Bankruptcy Law

One of the major innovations of the Safeguard Law  is that creditors are no longer liable for any credit granted to the debtor. Before the law came into force, a company's creditors, such as bankers or suppliers, could incur extra-contractual liability  for any unlawful credit granted to the company. Since the reform, Article L. 650-1 of the Commercial Code provides for a system of liability exoneration, with strictly delimited exceptions: “[w]hen safeguard, receivership or a court-supervised liquidation procedure is opened, creditors cannot be held liable for any harm suffered as a result of assistance granted, except in cases of fraud, clear-cut interference in the management of the debtor, or if the guarantees taken in compensation for such assistance are disproportionate to it”. These provisions are applicable to insolvency proceedings opened on or after 1 January 2006, even in respect of earlier events .

L. 2005-845 of 26 July 2005 on safeguarding businesses.

Cass. com., 19 June 2012, LawLex202100003122JBJ.

968. Improper financial support (soutien abusif)