On 1 October, Ordinance 2021-1193 introduced changes to the 'accelerated safeguard' procedure making this the 'preventive restructuring framework' as required by the 2019 Directive.

Certain conditions for the opening of an accelerated safeguard procedure have been retained with some modifications:

• cessation of payments must not exceed 45 days
• requirement for certified accounts
• the plan is drawn up in a prior conciliation procedure and mandatory “classes of affected parties” vote on the plan
• the process has a maximum duration of 4 months.

Certain conditions relating to consolidated accounts and the thresholds for workforce, turnover and balance sheet totals have been removed.

New “cross-class cram down”, the “best interests of creditors test” and the “absolute priority rule”

The reform introduces these three new rules in the context of the plan proposed by the debtor, which can only be adopted if it is approved by each of the classes, or a majority of the constituted classes, or at least one class of creditors other than the equity holders.

Rescue finance

New funds provided for the execution of the safeguard plan benefit from a 'post money privilege' and cannot be compromised in a subsequent restructuring and will rank senior in any liquidation.

Find out more

Take a look at our brand new European Restructuring & Insolvency online tool to find out more about the preventive restructuring framework in France and compare it with 22 other European jurisdictions. 

To discuss the reforms in more detail, please reach out to a member of our Restructuring & Insolvency team.