Jean-François Adelle, partner, conducted a webinar with Sara El Mouttaqi, associate, on the topic: “Structuring Secured Debt, Enforcing Security, and Navigating Secured Claims through the Lenses of Financial Restructuring in France: Lessons from the security and workout reforms of 2021 and recent large case precedents”.

Key Points discussed:
1. The introduction of a new classes system for affected stakeholders in coercive restructuring proceedings has inspired consensual proceedings, out-of-court work-outs, and safeguard proceedings below relevant thresholds.
2. Securities are structured in a multi-layer pyramid, involving different enforcement rights and treatment under the plan.
3. Despite payment and enforcement actions being frozen, certain security interests like financial collateral, title security, and pledges with effective right of retention can be immediately enforced in coercive proceedings.
4. Large restructuring case precedents highlight that the hierarchy of security interests does not always align with the waterfall principle of the absolute priority rule among classes (e.g., Orpea, Casino), urging secured creditors to advocate for their rights.
5. The treatment of secured creditors by the plan in relation to the security value lacks statutory clarity but has been clarified through case law and precedents:
– Secured creditors with claims exceeding the value of their security assets must be assigned to secured creditors classes for the full amount of their claims (e.g., Bordeaux Court of Appeal, Sept 2024).
– Secured creditors not in the money based on their security assets value can be subject to debt for equity swap, except if they inject new money (e.g., Casino).
6. Secured creditors possessing security with exclusive rights face challenges in realizing the value of their assets and seeking immunity from the plan, except in cases of fiducie-security or financial collateral. Early valuation of security assets and proactive engagement are recommended.

If you want to see the replay click here