1E9Ct5D

While the mandat ad hoc and the conciliation may be seen as amicable processesdesigned to solve specific issues, the procédure de sauvegarde is far closer in itsoperation, as well as in the solutions implemented, to the “regular” insolvencyproceedings (redressement judiciaire). The procedure is designed for companiesfacing complex difficulties. This scheme is implemented under close supervision byvarious Court-appointed bodies, which liaise with the company and its creditors toinitiate the recovery measures that are necessary to prevent the troubled companyfrom becoming insolvent.This procedure is aimed at the company that has not yet been compelled to file forinsolvency – that is, has not been insolvent for 45 days – but has significant liabilitieswith which it cannot meet. The purpose of this procedure is to develop a plan for thecompany’s reorganization. The reorganization process may include a sale of part ofthe company’s assets. By opening such a procedure, the company sends a strongmessage to its creditors that they need to agree on a restructuring of the company’sliabilities, lest the company becoming insolvent in the near future.By prohibiting the payment of all debts generated prior to the opening of thesauvegarde, as well as any legal action in relation to such debts, the procedureimmediately gives the company some breathing room. Furthermore, it may enablethe company to raise money to finance its operations. Loans made to the companyafter the opening of the sauvegarde, as well as debts arising from deferred paymentof sums due on executory contracts, receive a priority over other debts createdbefore the opening of the sauvegarde or other types of debts, such as trade debt,incurred after such opening (except salaries and Court expenses incurred during theproceeding).39