Vol 18 (2021) - Issue 3

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France: Unusual Times and Unusual Behaviours

Synopsis
To avoid the collapse of their economies because of the COVID-19 pandemic, massive State guaranteed financial assistance has been made available throughout Europe to businesses of all sizes and sectors in need of cash. This has enabled some businesses, already in poor financial condition, to unexpectedly extend their life span and temporarily survive as 'walking dead' or 'zombie' companies.
In France, the number of insolvencies fell by 38% in 2020, i.e twenty thousand insolvencies less than in 2019.1 This does not mean, however, that the number of so-called zombie companies is close to twenty thousand, nor that the number of insolvencies may sky-rocket in 2021, when the temporary support made available to businesses will come to an end, and exceed the usual number of insolvencies by twenty thousand.
Among the numerous questions linked to COVID-19 and the massive lending granted over the last twelve months, the authors first provide a summary of the latest statistics regarding the amounts of loans granted, estimated defaults and related comments by knowledgeable authors. In the second part of the article, they comment on the unusual situation where a lender has granted a loan, which was not in the borrower's interest but essentially in the lender's interest and how such behavior has been assessed by French courts.