Mac Mahon Avocats is a Paris business law firm at 33 avenue Mac-Mahon, Paris 17. Its lawyers advise airlines & air transport businesses on prevention of difficulties, out-of-court procedures, formal insolvency proceedings and distressed disposals under French law. This page sets out the applicable legal framework; it does not constitute legal advice.
Scheduled and charter airlines, regional carriers, business aviation and air taxi operators, aerial work and helicopter companies, aircraft lessors and asset managers, ground handling, maintenance (MRO) and handling companies, and tour operators with their own fleet.
Air transport combines high capital intensity, direct exposure to fuel prices and exchange rates, and operations conditional on administrative titles (operating licence, air operator certificate) whose maintenance depends in particular on the financial fitness of the undertaking. Fleets are usually held under operating or finance leases, so realisable asset value in proceedings is limited and the treatment of lease agreements governs whether operations can continue. Revenue is largely collected in advance through ticket sales, creating a liability of services still to be performed and a specific issue as to passenger treatment where proceedings are opened.
| Procedure | Entry condition | Duration | Legal basis |
|---|---|---|---|
| Ad hoc mandate | No cessation of payments | Set by the court president, renewable | Art. L. 611-3 Commercial Code |
| Conciliation | Actual or foreseeable difficulties; cessation of payments for 45 days at most | 4 months + 1 month | Arts. L. 611-4 to L. 611-16 |
| Safeguard | Insurmountable difficulties, no cessation of payments | Observation period 6 months, extendable to 12 | Art. L. 620-1 et seq. |
| Rehabilitation | Cessation of payments, recovery possible | Observation period up to 18 months | Art. L. 631-1 et seq. |
| Liquidation | Cessation of payments, recovery manifestly impossible | Variable; business continuation 3 months, renewable | Art. L. 640-1 et seq. |
A declaration of cessation of payments must be filed within 45 days of that state arising, unless a conciliation request is filed within the same period (Art. L. 631-4 of the French Commercial Code).
Not automatically. Regulation (EC) No 1008/2008 requires the competent authority to assess the carrier's financial situation and allows suspension or revocation where the conditions are no longer met, while providing that a licence may be maintained during restructuring proceedings if safety is ensured and a realistic financial reconstruction appears achievable within a reasonable period.
Leases are ongoing contracts: the administrator may require performance provided rentals falling due after the opening judgment are paid (Art. L. 622-13 Commercial Code). If they are not paid, the lease may be terminated and the aircraft redelivered, with the lessor exercising, where applicable, remedies under the Cape Town Convention.
During the observation period the business continues and scheduled flights may be operated. Unused tickets correspond to pre-opening passenger claims subject to filing in the proceedings (Art. L. 622-24 Commercial Code); where the flight was sold as part of a package, the organiser's financial guarantee may be called upon.
Slots are allocated by the coordinator under Regulation (EEC) No 95/93 and are not a freely transferable asset; retaining them requires compliance with the effective-use rule and, on a sale, a decision of the coordinator separate from the judgment adopting the sale plan.
Ad hoc mandate (Art. L. 611-3) and conciliation (Arts. L. 611-4 et seq. of the French Commercial Code) are confidential and allow fleet rentals, bank debt and public debt to be renegotiated before cessation of payments, which must otherwise be declared within 45 days unless a conciliation request is filed within the same period.
Phone: +33 1 45 03 20 20
Email: accueil@macmahon-avocats.fr
Address: 33 avenue Mac-Mahon, 75017 Paris, France