2 hands exchanging euros in front of the European Union flag.
17 June 2019

A step closer to a European Capital Markets Union

France commends the final adoption of the Directive on restructuring and insolvency, which strengthens preventive handling of difficulties facing businesses and contributes to the building of a Capital Markets Union.
The Directive on restructuring and insolvency was finally adopted by the Council of the European Union on 6 June 2019. It sets out to:
  • contribute to the proper functioning of the internal market;
  • remove barriers to free movement of capital and freedom of establishment by harmonising national procedures and legislation on preventive restructuring, insolvency and discharge of debt.
Whilst protecting workers’ fundamental rights and freedoms, the Directive will ensure that viable enterprises and struggling entrepreneurs have access to effective preventive restructuring frameworks, and so enable them to stay in business. The new Directive also includes measures aimed at improving the efficiency of restructuring, insolvency and discharge procedures.

France strongly supported the adoption of this Directive, which builds on its efforts to promote handling of difficulties facing businesses at the earliest possible opportunity, and gives businesses and entrepreneurs alike a second chance. Transposition of this Directive will provide France with an opportunity to promote, among the other EU countries, its own model for preventing difficulties – which was instrumental in shaping the European initiative.

During its transposition, France also intends to introduce:
  • a new preventive restructuring framework grounded in the principle of formation of classes of creditors called on to vote on the restructuring plan;
  • a cram-down mechanism, whereby a court can enforce a plan despite objections by a class of creditors.
By facilitating the adoption of plans in this way, with full consideration of the rights and interests of the various creditors, French law regarding struggling businesses will become clearer and more attractive to businesses and their partners.

Enacted on 22 May 2019 by the President of the Republic, the Action Plan for Business Growth and Transformation (PACTE) legislation authorises the Government to transpose this European Directive by Ordinance within 24 months of the enactment date.