Are 'Loan to Own' Strategies Possible Under French Law?
JCP Ed n°28-29 9 Juillet 2009
21 Pages Posted: 2 Jun 2015
Date Written: July 9, 2009
The differences between American and European insolvency law have often been noted: for more than a century American law has offered debtor companies a genuine second chance by giving them the opportunity to recover, whilst European laws have long favoured liquidation. Reforms, partly inspired by the American model, have recently been made throughout Europe, which have led to the development of certain practices. French law has been part of this movement. The law of 26 July 2005, and the ordinance of 18 December 2008 made significant changes to the law of distressed companies with the aim of promoting the recovery of companies, a concept which has not enjoyed great success since its introduction by the law of 25 January 1985. Whilst these are positive reforms, there is scope to go further. French law has not adapted to changes to the economy and financing techniques, which have occurred over the course of the last decade. The fact that there are so few "loan to own" strategies implemented by hedge funds in France is a sign of inefficiency of French bankruptcy law.
Keywords: bankruptcy law, hedge funds, loan to own.
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