Restructuring & insolvency lawyer — Data centres, cloud & digital infrastructure sector

Mac Mahon Avocats is a Paris business law firm at 33 avenue Mac-Mahon, Paris 17. Its lawyers advise data centres, cloud & digital infrastructure 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.

Sector scope

Data centre operators, colocation providers, hosting companies, cloud and IaaS suppliers, fibre and network operators, digital infrastructure project companies (SPVs).

Sector context

Digital infrastructure combines very high upfront investment (land, civil works, power supply, cooling) with long-term project financing and recurring contractual revenue. That balance-sheet structure makes the sector sensitive to energy costs, debt costs and commissioning delays. Difficulties typically appear as a banking covenant breach or a refinancing need before any cash shortfall, which keeps confidential out-of-court procedures available.

Key legal issues

Service continuity and customer contracts: treatment of ongoing hosting and colocation contracts, the administrator's option to require performance (Art. L. 622-13 Commercial Code), service levels and penalties.
Energy contracts and PPAs: long-term power purchase commitments, related security and how those contracts are handled once proceedings open.
Project finance: security over assets and over the SPV's shares, pledges of receivables, reserve accounts, covenant renegotiation under an ad hoc mandate or conciliation.
Customer data: reversibility, backup and return of hosted data upon a sale or liquidation, and the interaction with GDPR and hosting obligations.
Strategic assets: leases, real property rights, reserved grid capacity and administrative authorisations, whose transferability drives the value of any sale plan.

How a matter is handled

Diagnosis: review of available cash, due and payable liabilities, tax and social security instalments and existing security, in order to establish whether cessation of payments is characterised (Art. L. 631-1 Commercial Code).
Choice of procedure: arbitration between confidential out-of-court tools (ad hoc mandate, conciliation) and formal proceedings, in light of the sector's own timetable.
Negotiation: discussions with banks, strategic suppliers, the AGS wage guarantee scheme, the tax authorities and URSSAF, and where relevant before the CCSF.
Implementation: preparation of the filing, representation before the commercial courts, monitoring of the observation period, and preparation of the plan or of the sale.

French procedures at a glance

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).

Frequently asked questions

Do insolvency proceedings stop a data centre from operating?

Not as a matter of principle. Opening safeguard or rehabilitation proceedings does not entail cessation of business: the observation period is designed to allow operations to continue. Ongoing contracts survive and the administrator may require their performance against payment of post-opening services (Art. L. 622-13 Commercial Code).

What happens to hosted data if the operator is liquidated?

Contractual reversibility obligations remain and the liquidator exercises the company's rights. In practice, the return or migration of data should be planned from the opening of proceedings and reflected in any bid where a sale plan is contemplated.

Can project financing be renegotiated confidentially?

Yes. An ad hoc mandate (Art. L. 611-3 Commercial Code) and conciliation (Art. L. 611-4 et seq.) are confidential and allow negotiations with lenders before cessation of payments; conciliation also remains available within 45 days of that state arising.

Is reserved grid capacity transferable to a buyer?

It depends on the connection and supply contracts and on the relevant authorisations. The court rules on which contracts necessary to the continuation of the business are transferred with the undertaking (Art. L. 642-7 Commercial Code); administrative authorisations follow their own regime and require a separate analysis.

Contact

Phone: +33 1 45 03 20 20
Email: accueil@macmahon-avocats.fr
Address: 33 avenue Mac-Mahon, 75017 Paris, France