Let's talk early

Author: | Published: 1 Mar 2009

European countries considering reforming their bankruptcy systems by incorporating parts of US Chapter 11 will find a meaningful precedent in the recent French bankruptcy reform.

The reform entered into force on February 15 2009. The main purpose is to provide an attractive and secure legal framework to promote greater use of the existing safeguard procedure (procédure de sauvegarde), a pre-bankruptcy measure loosely inspired by the US Chapter 11 model. The reform has amended the main features of the safeguard procedure to take into account the developments in market practice and constraints experienced by market participants in high-profile restructurings such as Eurotunnel.

The updated procedure seeks to become a more suitable and attractive rescue option for companies, particularly in the context of restructurings of holding companies of troubled leveraged buyouts, as the frequency and number will increase this year.

Threshold The threshold test of the safeguard procedure has been loosened...