The sale plan transfers all or part of a distressed business to a purchaser under Art. L. 642-1 to L. 642-17 of the French Commercial Code. The pre-pack sale is its confidential preparation within an ad hoc mandate or a conciliation, subsequently approved in insolvency proceedings.
The sale plan (plan de cession) is governed by Art. L. 642-1 to L. 642-17 and R. 642-1 et seq. of the French Commercial Code. It may be ordered in rehabilitation or liquidation proceedings and, on a limited basis, in safeguard. Its purpose is to preserve businesses capable of autonomous operation, to maintain the jobs attached to them and to discharge liabilities out of the sale price.
| Stage | Content | Indicative timing |
|---|---|---|
| Opening judgment | Rehabilitation or liquidation with continued trading; appointment of the administrator | Day 0 |
| Marketing | Information memorandum circulated by the court-appointed administrator | Day 1 to day 10 |
| Bid deadline | Written, firm and irrevocable offers filed with the registry and the administrator (Art. L. 642-2) | Set by the court, commonly 3 to 8 weeks |
| Consultation | Opinion of the works council, of the controllers and of the public prosecutor | Before the hearing |
| Approval hearing | Comparative review of the bids and selection of the purchaser | After the bid deadline |
| Completion | Execution of the deeds, transfer of designated contracts, entry into possession | Usually 1 to 2 months |
Art. L. 642-2, II of the Commercial Code requires every offer to state:
An offer may only be amended in a way more favourable to the objectives of Art. L. 642-1 and becomes irrevocable until the court rules.
A pre-pack sale consists in preparing the disposal confidentially within an ad hoc mandate or a conciliation, under Art. L. 611-7 of the Commercial Code. Once a purchaser has been identified and terms negotiated, insolvency proceedings are opened so that the court can approve the sale plan within a very short timeframe, limiting the loss of value caused by publicity.
The sale plan transfers the employment contracts attached to the transferred business under Art. L. 1224-1 of the French Labour Code, within the limit of the jobs taken over by the judgment. Dismissals that are economic, urgent, unavoidable and indispensable are authorised by the approval judgment (Art. L. 642-5 of the Commercial Code) and notified within one month. Pre-petition salary claims and severance are advanced by the AGS within the statutory caps.
The price is the one offered by the selected bidder; it is not set by valuation. The court rules on the criteria of Art. L. 642-5, employment and the sustainability of the business prevailing over the amount alone.
No, save for statutory exceptions. The price is distributed among creditors according to the ranking of their security. The purchaser does, however, bear the instalments of loans that financed an asset encumbered by a special security transferred with it (Art. L. 642-12, para. 4).
No. Only the contracts designated by the court as necessary to continue the business are transferred (Art. L. 642-7). Others may be terminated. Certain administrative authorisations are transferred by operation of law.
In principle no. Art. L. 642-3 prohibits the debtor, de jure or de facto directors and their relatives from bidding, unless the court expressly authorises it on application by the public prosecutor and after the opinion of the supervising judge and the controllers.
A pre-pack results in a sale plan approved by the court after a bidding process, with transfer of designated contracts. A private sale of isolated assets in liquidation, authorised by the supervising judge, involves neither automatic contract transfer nor organised continuity of operations.
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