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:

On 20 July 2018, the Higher Regional Court of Düsseldorf ruled that standard D&O insurances do not cover restitution claims for payments which managing directors of a limited liability company make after the company becomes insolvent. Whereas it is possible to obtain coverage for restitution claims, many older policies do not provide for this. Directors are well advised to check the scope of their insurance coverage.

Background

1. Background of the claw-back reform

German insolvency law allows claw-back for actions made by the debtor during a period of up to 10 years prior to insolvency proceedings. Until the new rules entered into effect in April 2017, this long look-back period also applied to so-called coverage transactions, meaning payments to which the creditor was entitled under contract or law. The insolvency administrator only needed to prove that when making the payment the debtor willfully disadvantaged its other creditors, and the recipient of the payment was aware of this.

Proposal for a directive of the European Parliament and of the council on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures and amending Directive 2012/30/EU