French businesses face significant business disruption, as does any country faced with restrictions in place to curb movement of people because of Covid-19.
In this blog we consider what the restrictions are in France and what help is on offer.
What restrictions are in place and why is this impacting businesses?
The current restrictions, announced on March 16, 2020 by the President of the Republic are designed to minimize contact and travel and will be in place from Tuesday, March 17 at 12:00 p.m., for a minimum of fifteen days.
It is not always easy to prioritize between the various goals pursued in every insolvency legislation, namely; the continuation of the company, preservation of the jobs, the general economic/public interest and the payment of dividends to creditors.
There is no clear hierarchy in French law amongst these major targets and French case law appears fairly pragmatic. However compared to Insolvency regulations in other countries, French legislation and French case law appear very protective of the interests of the employees.
This seems obvious when one considers, for example,
Apport de la loi de modernisation de la justice du XXIe siècle
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.
Three years ago, the Commercial Code amended the procedure for declaring debts in France with the aim of simplifying the management of insolvency proceedings.
Before this reform, the only way for creditors (excluding employees) to declare their debts was to send their proof of debt to the receiver within 2 months (or 4 months for those living outside France) from the publication of the judgment opening the safeguard procedure, adminstration or liquidation – or be debarred.
Admission de l’inscription définitive d’une hypothèque judiciaire provisoire malgré la liquidation judiciaire
Cass. Com, 3 mai 2016, n°14-21.556
Aux termes d’un arrêt de principe, la Cour de cassation entérine et confirme la possibilité pour le créancier disposant d’une hypothèque judiciaire provisoire, inscrite avant le jugement d’ouverture, de l’inscrire définitivement après la liquidation judiciaire du débiteur.
The French government has made the assessment that certain small commercial courts were regularly finding themselves confronted with cases of great complexity, only because the company in difficulty had its head office in the jurisdiction of these courts. It therefore announced the establishment of specialised commercial courts (TCS) which will process the most complex insolvency proceedings.
Fidèle à sa jurisprudence, la Cour de cassation réitère sa position : de la seule fonction de dirigeant ne peut se déduire la qualité de caution avertie. En pareil cas, c’est à l’établissement de crédit de prouver qu’il s’est acquitté de son devoir de mise en garde lorsqu’il en est effectivement tenu.
A recent decision of the Slovak Courts suggest that if main proceedings have been opened in one member state and the debtor has assets in Slovakia, the insolvency practitioner in the main proceedings must act quickly and sell those assets before secondary proceedings are opened in Slovakia, otherwise he runs the risk of losing the assets to the secondary estate. Legal title to the assets must have passed to the buyer before the secondary proceedings are opened; it is not enough just for contracts to have been exchanged.
The continued modernisation of the French economy has been a long and difficult process but, as a former British prime minister was fond of saying, “there is no alternative”.