FRANCE Law and Practice Contributed by: Arnaud Fromion, Frédéric Guilloux and Pierre-Benoît Pabot du Châtelard, Clifford Chance
is possible, in which case the debtor’s obliga - tions are deemed to mature on the earlier of the day on which the court approves the sale of the business and the end of the period during which the court had allowed the business to continue. Please note that there is no concept of adequate protection under French bankruptcy law. 7.6 Transactions Voidable Upon Insolvency The insolvency date (defined as the date when the debtor becomes “in cessation of payments”) is generally deemed to be the date of the court decision commencing the insolvency proceed - ings ( redressement judiciaire or liquidation judi- ciaire ). However, in the decision commencing such proceedings or in a subsequent decision, a court may determine that the insolvency date is an earlier date, up to 18 months prior to the court decision commencing the proceedings. The insolvency date is important because it marks the beginning of the so-called “claw-back period” and certain transactions entered into by the debtor or payment or transfer of rights over assets made by the debtor during such period are, by law, void or voidable. Void transactions include transactions or pay - ments entered into during the claw-back period that may constitute voluntary preferences for the benefit of some creditors to the detriment of other creditors. These include transfers of assets for no consideration, contracts under which the reciprocal obligations of the debtor significantly exceed those of the other party, payments of debts not due at the time of payment, payments made other than in the ordinary course of busi - ness, security granted for debts previously incurred and provisional measures (unless the right of attachment or seizure predates the insol - vency date), stock options granted or exercised
during the claw-back period, the transfer of any assets or rights to a French law trust arrange - ment (fiduciary) (unless such transfer is made as a security for a debt incurred at the same time) and any amendment to a French fiduciary that dedicates assets or rights to a guarantee of prior debts. Voidable transactions include transactions entered into, payments made when due or cer - tain provisional and final attachment measures, in each case, if such actions are taken after the debtor was declared insolvent and the party dealing with the debtor knew that the debtor was insolvent. A request may be submitted to the court mainly by the JA, the creditors’ representative or the public prosecutor. 7.7 Set-Off Rights Set-off is possible where debts are mutual and have a common “nexus” (eg, they arise from the same contract or group of contracts). Insolvency proceedings are not an obstacle to closing out or netting financial instruments. 7.8 Out-of-Court v In-Court Enforcement As indicated above, both mandat ad hoc and conciliation proceedings are of a consensual nature: any agreement between the debtor and its creditors is negotiated on a voluntary basis and those creditors not willing to take part can - not be bound by the agreement or forced to accept it. They are also confidential proceed - ings, with no public records being made, and therefore are likely not to be known by day-to- day business partners of the debtor not being parties to the proceedings. In practice, once an agreement is reached in the context of mandat ad hoc , the parties may
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