European Restructuring Monitor (ERM)
Eurofound's ERM database on restructuring-related legal regulations provides information on regulations in the Member States of the European Union and Norway which are explicitly or implicitly linked to anticipating and managing change.
Commercial code, article L611-3 (ad-hoc procedure); Commercial code, article L611-1 to L611-16 (procédure de conciliation); Commercial code, articles L628-1 à L628-8 (procédure de sauvegarde accélérée); Commercial code, articles L620-1 to L627-4 (procédure de sauvegarde); Commercial code, articles L631-1 to L631-22 (redressement judiciaire).
There are 4 possible paths that can be followed if a company is in financial difficulty: mandat ad-hoc, sauvegarde, conciliation and redressement judiciaire. The choice depends on the financial situation the company is facing.
Procedure de mandat ad-hoc (ad-hoc procedure): This is open to companies where there are some financial difficulties but still fully operational. The court appoints a legal representative who assists the company's CEO but does not take its place. The procedure can be stopped at any moment if the company thinks the procedure reached its goal.
Safeguard procedures (procédure de sauvegarde): This is open to companies approaching a situation where they will have to stop payments. The safeguard procedure can be triggered by the CEO upon reaching the first serious set of difficulties. Unlike conciliation, it is a real judicial procedure that is publicised: the opening judgement is mentioned in the commercial register or in the trades directory and published in the Official Bulletin of Civil and Commercial Announcements (Bodacc) and in a legal notice journal. It lasts 6 months at the maximum. Once there is a plan in place, the tribunal can stop the safeguard procedure and ask the company to enact the plan. The plan might entail the closure or sale of certain activities. The duration of the plan cannot exceed a 10 years' timeline. Moreover, if the company has more than 150 workers and/or a total turnover of more than €20 million, creditors are represented by two committees: one which represents the credit institutes and one that represents the suppliers.
Conciliation: If a company is in a situation where payments have stopped for less than 45 days, the tribunal can start a conciliation procedure upon request of the CEO. The company has to present a full report on its credits and debts, its securities and obligations, its annual reports for the past 3 years, a presentation of the financial situation highlighting difficulties and financial support needs. The company must also present a document containing reflections and an initial assessment on the situation and a way forward to improve the situation. The conciliation procedure aims at reaching a friendly agreement between the company and its creditors. The tribunal can proceed with a 'simple order' to stamp the agreement and its details are kept confidential by the parties. Otherwise an 'approval' procedure can be enacted by the tribunal and in this case the case is made public (with the aim of offering more guaranties to the creditors).
Judicial reorganisation proceeding (redressement judiciaire): this is the final step that can be taken to rescue a company. It includes cases where the criteria for the previous steps are not applicable and the company has stopped its payments for longer than 45 days. Under the law, the call for a 'redressement judiciare' can be done by the company or by a creditor. In this case the tribunal announces the opening of reorganisation and liquidation. Then, the CEO is assisted by a legal representative whose mandate is to make sure that creditors' demands are satisfied. The court may also appoint a judicial administrator (required if the company has more than 20 employees and more than €3 million of revenues), whose mission is to assist the CEO for some or all acts of management. The procedure can last for a maximum of 18 months after which there are two possible solutions: repay the debts and implement a continuation of activities plan; or, if debt cannot be repaid, an external buyer can be sought or liquidation of assets can be implemented.
According the last data (Ministry of justice, 2022), after a sharp fall in 2020 (-22%), mainly due to the health situation, the number of requests to initiate prevention procedures (5,400) rose in 2021 (+17%). In 2021, 2,300 decisions relating to prevention procedures 18% more than in 2020.
More than eight out of ten decisions relate to requests for ad hoc mandates. Of these requests, nearly six out of ten resulted in the appointment of an agent, on average 25 days after the matter was referred to the court. 430 decisions concerned conciliations. These were handed down on average 7.0 months after the case was opened. An agreement was reached in almost half the cases. The conciliation procedure ended without an agreement in 35% of cases and was rejected in 12% of cases. The average duration of conciliation proceedings in the case of an agreement between the parties was 5.5 months in 2021, an increase of 2 months compared with 2020, while the average duration without an agreement was 8.2 months, an increase of 81 days.
The number of applications to open insolvency proceedings fell by 5.1% in 2021 to 33,200. 61% of these applications concern judicial liquidation proceedings, 30% judicial reorganisation proceedings and 2.7% safeguard proceedings. Slightly more than one in ten applications is lodged with the courts.
In 2021, commercial courts handed down 26,200 decisions to open collective proceedings, of which just under three-quarters were immediate judicial liquidations, one-quarter judicial reorganisations and 2.0% accelerated and/or financial safeguard procedures. In 2020, 24% of companies that were the subject of insolvency proceedings belonged to the automotive trade and repair sector, 21% to the construction sector and the same proportion to the business services sector.
In 2021, 3,000 businesses benefited from a recovery plan and 515 from a safeguard plan. The latter figure is 20% higher than in 2020, after four consecutive years of sharp decline (-54% between 2016 and 2020), which followed a period of steady growth since 2006, when the safeguard procedure was created.
For companies benefiting from a safeguard plan, the opening phase lasted 14 days on average and the solution phase 16.4 months. For companies benefiting from a recovery plan, the opening phase lasted 56 days on average and the solution phase 17.1 months. 5,000 companies were the subject of a judicial liquidation procedure upon conversion of another procedure: judicial recovery (4,860), safeguard (140) or professional recovery (40). On average, liquidations take place 6 months after the opening of receivership proceedings and 8 months after the opening of safeguard proceedings. Lastly, there were 1,000 judicial liquidations ordered following the resolution of a reorganisation plan (950) or safeguard plan (50). These liquidations liquidations take place within an average period of 8.7 months.
Eurofound (2016), France: Rescue procedures in insolvency, Restructuring legislation database, Dublin, https://apps.eurofound.europa.eu/legislationdb/rescue-procedures-in-insolvency/france
Between the end of 2022 and the first half of 2023, almost 300,000 employees working for ‘big tech’ companies were laid off across the world, making headlines for months in global media. This development has been a shock, considering the high numbers of jobs in well-known tech corporations with a reputation for offering good working conditions and well-paid positions.
The retail banking sector is fertile ground for studying the impacts of digitalisation on work and employment. Financial services are increasingly provided online, without the intermediary of customer-facing institutions. Many banks in the sector have been undergoing serial restructuring since the global financial crisis, and it is one of the few service sectors with stagnant or declining employment.
Since 2011, the Restructuring support instruments database of the EU PolicyWatch has been collecting information on measures that assist companies and workers to anticipate and manage restructuring. This article looks at measures in the database aimed at supporting employees and employers during the COVID-19 pandemic (2020–2022).
Eurofound’s European Restructuring Monitor database reveals the impact of the energy crisis on employment in the EU. Following Russia’s invasion of Ukraine in February 2022, energy prices have hit record highs. The European Commission imposed sanctions and limitations on the import of oil and gas from Russia, which has reacted by reneging on supply commitments to many Member States.
