French bankruptcy law reform assessed

Author: | Published: 1 Dec 2005

After more than two years of parliamentary debates and compromises, a complete reform of French bankruptcy law, known as the Business Safeguard Act (la loi de sauvegarde des enterprises) was enacted on July 26 2005. It will enter into force on January 1 2006.

Before adoption of the act, there were four alternative bankruptcy procedures under French law:

ad hoc mediation (mandataire ad hoc), a process by which a court-appointed mediator assists in non-binding negotiations between a debtor and its creditors; voluntary settlement or friendly composition (réglement amiable), a judicially supervised contractual negotiation in which the court may grant a stay against creditors, which was modified by the Act and is now known as conciliation; judicial reorganization (redressement judiciaire), leading to a court-administrated restructuring of the debtor company; and judicial liquidation (liquidation judiciaire), for cases in which the court finds that continued operations are not feasible. ...