Fiducie spoke, Restructuring & conciliation

The fiducie in restructuring:
conciliation, safeguard, judicial reorganisation

The security fiducie (Civil Code art. 2011 to 2030, Law of 19 February 2007) is a structured-financing tool particularly suited to restructuring situations: amicable conciliation (Commercial Code art. L. 611-7), ad hoc mandate, safeguard, judicial reorganisation. Its asset-isolation mechanism (the assets placed in fiducie no longer form part of the settlor's assets) gives it resistance to suspect-period nullities (Commercial Code art. L. 632-1) and to the conciliation privilege. This spoke summarises the operational stakes and the pitfalls identified in practice.

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— In brief
Governing text
Civil Code art. 2011 to 2030 + Law of 19 February 2007
Key proceeding
Conciliation (Commercial Code art. L. 611-1 to L. 611-15) + L. 611-7 privilege
Suspect period
Security fiducie generally preserved from L. 632-1 nullities
Tax regime
French Tax Code 238 quater A to I, transparency where conditions are met
Practical strengths
Asset isolation + enforceability against third parties + financial flexibility
— 01

Asset isolation, a decisive lever in amicable proceedings

In conciliation proceedings (Commercial Code art. L. 611-1 et seq.), the central issue for the debtor is to keep the business running while securing the contributions of new financing providers. The security fiducie offers a specific answer: the assets transferred to the fiduciary leave the debtor's assets and form a distinct special-purpose pool of assets (Civil Code art. 2024). For secured creditors, this means reinforced protection against competing claims from other creditors and against suspect-period nullities.

Our conviction: the combination of a fiducie with a court-approved conciliation agreement is the most robust architecture for restructuring-financing transactions. The privilege of article L. 611-7 paragraph 7 of the Commercial Code (the conciliation privilege, known as the "new money" privilege) is added to the fiduciary isolation: the new contributions benefit both from priority ranking in the event of collective proceedings and from erga omnes enforceability through the fiducie.

One caveat, however: a fiducie granted during the suspect period (6 months before the cessation of payments, extended to 18 months for certain acts in safeguard / judicial reorganisation) remains liable to be set aside on the basis of Commercial Code art. L. 632-1 if it lacks genuine consideration or is granted with fraudulent intent. The traceability of the consideration and the economic documentation are decisive.

— 03

A case handled by the firm

Distressed property company, fiducie + 18-month court-approved conciliation

A wealth-holding property company owning 12 buildings (value €38M), indebted to the tune of €28M to 4 banks. Cessation of payments imminent. Our strategy: (1) opening of a conciliation (Commercial Code L. 611-3) with the commercial court; (2) creation of a security fiducie over 6 main buildings for the benefit of the bank pool in consideration of new refinancing of €8M ("new money"); (3) court approval of the agreement (Commercial Code L. 611-8 II) shielding the fiducie against any later nullity; (4) an orderly disposal plan for the other assets over 18 months. Outcome: no collective proceedings opened, deleveraging of €22M over 24 months, property company saved. Total cost of the transaction (fiduciary fees + advisers + expenses): around 1.2% of the restructured principal, well below the cost of equivalent collective proceedings.

— 02

Operational mechanics in conciliation and collective proceedings

1. Security fiducie granted BEFORE the cessation of payments

This is the most secure scenario. A security fiducie created ahead of any proceedings, with clear consideration (release of financing, refinancing, partial debt waiver), is enforceable against the bodies of the later collective proceedings. The fiduciary assets do not fall into the insolvency estate: they remain available to the secured creditor on the terms of the contract.

2. Fiducie + court-approved conciliation agreement (Commercial Code L. 611-8 II)

Court approval of the conciliation agreement confers several advantages: (a) the privilege of article L. 611-11 over the new contributions (priority in the event of subsequent collective proceedings); (b) the protection of the agreement against suspect-period nullities (Commercial Code L. 632-3, which shields the approved agreement); (c) the publicity that clarifies the debtor's asset position.

3. Safeguard and fiducie granted with supervisory-judge authorisation

In safeguard (Commercial Code L. 622-7 II), granting security after the opening judgment is possible with the authorisation of the supervisory judge. A security fiducie authorised by the judge naturally escapes the nullities. A typical case: emergency refinancing of inventory or of operations during the observation period, where the fiducie secures the bank pool that provides the liquidity.

4. Suspect period and the nullities of art. L. 632-1

Acts creating security after the cessation of payments (during the suspect period) may be set aside where they are granted for prior debts (Commercial Code L. 632-1, 6°). Conversely, a fiducie granted as security for new credit and with genuine economic consideration resists that nullity. The contemporaneous documentation of the transaction (expert reports, business plan, letters of intent) is decisive here.

— Frequently asked questions

Can a fiducie granted in conciliation be set aside in the event of a later judicial reorganisation?

No, provided the conciliation agreement is court-approved (Commercial Code art. L. 611-8 II). Article L. 632-3 of the Commercial Code shields the approved agreement against suspect-period nullities. Court approval thus creates a reciprocal protective effect: the fiducie secures the new financing; the approval secures the fiducie. Absent approval (an agreement merely recorded), the protection is more limited, and a case-by-case analysis is essential.

Which assets can be transferred into a security fiducie?

A very broad scope (Civil Code art. 2011): assets, rights or security, present or future, movable or immovable, tangible or intangible. In practice: buildings, company shares (SCI, SAS, SARL), commercial receivables, trademarks, patents, business goodwill, contracts. For buildings, a formality at the land registry; for company shares, notification or approval depending on the articles of association.

What is the cost of a security fiducie in restructuring?

Several items: (1) fiduciary fees (typically 0.15 to 0.40% per year of the value of the fiduciary assets, with a minimum flat amount); (2) creation costs (notarial deed for buildings, notification, land-registry publicity, fixed registration duty French Tax Code 635 8°); (3) advisory fees (drafting the contract, negotiating with creditors). For a €25-30M matter, the total creation cost plus the first year is typically €80,000 to €150,000.

Can the settlor remain usufructuary or operator of the fiduciary assets?

Yes, frequently: this is the availability agreement (often called a "fiduciary lease" or "management contract"). The fiduciary is the owner; the settlor operates the assets on precise contractual terms. This is particularly useful for a security fiducie over operating buildings: the property company keeps the economic use while the fiduciary holds the ownership right as security. The interaction with VAT and depreciation is to be analysed case by case.

What is the tax regime of a security fiducie in restructuring?

In principle neutral (French Tax Code 238 quater A to I): the transfer to the fiduciary and the retransfer to the settlor do not trigger a taxable capital gain where the conditions of article 238 quater B are met (in particular: the settlor is designated as beneficiary and the fiduciary complies with the accounting undertakings, carrying over the book values). In practice, this is a major advantage over a classic sale-and-leaseback. A specific regime applies to disposals to a third party from the fiducie (articles 238 quater F to I).

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