According to the French ministry for justice, 59,000 French businesses had difficulties in 2002 leading them to appear in the commercial courts. The government believes current bankruptcy laws drive companies, and particularly small- and medium-sized enterprises (SMEs), too quickly into liquidation.
Currently businesses are obliged to wait for insolvency before being placed in compulsory administration, and the vast majority are subsequently liquidated.
The government has now drawn up a reform plan, based on Chapter 11 bankruptcy protection in the US, which would allow companies to be placed in administration before they become insolvent and suspend their debt obligations to enable them to rethink strategy. Under the plan the liquidation process, which currently takes about four years on average, would also be accelerated.
Source: Le Monde
