Since the adoption of the 2011 Finance Act, the scope of application for thin capitalization rules, provided for in article 212 of the French Tax Code, was extended to all loans, including bank loans, backed by security interest or a guarantee, granted by a company belonging to the borrower's group or by a company with a guaranteed undertaking secured by a company related to the borrower.
On January 19, 2012, the Versailles' Court of Appeals confirmed that CMBS borrower, Heart of la Défense SAS (Hold), and its Luxembourg parent company, Dame Luxembourg Sarl (Dame), were entitled to Court protection in France under Safeguard Proceedings (sauvegarde). Safeguard is a French pre-bankruptcy process that resembles the U.S.
SUMMARY
French bankruptcy law has been recently modified by Law no. 2012-346 of March 12, 2012 relating to protective measures (mesures conservatoires) applicable to safeguard, recovery and liquidation proceedings, and by Law no. 2012-387 of March 22, 2012 relating to the simplification and easing of administrative procedures.
In a decision that represents a triumph for bondholders, and should provide comfort to market participants, the Supreme Court of France (the “Supreme Court”) has recognized the trust structure and the parallel debt mechanism as part of security packages put in place for secured international financings granted to a French company.
A codification of existing legislation, the French Code of Civil Execution Procedures entered into force on 1st June past, both as regards its legislative provisions (Order 2011-21895 of 19 December 2011), and regulatory provisions (Decree 2012-783 of 30 May 2012).
The notorious law 91-650 of 9 July 1991 reforming civil execution procedures, together with its implementing decree 92-755 of 31 July 1992, were abrogated.
Decree n°2012-1190 dated 25 October 2012 (JORF n°0251 dated 27 October 2012) issued for the implementation of Law n°2012-346 dated 12 March 2012 sets out the rules for implementing conservatory measures within safeguard, reorganisation or liquidation proceedings.
New insolvency proceedings called “accelerated financial safeguard” (sauvegarde financière accélérée) were introduced into French law two years ago1.
A new form of bankruptcy procedure, Accelerated Financial Safeguard (sauvegarde financière accélérée, “AFS”) was adopted by the French Parliament on October 22, 2010.
France has amended the safeguard procedure by which debtors facing difficulties may restructure their financial arrangements.
On March 8, 2011, France's highest court, the Cour de cassation, confirmed that CMBS borrower, Heart of la Défense SAS (Hold), and its Luxembourg parent company, Dame Luxembourg Sarl (Dame), were entitled to Court protection in France under Safeguard Proceedings (sauvegarde). Safeguard is a French bankruptcy process that resembles the U.S. Chapter 11 debtor-in-possession procedures, used most recently (and notably) in connection with the bankruptcies of General Motors and Lehman Brothers.