Company in difficulty
Difficulties faced by regulated companies in the EU: the principle of universality of procedures
By Yasmine EDDAM12 June 2025The failure of a bank or insurance company in another EU country may seem like a distant event. However, because of the interconnection of financial markets, its consequences can spread rapidly across borders and directly affect companies, creditors and policyholders in France. To avoid the legal and economic chaos that would result from multiple and contradictory insolvency procedures, the European Union has put in place a specific framework based on the principle of universality. Understanding this mechanism is essential for any company interacting with European financial partners. A global approach to the difficulties faced by regulated companies is needed to grasp all the issues at stake, particularly their European dimension. European harmonisation in the face of cross-border financial crises The objective of European law in this area is clear: to ensure single, consistent and predictable management of the difficulties of a financial entity operating in several Member States. Prior to this harmonisation, the...
Securing markets and payment systems: guarantee mechanisms in the face of systemic risk
Commercial, business and competition law, Companies in difficultyThe stability of the global financial system rests on a delicate balance. The extreme interconnectedness between banks, investment firms and market infrastructures means that the failure of a single player can potentially trigger a devastating chain reaction. To prevent this risk, which has been described as systemic, the legislator has introduced...Compensation and protection for customers in the event of bank and insurance company failure
Commercial, business and competition law, Companies in difficultyThe failure of a bank or insurance company is a dreaded event that can cause legitimate concern among individuals and business owners. Contrary to popular belief, the failure of a financial institution does not mean the automatic loss of client funds or rights. There are mechanisms...Insolvency proceedings for regulated companies: specific legal features in French law
Commercial, business and competition law, Companies in difficultyWhen a company encounters insurmountable financial difficulties, collective procedures such as safeguard, receivership or liquidation offer a legal framework for managing the situation. However, this common law regime, which is well known to entrepreneurs, does not apply as such to players in the financial sector. Banks, insurance companies,...Resolution and recovery procedures for financial institutions: the central role of the supervisory authorities
Commercial, business and competition law, Companies in difficultyManaging the crisis of a bank or insurance company is not covered by ordinary bankruptcy law. Faced with the risk of contagion that could destabilise the entire financial system, the public authorities have put in place a specific administrative regime, focused on the prevention and controlled management of insolvencies....Difficulties faced by regulated companies: a complex legal framework between prevention and resolution
Commercial, business and competition law, Companies in difficultyWhen a bank, investment firm or insurance company runs into difficulties, the rules of the game change radically. The ordinary law governing companies in difficulty does not apply in the same way. A specific legal framework, largely influenced by European law, has been put in place to manage such situations.Groups of companies in difficulty: how Europe is facilitating coordination
Commercial, business and competition law, Companies in difficultyIn today's economic landscape, many businesses are organised into groups of companies: a parent company controls one or more subsidiaries, sometimes spread across different countries. While this structure offers advantages during periods of growth, it becomes a real headache when the group, or one of its subsidiaries, is unable to...Declaration and verification of claims during the observation period
Commercial, business and competition law, Companies in difficultyThe opening of collective proceedings (safeguard, receivership or compulsory liquidation) triggers a series of mechanisms designed to organise the handling of the debtor company's difficulties. At the heart of these mechanisms is the management of past liabilities, i.e. debts incurred prior to the opening judgment. The declaration of debts represents a...Current contracts during the observation period
Commercial, business and competition law, Companies in difficultyThe opening of a safeguard or receivership procedure places the company in a delicate situation, marked by the need to continue its business while dealing with its financial difficulties. The observation period, a genuine diagnostic and restructuring phase, raises a fundamental question for the company's survival...The observation period in insolvency proceedings: an essential guide
Commercial, business and competition law, Companies in difficultyWhen a company encounters serious difficulties, the law provides mechanisms to try to save it or, failing that, to organise its demise under the best possible conditions. At the heart of the safeguard and receivership procedures lies a decisive phase: the observation period. This is a time when...Management of the business during the observation period: roles and powers
Commercial, business and competition law, Companies in difficultyThe opening of a safeguard or receivership procedure marks the start of a delicate phase: the observation period. During this stage, the main objective is to determine whether the company has the necessary capacity to recover while maintaining its activity. The day-to-day running of the business continues, but in the interim...Safeguarding and receivership: a guide to understanding the procedures
Commercial, business and competition law, Companies in difficultyFaced with economic or financial difficulties, a company has legal mechanisms at its disposal to try to overcome its problems and ensure its continued existence. Safeguard and receivership are two distinct but often confused collective procedures. Understanding their differences, their objectives and how they work is essential for any company director...Preparing and negotiating an effective safeguard plan
Commercial, business and competition law, Companies in difficultyOpening a safeguard procedure is a decisive step for a company facing difficulties that it is unable to overcome on its own, even if it is not in a state of suspension of payments. Far from being an end in itself, the primary aim of the procedure is to reorganise the company in order to...Content and measures of an adopted safeguard plan
Commercial, business and competition law, Companies in difficultyAdopting a safeguard plan is a decisive step for a company facing difficulties that it is unable to overcome on its own. Far from being a mere formality, this plan is a detailed roadmap, validated by the court, designed to ensure the continuity of the business, the maintenance...Implementing, monitoring and amending the safeguard or recovery plan
Commercial, business and competition law, Companies in difficultyThe adoption of a safeguard or recovery plan by the court marks a decisive step for a company in difficulty. It is the sign that a solution has been found to clear the liabilities while allowing the business to continue. However, the judgment approving the plan is not an end in itself....Verification of claims, suspension of interest and registrations: consequences of the declaration
Commercial, business and competition law, Companies in difficultyhtml Declaring your claim on time, as explained in our previous article, is a crucial step when your debtor is the subject of collective proceedings (safeguard, reorganisation or judicial liquidation). However, the process does not stop there. Your claim will now be examined, and other important consequences of the opening of insolvency proceedings...The suspect period: definition, determination and legal action
Commercial, business and competition law, Companies in difficultyWhen a company's difficulties reach a critical point, French law provides for specific mechanisms to try to turn it around or, if that is no longer possible, to organise its liquidation in an orderly fashion. At the heart of these so-called collective procedures (receivership and liquidation) lies a fundamental concept:...When can a deed be annulled during a suspect period?
Commercial, business and competition law, Companies in difficultyWhen a company runs into financial difficulties leading to receivership or compulsory liquidation, a critical period begins: the suspect period. As we saw in our introductory article on the suspect period, certain acts carried out during this period are so abnormal that they are automatically nullified by law...Acts automatically annulled during the suspect period (legal nullities)
Commercial, business and competition law, Companies in difficultyWhen a company is experiencing major financial difficulties, there is a particularly sensitive period before the official launch of receivership or liquidation proceedings. This is known as the 'suspect period', a period of time during which certain actions taken by the director may be called into question....Understanding the suspect period and its consequences for your company
Commercial, business and competition law, Companies in difficultyWhen a company is experiencing significant financial difficulties, the prospect of receivership or liquidation proceedings may become a reality. Even before such proceedings are officially opened by the court, a critical and often little-known phase begins: the suspect period. This period is not insignificant. The decisions taken, the...International bankruptcy: when and how do the French courts intervene?
Commercial, business and competition law, Companies in difficultyThe increasing internationalisation of trade and the location of companies means that there are more and more situations where financial difficulties extend beyond the borders of a single country, particularly for regulated companies operating internationally. What happens when a French or foreign company with links to France finds itself in financial difficulty?
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