FRANCE Law and Practice Contributed by: Raphaële Courtier, Sébastien de Monès, Victor Camatta and Jessica Chartier, Bredin Prat
7.2 Claw-Back Risk The concept of a claw-back period ( période sus- pecte ) exists under French law. The claw-back period starts on the date on which the debtor is deemed to have become insolvent. That date is determined by the bankruptcy judge and it can be backdated by up to 18 months from the judgment opening the insolvency proceedings. Any security interest granted by a debtor during that period to secure an already existing indebt- edness shall be automatically declared null and void, on the basis that it violates the principle of equality between creditors. In the context of the acquisition of companies, registration duties are due, subject to certain exemptions, and range from 0.1% for joint-stock companies ( sociétés anonymes and sociétés par actions simplifiées ) to 3% for companies such as sociétés à responsabilité limitée (another type of limited liability company), sociétés en nom col- lectif (partnerships) and sociétés civiles (private companies). For the shares of certain listed com- panies, a 0.3% financial transaction tax may instead be applicable. The French Finance Law for 2025 increased this financial transaction tax to 0.4%, from 1 April 2025. 8. Tax Issues 8.1 Stamp Taxes Such registration duties are increased to 5% for non-listed companies predominantly invested in French real estate. As far as financing documentation is concerned, there is no obligation to submit any of the finance documents (except, as previously mentioned, for certain security interest over land and buildings, the pledge over a business and the pledge over machinery and equipment) to stamp taxes or
• Cautionnement – under this personal guaran- tee, the guarantor undertakes to the secured creditor to repay the borrower’s debt or fulfil the borrower’s obligations in the event the borrower fails to do so. In practice, lend- ers will prefer a joint and several guarantee ( cautionnement solidaire ) from the guarantor, rather than a simple cautionnement pursuant to which creditors have to extinguish their recourses against the borrower before they can call on the guarantee from the guarantor. • Garantie, autonome à première demande – under an autonomous on-demand guarantee ( garantie, autonome à première demande ), the guarantor undertakes, in consideration of an obligation entered into by the borrower, to pay a sum of money upon first demand of the lender. The guarantor’s undertaking will require a sepa- rate agreement that is independent and autono- mous from any obligation of the borrower under the credit agreement. 6.2 Restrictions See a discussion of relevant restrictions in 5.4 Restrictions on Upstream Security to 5.6 Other Restrictions . 6.3 Requirement for Guarantee Fees While guarantee fees are not sufficient (or nec- essary) to evidence the corporate interest of the guarantor to provide a guarantee, it could be one of the elements to take into account to motivate the corporate interest. 7. Lender Liability 7.1 Equitable Subordination Rules French law does not provide for equitable sub- ordination rights.
199 CHAMBERS.COM
Powered by FlippingBook