FRANCE Law and Practice Contributed by: Anne-Sophie Noury, Saam Golshani and Alicia Bali, White & Case
of the sums dues under the claims, (ii) any intragroup claims or (iii) any shares or securities of a company.
While out-of-court proceedings have the advan - tage of confidentiality, a positive outcome requires the debtor’s creditors called up to participate in the negotiations to agree to make the necessary efforts to ensure the continuation of business. Neither the court- appointed conciliator nor the debtor has the power to impose those efforts on dissenting creditors in the context of consensual proceedings (save some time- limited moratoria). One path to overcome the opposition of dissenting creditors preventing the adoption of a restructuring agreement negotiated during the amicable proceed - ings is to use accelerated safeguard proceedings to benefit from the cram-down system and force the adoption of the safeguard plan. In this two-step mod - el, a prepack restructuring plan is negotiated during an out-of-court procedure (conciliation) seeking the support of a great number of creditors, with such plan being implemented in the framework of a collective proceeding (accelerated safeguard). Ad hoc creditor groups or steering committees may be formed during out-of-court proceedings but there are no mandatory rules or obligations related to credi - tor steering committees. The agent for lenders under a secured credit facility may form a steering committee of lenders to help organise the negotiations amongst the pool of lenders. Noteholders may also organise themselves through ad hoc groups to represent them during restructuring negotiations. A single creditor, or a consortium of two or three creditors, may purchase a large portion of outstanding debt and then negotiate directly with the company or play an outsized role in an ad hoc group or steering committee. When structuring a financing, lenders are strongly encouraged to agree in advance on a set of rules that would be applicable in subsequent restructuring pro - ceedings, usually through intercreditor agreements. In this way, creditor groups may further negotiate and reach agreements and may arrange their competing rights to receive payments of cash or other property from a company, as well as determining timelines and details with respect to such creditor groups’ respec - tive abilities to exercise remedies. Such agreements will have particular importance in the opening of sub - sequent court-administered proceedings.
3. Out-of-Court Restructuring 3.1 Out-of-Court Restructuring Process Under French law, two out-of-court proceedings are available for a debtor in trouble: • mandat ad hoc proceedings, which are without time limit; and • conciliation proceedings, which last up to five months. Neither of these procedures triggers an automatic stay of payment and enforcement actions. Creditors are therefore not barred from taking legal action against the debtor to recover their claims, but those that have agreed to take part in such proceedings usually also agree to abstain from such action while they are ongo - ing. In any event, the debtor retains the right to petition the relevant judge for a grace period under Article 1343-5 of the French Civil Code. More particularly, and pur - suant to Article L. 611-7 of the French Commercial Code, the debtor retains this right to petition the judge if a creditor has formally put the debtor on notice to pay, is suing for payment or does not accept a request to stay payment of its claim by the deadline set by the conciliator. In the latter case, the judge may order the postponement or rescheduling of claims of the credi - tor that have not yet fallen due for the duration of the conciliation proceedings. Before the 2021 Ordinance, there was limited connec - tion between out-of-court and in-court proceedings. This ordinance tends to create bridges between out- of-court amicable proceedings and insolvency pro - ceedings, with the idea that restructuring solutions could be negotiated during the amicable phase and implemented in the context of subsequent insolven - cy proceedings. These evolutions concern both the implementation of traditional restructuring plans and the sale of business.
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