TAKE OVER OF ASSETS IN FRANCE
Investing in the takeover of assets in France can be an advantageous operation for both the purchaser and the seller if you are ready to be familiar with the technicalities of French Bankruptcy law.
Advantages of takeover of assets:
It is the opportunity to acquire a complete and autonomous branch of activity:
- For a low price
- Free of any debt and security right
- Directly, or indirectly through a company created for the operation
- Under favourable and derogatory conditions from ordinary law:
- free to choose the assets and stocks he keeps, and even the number of employees taken over
- does not bear the costs of redundancies
- decides whether or not to continue the contracts necessary for the continuation of the activity.
Disadvantages of takeover of assets:
However, to be assisted in setting up an asset takeover is necessary because:
- Strict schedule leaves short time for the preparation of the takeover file
- Obtaining information can be difficult
- The process is public and open to competition
- A good knowledge of the various proceedings under French law is essential since the methods for taking over a business differ from one procedure to another.
- The takeover offer can be total or partial and is subject to Bankruptcy law that restrict the principle of freedom of bidding
- The judge shall set the time limit within which the takeover offer must be submitted
- The judge chooses the takeover offer(s) that will preserve the most employment attached to the assets sold, the payment of creditors and offer the best guarantees of execution
- Once the most attractive offer has been chosen, the liquidator or receiver completes the final sale in collaboration with the appointed buyer and his attorney.
The “prepack-cession”: an alternative to the “classic” takeover of assets
American-inspired (“pre-arranged sales”), the prepack-cession consists of preparing, at the stage of a preventive proceedings, a total or partial sale of assets, which will be implemented into a receivership or a winding-up proceedings where the court will be able to draw up a pre-negotiated sale plan.
The prepack-cession is particularly advantageous for three reasons:
- It is carried out under a confidential proceedings. In this way, the target company does not suffer from a devaluation of assets, while preserving its reputation and the trust of its partners.
- Only the debtor may request a “prepack-cession”. The debtor is therefore a partner in the takeover project.
- Going through the “prepack-cession” speeds up the proceedings, since the search for buyers will already have been carried out.
FOR MORE DETAILS ON THE SPECIFIC ASPECTS OF TAKING OVER ASSETS IN FRANCE, PLEASE CHECK THE NEXT CONTRIBUTION BY OUR EXPERT , Ms. CHARLENE RUSSO-TRANCHAND OF rothpartners.