FRANCE Law and Practice Contributed by: Anne-Sophie Noury, Saam Golshani and Alicia Bali, White & Case
• paying a carrier requesting payment directly from the debtor. In safeguard proceedings, the debtor remains in pos - session and is allowed to carry out day-to-day trans - actions. However, any transaction that would entail the sale of an important asset of the business would be subject to the supervisory judge’s authorisation. The judge may indeed authorise the sale of certain assets on a piecemeal basis if the situation so requires. The sale of the business as a whole is not possible (in contrast to judicial reorganisation proceedings). However, the court may authorise the sale of certain assets, either on a piecemeal basis or as a going concern if such assets form an autonomous branch, provided that the debtor can continue to run its busi - ness as a going concern without affecting its ability to present a safeguard plan. It can also be a term of a restructuring plan that disposals are executed on a pre-agreed basis and that certain creditors voting on the plan can acquire those assets. The plan needs to be approved by the requisite majorities, and the price needs to be legitimate and set at a fair value to avoid claims of unfair prejudice and material irregularity. In judicial reorganisation proceedings, the court appoints a judicial administrator to be in charge of assisting the management of the debtor’s business. The management of the debtor will continue the daily management of the business, while the judicial administrator supervises and sometimes authorises in advance any exceptional decisions to be taken about the debtor’s assets. During the observation period of judicial reorganisa - tion proceedings, the court appoints a judicial admin - istrator to be in charge of assisting the management in the debtor’s business. The management of the debtor will continue to operate the daily management of the business, while the judicial administrator supervises – and sometimes authorises in advance – any excep - tional decisions to be taken about the debtor’s assets. During liquidation proceedings, however, a liquidator 4.5 The Position of Office Holders in Restructuring, Rehabilitation and Reorganisation
is appointed by the court, and the management of the debtor is usually (but not necessarily) divested of all rights pertaining to the business of the debtor and the disposal of assets. Given the severity of the finan - cial difficulties encountered by the distressed debtor, the business of the company will usually be managed entirely by the liquidator. In judicial reorganisation proceedings, the judicial administrator has the exclusive power to continue or terminate the debtor’s executory contracts. The judicial administrator may request the termination of an executory contract if such termination is deemed necessary to protect the interests of the debtor in pos - session and does not excessively prejudice the other party’s rights. If contracts are continued, the debtor and the creditor remain in the same situation as exist - ed prior to the opening of the proceeding. The creditor shall continue to honour its commitments and obliga - tions despite the default of payment by the debtor prior to the proceedings. If the contract is rejected, the effect may also be favourable to the debtor since the burden will be reduced. The creditor will have to file its claim resulting from the rejection of the contract. The same provisions apply in liquidation proceedings that open with an observation period. 4.6 The Position of Shareholders and Creditors in Restructuring, Rehabilitation and Reorganisation Outside of insolvency proceedings, existing equity owners may be entitled to receive dividends if legal requirements for such distribution are met (which implies that there is a distributable profit). In safeguard or judicial reorganisation proceedings, equity owners will be regrouped into class(es) of equi - ty holders if the legal requirements for class-based consultation are met or if the supervisory judge order such consultation. In this case, they shall vote on the drafting plan under the rules governing votes at share - holders/equity holders’ general meetings, except the decision is taken at the same two-thirds majority. Sim - ilar to dissenting creditors, a plan may be imposed on equity holders if specific legal conditions are met (for more information, see 4.2 Statutory Restructuring, Rehabilitation and Reorganisation Procedure ).
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