(Ordonnance no. 2014-326) was published in the French official journal on 14 March 2014. The new rules apply to all proceedings that open on or after 1 July 2014 but will have an influence on current loan negotiations. It redresses the checks and balances in place by creating a double-edged sword over the heads of shareholders by reallocating rights to lenders and by enhancing lender led restructurings.
Significant change: new rights are now given to lenders to propose a counter restructuring plan where restructuring proceedings (safeguard or receivership (redressement judiciaire)) are opened. Until now, the debtor was not obliged to put creditors' restructuring counterproposals to a vote leaving creditors with no other choice than agreeing with the debtor's plan or forcing liquidation.
Post reform, members of the lenders' committee and suppliers' committee will be able to prepare their own restructuring plans and submit them to other creditors for approval. The lenders' committee includes either senior or subordinated lenders, but excludes bondholders who vote in a separate committee. Alternative plans will require the approval of 66.67% by value of lenders and suppliers who attend and vote in each committee, as well as the approval of 66.67% of the bondholders committee. Unlike senior lenders, bondholders are not authorized under the new statute to present an alternative restructuring plan. However, given the lenders' restructuring plan requires bondholders' consent, their interests must be taken into consideration by the lenders under the alternative proposal.
In the event of a debt-for-equity swap organized under a safeguard or redressement judiciaire, the receiver is now authorized by Court to convene a shareholders' meeting to vote subsequent changes to the by-laws. Under new Article L. 626-16-1 of the French Commercial Code, a simple majority of shareholders' approval will be needed instead of the two third statutory majority. In the event of a debt-for-equity swap organized under receivership (redressement judiciaire), the receiver will also be allowed to ask competent judges to appoint a third-party to vote in place of the current shareholders should they refuse to vote in favour of the required changes to by-laws and where the company's equity position shows disproportionate losses.
Under the new statute, any creditor will also be entitled to require the dismissal of the Court-appointee should the former consider that the latter does not act properly and independently.