NATIONAL REPORT FOR FRANCE

Abstract

This chapter investigates the treatment of executory contracts under French corporate insolvency law. While the French Commercial Code does not provide a definition of the concept of executory contracts, it is generally assumed that insolvency proceedings do not result in the automatic termination of the debtor’s executory contracts. Hence, executory contracts remain binding on both parties pending their assumption or rejection by the insolvency official. As certain types of executory contracts are deemed to justify special treatment in insolvency proceedings, the chapter investigates their treatment under the law. The chapter also investigates the treatment of contractual remedies in insolvency law, such as ipso facto clauses, close-out netting provisions and flip clauses. Finally, the chapter analyses the most recent reforms in the corporate insolvency field and the drivers behind these regulatory changes. The report concludes that the most recent reforms have improved the balance between debtor and creditor protection: France is now a more investor-friendly jurisdiction, while debtors benefit from a more sophisticated set of tools.