Observation period

The observation period (période d'observation) is a phase in French judicial reorganisation proceedings (redressement judiciaire) during which the company continues operations under the supervision of a judicial administrator, while the administrator assesses viability and prepares either a continuation plan or a disposal plan. It typically lasts 6 months, renewable up to 18 months in complex cases. During this period, pre-petition debts are frozen and the company benefits from an automatic stay on creditor enforcement. In Distressed M&A, the observation period is the window during which acquirers conduct accelerated due diligence and prepare disposal plan offers.

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Example: a French manufacturer enters judicial reorganisation with a 6-month observation period. During this time, the judicial administrator conducts an IBR, identifies three potential buyers and issues a structured process letter. Hectelion's client — an industrial acquirer — conducts compressed due diligence in 12 working days and submits a disposal plan offer of CHF 4.8 million preserving 120 jobs before the observation period deadline.

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Hectelion advises buyers in judicial reorganisation processes, conducting rapid due diligence and valuation within compressed observation period timelines.