Judicial reorganization

Judicial reorganisation (redressement judiciaire) is the French insolvency procedure aimed at enabling the continuation of business activity, preservation of employment and settlement of creditors' liabilities through a court-approved plan. It is opened when a company is in cessation of payments but a viable continuation is possible. An observation period (typically 6–18 months) allows the judicial administrator to assess the situation and prepare either a continuation plan (plan de continuation) or a disposal plan (plan de cession). In Distressed M&A, the disposal plan route enables acquirers to purchase the business under judicial supervision.

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Example: a Swiss-owned French subsidiary enters judicial reorganisation following the loss of a key contract. During the 12-month observation period, the judicial administrator conducts an IBR confirming business viability with a CHF 2.5 million equity injection. A continuation plan is presented to the commercial court, providing for: full repayment of priority creditors, staggered repayment of unsecured creditors over 10 years, and a capital increase subscribed by the Swiss parent — allowing the business to survive and emerge from the procedure.

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Hectelion advises companies and investors in judicial reorganisation contexts, providing financial analysis and valuation to support continuation or disposal plans.