France's New Fast-Track Safeguard Law

Safeguard is rooted in the philosophy of French insolvency law, which is to preserve the continuity of business and employment rather than creditor's rights. It is often criticized (usually by financiers) for tipping the balance of interests between the stakeholders in business too far away fro...

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Bibliographic Details
Published in:American Bankruptcy Institute journal 2011-03, Vol.30 (2), p.30
Main Author: Gallagher, Adam
Format: Article
Language:English
Subjects:
Bankruptcy laws
Creditors
Debt restructuring
Enforcement
Insolvency
Mediation
Moratoriums
Proposals
Reforms
Stockholders
Online Access:Get full text
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Summary:Safeguard is rooted in the philosophy of French insolvency law, which is to preserve the continuity of business and employment rather than creditor's rights. It is often criticized (usually by financiers) for tipping the balance of interests between the stakeholders in business too far away from the providers of capital, and for allowing the management and sponsors of a failing debtor to avoid their debt obligations too easily. Safeguard was introduced in 2005 and was given its first successful large-scale international road test in the Eurotunnel case, which gave rise to reforms of the safeguard regime at the end of 2008. The latest 2010 reform described in this article makes the implementation of pre-agreed restructurings, or pre-packs, easier by introducing an accelerated safeguard timetable with a modified regime for the consultation of creditors. The new procedure is a positive step forward, but does not go as far as it should, possibly because it was introduced and passed too quickly.
ISSN:1931-7522