Given their training, experienced management skills and adept knowledge of the legislative statute, the French Judicial Administrator (or simply “administrator”) remains the specialist for companies undergoing transitory difficulty.

 

Regardless of the problems encountered, the administrator intervenes as an independent professional at the sides of company chief executive officers. He assists them in anticipating and dealing with crisis situations and in making the right decisions to a sustainable recovery of the business.

The administrator exerts a twofold mission – he guarantees the transparency and propriety of the negotiations and also provides assistance in the reaching of bilateral agreements between the company and its partners.  

His domain of intervention gives him access to many specialists in the distressed business sector, such as:  Specialised investors, dedicated banks (litigation, special affairs, financing), lawyers, chartered accountants, public bodies (CIRI / Interdepartmental Committee on Industrial Restructurings, foreign equivalents:  Industrial Restructuring Corporation, Industrial Revitalisation Corporation) ; DDTE / Employment and Labour Departmental Administrations; ANPE / National Employment Bureau; etc… ), financial advisors, investment banks, transition managers 

Acting as a risis manager, and an advocate of surveillance and early detection, the French Judicial Administrator intervenes more frequently upstream of difficulties through the prevention measures promulgated by the legislator.

The following chart describes the different prevention options available:  The quicker the business launches a preventive measure, the more management control they retain and the better the chances for survival of the company.

Ad hoc mandat Conciliation Safeguard Reorganization
Conditions for opening of procedure Known or foreseeable difficulties.

No payment default

Known or foreseeable difficulties.  Payment default possible if less than 45 days Known or foreseeable difficulties.
No payment default
Payment default if less than 45 days
Purpose of intervention Resolution of problems through private negotiations/amicable agreement with main creditors Resolution of problems through private negotiations / amicable agreement with main creditors.

Possible homologation

New-money creditor’s lien

Suspension of payments during observation period. Suspension of payments only for reorganization.

Three outcomes possible:  (1)Reorganization, (2)Sale as a going concern  (3) Conversion to liquidation

Opening of procedure At the initiative of the chief executive officerAmicable and private negotiations At the initiative of the chief executive officer

 

Amicable and private negotiations

At the initiative of the chief executive officer.

 

Suspension of debt repayment during procedure.

At the initiative of the chief executive officer, by a creditor’s writ of summons, or by decision of the court itself.

 

Exposure level Confidential Confidential Published Published
Management autonomy Chief executive officer has complete freedom to act Chief executive officer has complete freedom  to act 2 possibilities:
Manager (1) retains full autonomy but under court supervision, (2) Manager is assisted by administrator 
2 possibilities:

(1) Management assisted, (2) Administrator entirely assumes manager’s role.

 

Remuneration of manager established by supervising judge.

Outcome of pledges, security,  guarantees Negotiable Guarantees, pledges, security, etc: Natural persons and legal entities can enter into agreements Guarantees, pledges, security, etc:  Protection during observation period.  Further

Safeguard plan is extended to personal pledges; natural persons can negotiate agreements.

Guarantees, pledges, security, etc:  Natural persons only protected during Observation period, not during continuation plan.