The Role of the Creditors' Committee

In light of the financial crises that the world has faced since the beginning of the 21st century, the financial landscape in France has organized and structured itself similarly to Anglo-Saxon countries. The legislator has adapted with the Accelerated Financial Safeguard Act (SFA) of 2010, which notably provides for the establishment of creditors' committees, bringing together all financial lenders by type.

These creditors' committees have the advantage of ensuring that no stakeholder is excluded from discussions and negotiations. Indeed, for a restructuring agreement to be reached among all parties, it is a prerequisite that each committee is able to validate it individually through a two-thirds qualified majority vote.

However, in the context of restructuring operations requiring the rescheduling of financial debts, contractual majority rules necessitate unanimous approval from senior and/or subordinated creditors.

While negotiations between the parties typically occur in a so-called amicable context (in bonis procedure, ad hoc mandate, or conciliation), the finalization of these agreements can take place within a collective procedure, such as the SFA, particularly to identify recalcitrant creditors.

To address potential issues of minority abuse, the parties may collectively decide to transition to the SFA, establishing creditors' committees where the two-thirds majority rule applies. In this context, creditors' committees can prove to be entirely beneficial in reaching an agreement while circumventing majority rules.

Furthermore, nothing prevents their representatives from negotiating an alternative agreement in parallel and in confidence.

Indeed, the establishment of creditors' committees allows different classes of creditors, under the guidance of an agent and/or a representative of the active bondholders, to organize, engage in discussions and negotiations with all parties, and, if necessary, to formulate restructuring offers pre-approved by their own creditors' committee. This provides genuine credibility to the proposed offer, which may also, if applicable, be formulated in concert and pre-approved with the other creditors' committee.