FRANCE Law and Practice Contributed by: Anne-Sophie Noury, Saam Golshani and Alicia Bali, White & Case
An exhaustive list of transactions that are set aside by the court when carried out during the hardening period is provided by the French Commercial Code, as follows: • any deed entered into without consideration of transferring title to movable or immovable property; • any bilateral contract in which the debtor’s obliga - tions significantly exceed those of the other party; • any payment, by whatever means, made for debts that had not fallen due on the date when payment was made; • all payments for outstanding debts, if not made by cash settlement or wire transfers, remittance of negotiable instruments or Dailly assignment of receivables; • deposits or consignments of money made under Article 2350 of the Civil Code in the absence of a final judgment; • any contractual security interest or contractual right of retention granted over the debtor’s assets or rights for debts previously incurred, unless they replace a previous security interest of at least an equivalent nature and base and with the excep - tion of the assignment of professional receivables (Dailly assignment) made in the execution of a framework agreement entered into prior to the date of insolvency; • any legal mortgage attached to judgments of con - demnation constituted over the debtor’s assets for debts previously incurred; • any protective measure, unless it gave rise to a recording or registration before the date of insol - vency; • any granting exercise or reselling of stock options; • any transfers of movables or assignment of rights into a trust estate, unless this transfer or assign - ment occurred as security for a debt simultane - ously incurred; and • any amendment to a trust agreement affecting the rights and movables already assigned or trans - ferred to a trust estate as security for debt incurred prior to such amendment.
In addition, any payment made or any transaction entered into during the hardening period is subject to optional voidance at the discretionary power of the insolvency court, subject to the fulfilment of two con - ditions: • the payment or transaction took place during the hardening period; and • at the time of the payment or transaction, the con - tracting party knew that the debtor was insolvent at the relevant time. The hardening period starts from the date the debtor becomes insolvent and may be backdated by the insolvency court up to 18 months before the insol - vency judgment. If a conciliation agreement has been reached and formally approved prior to the opening of the judicial reorganisation or liquidation proceeding, the insolvency date cannot be set at a date before the court order approving the conciliation agreement. 8.2 Claims to Set Aside or Annul a Transaction or a Transfer A petition to annul a voidable payment or a transaction may be brought by the judicial administrator/liquida - tor, the creditors’ representative, the commissaire à l’exécution du plan or the public prosecutor. Under French law, a petition relating to the hardening period may only be brought in an insolvency proceeding to the extent that the insolvency test is met. Any views expressed in this publication are strictly those of the authors and should not be attributed in any way to White & Case LLP.
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