The European regulation of 20 May 2015 on insolvency proceedings (the “Insolvency Regulation”) came into force a year ago, significantly modifying European insolvency law. An ordinance published in November 2017 started the process of adapting French law to reflect the requirements of the Insolvency Regulation. A decree of 5 June 2018 (the “Decree”) modifying the regulatory part of Book VI of the French Code de Commerce is the final piece in the jigsaw.
When executing public M&A transactions, dealmakers need to understand local market practice as well as the local regulatory environment.
1. Background
The sauvegarde filing by Camaïeu’s holding company Modacin France SAS (Holdco) has been reported in the French press as one of the first cases where a safeguard proceeding has been opened by a company’s management in order to prevent its creditors from enforcing the fiducie previously granted to them over the shares of Holdco’s subsidiary as part of a court-approved restructuring proceeding (conciliation) of the group back in 2016.
Presented as a major measure of the five-year French presidential term, the law “on growth and business transformation”, also known as the PACTE Act, came into force on May 24th, 2019. Amongst the changes that were brought, some of them deserve a particular focus.
Two phases of the reform. The PACTE Act revises the insolvency legal framework and mainly empowers the executive to directly implement the EU insolvency directive and to reform the law on security interests within a period of two years.
The first phase of the reform
The French conciliation procedure, introduced in 2005, has become such a key procedure in France that it cannot be ignored. For any restructuring involving France (whether partially or wholly), the possibility of a conciliation procedure has to be seriously considered.
Concept of conciliation procedure
Introduction
The Sapin II Act of November 8 2016 amended the regime governing directors' liability in an insolvency scenario in order to encourage the recovery of honest directors of failed businesses.
Il y a trois ans déjà, l’ordonnance du 12 mars 2014, conçue dans le but de « simplifier » la gestion des procédures collectives, est venue modifier la procédure de déclaration des créances.
Avant cette réforme, les créanciers (hors salariés) devaient adresser leur déclaration de créances au mandataire judiciaire dans un délai de deux mois (quatre mois pour ceux résidant hors de France Métropolitaine) à partir de la publication au BODACC du jugement ouvrant la procédure de sauvegarde, de redressement ou de liquidation judiciaire, sous peine de forclusion.
Key points