Restructuring & insolvency lawyer — Forestry estates & timber industry sector

Mac Mahon Avocats is a Paris business law firm at 33 avenue Mac-Mahon, Paris 17. Its lawyers advise forestry estates & timber industry 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

Forest estate owners and managers, forestry groupings and forestry investment vehicles, forestry works contractors, timber harvesters and traders, sawmills and primary processing units, and wood energy producers.

Sector context

Forests are long-term assets generating irregular income: fellings follow a multi-year management plan while maintenance, access and replanting costs run continuously. The sector is exposed to health and climate hazards (bark beetle, drought, storms, fire) and to timber price volatility. The legal framework combines civil law, rural law and the Forestry Code: whether the activity is agricultural or commercial determines access to the agricultural amicable settlement or to Book VI insolvency proceedings, while holding a sustainable management document conditions certain tax benefits.

Key legal issues

Characterisation of the activity: forestry production is an agricultural activity within the meaning of Art. L. 311-1 of the Rural Code, whereas trading and processing are generally commercial; this determines the choice of procedure.
Agricultural amicable settlement: for farmers, the procedure under Arts. L. 351-1 et seq. of the Rural Code may precede the opening of formal insolvency proceedings.
Holding structures: forestry groupings, civil companies and undivided ownership; interaction between proceedings against the operating company and the estate of the owning entity.
Timber sale contracts: standing or roadside timber sales, harvesting deadlines, transfer of title in the timber and treatment of ongoing contracts.
Security and stock pledges: pledges over forestry equipment, warrants over timber stocks and suppliers' retention of title in sawmills.
Sustainable management document: simple management plan and related commitments (Forestry Code, Art. L. 122-3) and the effect of a sale on tax regimes and grants received.
Health hazards and insurance: indemnities, public aid and the treatment of exceptional sanitary fellings within a plan.
Leases and use rights: rural leases, hunting agreements, rights of way and firewood rights, to be reviewed before any sale.

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

Can a forest owner enter French insolvency proceedings?

Safeguard, rehabilitation and liquidation proceedings are open to persons carrying on an agricultural, commercial, craft or independent activity and to private law entities (Arts. L. 620-2, L. 631-2 and L. 640-2 Commercial Code). For farmers, the opening is normally preceded by a referral to the court president for an amicable settlement.

Does standing timber sold still belong to the estate?

Transfer of title depends on the sale contract. A felling sale may transfer title on conclusion, with a harvesting deadline only, or defer transfer until felling. Contract analysis determines the asset inventory.

Is forest held by a forestry grouping caught if the operating business is insolvent?

Proceedings against an operating company do not automatically extend to another legal entity's estate. Extension requires proof of commingling of assets or sham structuring under Art. L. 621-2 Commercial Code.

Can an exceptional felling fund a plan?

A rehabilitation plan may include asset disposals and exceptional revenue. Fellings remain governed by the sustainable management document and applicable administrative authorisations, compliance with which is reviewed when the plan is prepared.

Contact

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