International Insolvency in France

International Insolvency in French Law

French law governing cross-border insolvency is codified principally in Book VI of the Code de commerce, supplemented by the EU Insolvency Regulation (Regulation (EU) 2015/848, the recast EIR) and, for non-EU cases, the French rules of private international law. The French approach to international insolvency has evolved from a territorialist stance — limiting the effects of foreign proceedings to the territory of the State of opening — to a modified universalist approach, recognising the primacy of the main proceedings while accommodating local interests through secondary proceedings.

The Code de Commerce Book VI

Book VI of the Code de commerce (Articles L610-1 to L670-8) establishes the substantive French insolvency framework, including sauvegarde (preventive restructuring), redressement judiciaire (judicial reorganisation), and liquidation judiciaire (judicial liquidation). Articles L620-1 to L670-8 govern the procedures applicable to debtors whose centre of main interests (COMI) is in France. The territorial scope of French insolvency law is determined by the debtor’s COMI: if the COMI is in France, French courts have jurisdiction to open main proceedings.

EU Insolvency Regulation: Recognition

The EU Insolvency Regulation (recast), directly applicable in France since 26 June 2017, establishes a framework for cross-border insolvency within the European Union (excluding Denmark). The regulation is based on the principle of universalité limitée (modified universalism): main proceedings opened in the Member State of the debtor’s COMI are recognised throughout the EU without further formalities. The judgment opening main proceedings produces the same effects in all other Member States as under the law of the State of opening, subject to limited exceptions.

French courts apply the EIR directly. The tribunal de commerce (commercial court) having jurisdiction over the main proceedings may appoint a mandataire judiciaire (insolvency practitioner) whose powers extend to all assets of the debtor located in other Member States. French courts recognise the authority of foreign insolvency practitioners appointed in other Member States and will enforce orders made by the foreign insolvency court, including orders for the return of assets.

COMI Determination

The concept of COMI is central to the EIR framework. The regulation presumes that the COMI of a company is the place of its registered office, and that the COMI of an individual is the place of their habitual residence or principal place of business. The presumption may be rebutted where factors indicate that the debtor’s administration and supervision interests are located elsewhere. French courts have applied the ECJ’s Interedil (C-396/09) criteria, examining the location of the debtor’s headquarters, management, employees, creditors, and assets.

Secondary Proceedings

Where main proceedings have been opened in another Member State, French courts may open secondary proceedings (procédures secondaires) against the same debtor if the debtor has an établissement (establishment) in France. An établissement is defined as any place of operations where the debtor carries out non-transitory economic activity with human means and assets. Secondary proceedings are territorial in effect, limited to assets located in France.

Secondary proceedings may be procédures de liquidation only, not sauvegarde or redressement judiciaire. The liquidator in the secondary proceedings must cooperate with the main proceedings liquidator, and the regulation provides for coordination mechanisms, including the duty to inform creditors in other Member States. The main proceedings liquidator may propose restructuring plans or request a stay of the secondary proceedings.

Foreign Representative Power

French law recognises the standing of foreign insolvency representatives appointed in main proceedings under the EIR. The foreign representative may exercise all the powers conferred by the law of the State of opening, including the power to collect assets, realise property, and initiate actions in French courts. The foreign representative must provide evidence of their appointment, including a certified copy of the judgment opening proceedings.

For insolvency proceedings from non-EU States, French law applies the principle of courtoisie internationale (international comity). French courts may grant recognition to foreign insolvency proceedings on a discretionary basis, considering the jurisdiction of the foreign court, the fairness of the proceedings, and the absence of prejudice to French creditors or public policy. The Cour de cassation has recognised foreign main proceedings in several decisions, including the recognition of US Chapter 11 proceedings (arrêt Klempka, Cass. com., 19 November 2002).

Reciprocity

French law does not require formal reciprocity for the recognition of foreign insolvency proceedings. The Cour de cassation has held that recognition depends on the conformity of the foreign proceedings with French procedural fairness and the absence of prejudice to French creditors, not on whether the foreign State would recognise French proceedings. However, the absence of reciprocity may be a factor in the court’s assessment of the appropriateness of recognition.

Practical Application

In practice, the French approach to international insolvency is pragmatic. French courts cooperate with foreign insolvency practitioners through protocol agreements, coordinating the administration of cross-border estates. The Conseil national des administrateurs judiciaires et des mandataires judiciaires (CNAJMJ) facilitates cross-border cooperation through its international network. France has also ratified the UNCITRAL Model Law on Cross-Border Insolvency, though its implementation into domestic law has been limited, with French courts preferring to apply their established case law on international comity.