French study on the efficiency of European insolvency proceedings

Paris, 2021-04-22

In January 2021, the « Conseil National des Administrateurs Judiciaires et des Mandataires Judiciaires de France » (National Council of French Judicial Officers and Judicial Representatives) has conducted a study on the efficiency of collective proceedings throughout Europe, comparing both the functioning and the role of legal systems governing insolvency proceedings in Germany, Spain, Italy, Netherlands, the UK and France.

As far as France is concerned the study reveals that:

  1. France is the sole country in which two entities are involved. One to represent the interests of the debtor – the administrators – the other the interests of the creditors – the agents. These professions are regulated just like in Italy.
  2. France has 2,6 times more bankruptcy proceedings than Germany and the UK. In 2019, insolvency proceedings opened in France where handled as liquidation proceedings in 65% of the case, 25 % of the cases where considered reorganisation proceedings and the remaining 10 % referred to the just introduced new preventive proceedings.
  3. French insolvency proceedings focus very much on safeguarding employment and on the preservation of activity of companies. Consequently, 39% of companies under liquidation proceedings adopt a business continuity plan avoiding finaly liquidation. This 39% figure must be compared with the 8% figure in the Netherlands, 5% in Spain and 4.5% in Germany.
  4. In France, the order of privileges differs from other jurisdictions since employee claims are given a very high priority. While employee protection is different in France from other EU- member states, all countries scrutinised in the study provide a guaranteed fund dedicated to the protection of the employees’ interests.

In 2020, subsidies aimed to cushion the economic consequences of the Covid crisis have considerably reduced the number of insolvencies in France.

Author: Marc Olivier-Martin, ROOM AVOCATS