Challenges of the Knowledge Society (Jun 2022)
THE SAFEGUARD PROCEEDING IN THE FRENCH LEGAL SYSTEM – A SUCCESSFUL TOOL IN INSOLVENCY PREVENTION
Abstract
From a historical point of view, the French Commercial Code from 1807 had been known for its punitive regulation regarding debtors who had become insolvent. However, nowadays, the French legal system has transformed into one of the most „debtor-friendly” legislations across Europe. The French Commercial Code provides four mechanisms destined to prevent insolvency – the ad-hoc mandate, the conciliation proceeding, the safeguard proceeding, the accelerated safeguard proceeding – and a formal judicial proceeding destined to prevent bankruptcy, known as the judicial recovery proceeding. This paper will analyze the safeguard proceeding since it is the most successful tool in the French legal system regarding insolvency prevention, according to statistics. We aim at identifying the incentives leading debtors to resort to this mechanism and the best practices which may consist of a source of inspiration for other Member States’ legislations in matters of insolvency prevention. Moreover, France is one of the few countries having already implemented the Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications and on the measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1123 (Directive on restructuring and insolvency). Thus, the French safeguard proceeding may be considered as one of the most modern tools offered by a Member States’ legislation in matters of insolvency prevention.
