existence or not of a new creditor type; (ii) the compatibility of that possible new type of creditor and the current system of creditors hierarchy, and (iii) the specific rights of that new creditor, should there be one, in creditors arrangement proceedings.
(i) Is the secured creditor a new type of creditor?
With two decisions (No. 1895/2018 and No. 1896/2018), both filed on 25 January 2018, the Court of Cassation reached opposite conclusions in the two different situations
The case
The Constitutional Court (6 December 2017) confirmed that Art. 147, para. 5, of the Italian Bankruptcy Law does not violate the Constitution as long as it is interpreted in a broad sense
The case
With the decision No. 1195 of 18 January 2018, the Court of Cassation ruled on the powers of the extraordinary commissioner to require performance of pending contracts and on the treatment of the relevant claims of the suppliers
The case
The Court of Cassation with a decision of 25 September 2017, No. 22274 confirms that Art. 74 of the Italian Bankruptcy Law provides a special rule, which does not apply to cases to which it is not explicitly extended
The case
With the decision No. 1649 of 19 September 2017 the Court of Appeals of Catania followed the interpretation according to which a spin-off is not subject to the avoiding powers of a bankruptcy receiver
The case