Piercing the corporate veil: parental liability to the employees of failed French subsidiaries

The French Supreme Court recently delivered a judgment in the context of the insolvency of the French subsidiary of a US parent that has profound consequences for international corporate groups operating in France, their in-house counsel teams and external advisers.

The court held that shareholders of French subsidiaries may owe a duty of care to the subsidiaries’ employees in certain circumstances. This is obviously true where shareholders have knowingly caused the subsidiary’s failure and the consequent dismissal of its employees. But shareholders have also been found in breach of their duty where their “légèreté blâmable” (a culpable lack of judgement, such as the sale of the French business to an entity that lacks the financial resources or expertise to run the operation) caused or contributed to the termination of the employment agreements.

In this particular case, the responsible shareholder was a global private equity firm. A number of similar actions are presently before the courts which involve claims by French employees against large, international groups of companies.

In the context of such distressed situations, a good understanding of the principles of French insolvency and labour law which underpin liability is essential.

This webinar will examine:

• The legal, political and social context of this line of case law
• The treatment of employees’ contractual and tort claims under French law
• The defence of the shareholders before the labour, civil and bankruptcy courts
• Some key, consequential corporate governance and M&A issues in exit strategies and similar divestiture transactions

Speakers

Marie-Emilie Rousseau-Brunel
Partner, Labour and Employment  

Marie-Emilie Rousseau-Brunel specialises in employment and social security law. She assists French and international clients on individual and collective matters, reorganisations and special employment issues. She has also developed strong expertise as an employment law litigator before both labour tribunals and civil jurisdictions. She is a member of the Employment Law Section of the American Bar Association and the European Employment Lawyers Association.

Laurent Assaya
Partner, Restructuring and Insolvency

Laurent Assaya is an expert in pre-insolvency proceedings (mandat ad hoc and conciliation) and formal insolvency proceedings. He has a strong corporate background (included distressed M&A). Known for his international experience, he is regularly involved in complex restructuring operations in France and abroad. He is currently the lead defence lawyer in major employee claims proceedings similar to the cases discussed in the webinar.