Vol 19 (2022) - Issue 4

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France Adapts Its Restructuring Regime

Synopsis
Whilst the COVID-19 spread has prompted an immediate response by governments to mitigate the impacts of an unprecedented crisis over business organisation and activity, the pandemic also offered the opportunity to question and adapt existing insolvency legislation frameworks.
France, like other EU member states, transposed the EU Directive 2019/1023 of 20 June 2019 on Restructuring and Insolvency in the midst of the crisis.
The much-anticipated Ordinance 2021-1193 of 15 September 2021, supplemented by an implementing decree promulgated on 24 September 2021, applies to proceedings initiated as of 1 October 2021.
French pre-insolvency framework has often been praised for its efficiency. Yet the existing toolbox available to debtors has been further improved, endorsing specific measures introduced as part of the COVID-19 action plan and strengthening their coercive nature towards reluctant creditors.
In the meantime, French law’s attractiveness has also been increased with the modification of creditors’ classification in insolvency proceedings. A new balance is now being struck between the interests involved, leaning more towards the benefit of secured creditors.