Pre-Pack Sales Under Directive 2026/799: A Guide for Buyers and Creditors in France

Directive (EU) 2026/799, which entered into force on 21 April 2026, introduces a harmonised framework for pre-pack proceedings across EU member states, including France. Until France completes transposition – required by 22 January 2029 – the existing national insolvency framework under Book VI of the French Commercial Code continues to govern pre-pack and related insolvency proceedings in full. Buyers, creditors and investors engaging with distressed French businesses today must therefore navigate both the incoming European standards and the current domestic rules simultaneously.

What Directive 2026/799 Changes – and What It Does Not (Yet)

The Directive was approved by the European Parliament on 10 March 2026, adopted by the Council on 30 March 2026, published in the Official Journal on 1 April 2026 and entered into force on 21 April 2026. It rests on five pillars: avoidance actions, pre-pack proceedings, directors' duty to file, creditors' committees, and asset tracing. The objective is minimum harmonisation – meaning member states retain discretion to maintain or introduce stricter national rules when implementing the Directive.

This minimum-harmonisation approach is particularly significant for France. Book VI of the Commercial Code contains a sophisticated and well-litigated insolvency regime. That regime does not disappear on 21 April 2026; it remains fully operative until national implementing legislation is in place. Foreign clients sometimes assume the Directive has immediate direct effect on domestic proceedings – it does not. Only once transposition is complete will national rules need to meet the Directive's floor.

Pre-Pack Proceedings: The European Framework

Under Directive 2026/799, a pre-pack proceeding is a structured mechanism in which the sale of a debtor's business or assets is negotiated confidentially before formal insolvency proceedings open, and then executed immediately at the point of opening. The Directive establishes minimum procedural guarantees designed to protect creditors from undervalued fire-sales while preserving the speed advantage that makes pre-packs commercially attractive.

Key features introduced at the European level include:

• Transparency requirements around the marketing and valuation process conducted prior to formal opening;
• Creditor notification and consultation rights, including a role for the creditors' committee where one is constituted;
• Judicial or administrative supervision of the transaction, ensuring the sale price is validated against an independent valuation;
• Limits on avoidance actions against buyers who acquire assets through a compliant pre-pack, provided the procedural safeguards were observed;
• Asset tracing tools to support recovery where assets were transferred prior to the proceeding in circumstances that may be challengeable.

Because transposition is pending until 22 January 2029, the precise form these requirements will take in French law is, at the time of writing, subject to national legislative choices. Foreign buyers and creditors should treat the Directive's provisions as a reliable guide to where French law is heading, not as a statement of current French law.

The Current French Framework: Book VI of the Commercial Code

France already has pre-pack-like mechanisms operating under its domestic regime, most notably the cession préparée structure developed through court practice within the sauvegarde and redressement judiciaire procedures. These allow a debtor and its advisers to negotiate a sale with a prospective buyer during the confidential mandat ad hoc or conciliation phase, before the formal collective proceeding opens and the plan is adopted.

Several features of the current framework deserve particular attention from international parties:

• Confidentiality of conciliation: The existence of a conciliation proceeding is not public unless an accord is homologated. This confidentiality is commercially valuable but also means that counterparties dealing with the debtor may be unaware of the proceeding.
• Role of the commissaire de justice: In asset-realisation steps, a commissaire de justice (formerly huissier de justice) may be involved in the execution of certain procedural steps. Foreign clients frequently underestimate the practical importance of engaging with these officers correctly.
• Avoidance action exposure: A buyer who acquires assets outside a properly constituted proceeding faces the risk that transactions concluded in the période suspecte are challenged by the insolvency officeholder. The Directive's future harmonised rules on avoidance actions will eventually provide greater certainty, but under current French law the exposure turns on detailed factual analysis.
• Director liability: Directors of a French company in financial difficulty face potential liability under the existing Commercial Code rules, including for faute de gestion contributing to the insufficiency of assets. The Directive's pillar on directors' duty to file will, once transposed, establish a harmonised trigger point. Until then, French law applies in full.
• AMF and ACPR considerations: Where the distressed entity is regulated – for example a financial institution subject to ACPR supervision, or a listed company within AMF oversight – additional regulatory constraints apply to any pre-pack sale process. These constraints operate in parallel with insolvency law and require separate legal analysis.

If you are assessing exposure in an active French insolvency or a potential pre-pack transaction, Ferraz & Whitmore can assist with a structured risk review. Contact us at info@ferrazwhitmore.com or visit our contacts page.

Step-by-Step: How a Pre-Pack Sale Proceeds in France Today

While national implementation of the Directive is pending, the following steps describe the current French practice for a pre-pack-style transaction. Buyers and creditors entering this process should map each step against their own position.

1. Early identification and confidential negotiation. The debtor, typically advised by a restructuring counsel and an investment bank or adviser, identifies one or more potential buyers during the mandat ad hoc or conciliation phase. Negotiations are governed by confidentiality undertakings. No public marketing is legally required at this stage under current French law, though a robust marketing process reduces avoidance risk and supports valuation.
2. Independent valuation. The debtor and its advisers obtain an independent valuation of the assets or business to be sold. This valuation anchors the eventual purchase price and is central to demonstrating that creditors' interests are protected. Under the incoming Directive framework, such valuation will be a mandatory procedural element.
3. Negotiation of sale documentation. The buyer and debtor negotiate the terms of the asset purchase agreement (APA) or share purchase agreement (SPA) in advance of the formal opening. The agreement is typically conditional on court approval following the opening of a collective proceeding.
4. Opening of collective proceedings. The debtor files for redressement judiciaire or liquidation judiciaire, as appropriate. The commercial court (tribunal de commerce) appoints an administrator (administrateur judiciaire) and a creditors' representative (mandataire judiciaire).
5. Presentation of the plan or offer to the court. The pre-negotiated sale is presented to the court as an offer to be evaluated. The administrator reviews the offer, consults with the creditors' representative, and the creditors' committee (where constituted) may be asked for a position. The Cour de cassation has in its case law addressed the standards applicable to sale plan approval, and its jurisprudence continues to inform the assessment carried out by lower courts.
6. Court approval and closing. The court approves the sale plan. Closing occurs pursuant to the approved plan under the supervision of the administrator. The commissaire de justice may be involved in the physical execution of certain steps.
7. Post-closing matters. The buyer and remaining creditors must monitor the treatment of employees (transferred under TUPE-equivalent rules derived from EU law), any deferred or retained liabilities, and the potential for avoidance actions in the period following closing.

Realistic Timelines

The timeline for a French pre-pack transaction depends on the complexity of the business, the number of creditors and employees, and the speed at which a buyer can complete due diligence. As a general illustration:

• The confidential preparation phase (mandat ad hoc or conciliation) may last several weeks to several months, depending on negotiation dynamics.
• Once a collective proceeding opens, the observation period during which the court evaluates plans is subject to statutory maximum durations under Book VI of the Commercial Code. The precise durations depend on the type of proceeding and whether extensions are granted.
• Court approval of a pre-negotiated sale can be obtained relatively quickly compared with a fully open competitive process, which is one of the structural advantages of a pre-pack approach.

Foreign buyers consistently underestimate the time required for regulatory clearances – particularly where the target is subject to ACPR or AMF oversight, or where competition filings are required. These timelines run in parallel with the insolvency process and must be planned for from the outset.

Cost Drivers

The principal cost drivers in a French pre-pack transaction include:

• Insolvency officeholders' fees: The remuneration of the administrator and creditors' representative is regulated by statute. Nevertheless, in complex transactions, these costs can be material and should be budgeted.
• Independent valuation costs: A credible independent valuation is essential to defend the transaction against avoidance actions and creditor challenges. Cutting corners on valuation is one of the most common and costly errors made by foreign buyers.
• Legal counsel: Separate counsel for the buyer, the debtor, and (in some cases) the creditors' committee will each be engaged. Foreign buyers should retain French-qualified insolvency counsel with direct experience before the relevant tribunal de commerce.
• Regulatory costs: AMF and ACPR processes, where triggered, carry their own procedural requirements and may require specialist regulatory counsel in addition to insolvency counsel.
• Employee-related costs: The obligation to transfer employees under applicable labour law rules is a structural cost that should be modelled carefully before binding commitments are made.

Common Errors by Foreign Clients

Based on experience advising international buyers and creditors in French insolvency proceedings, several patterns of error recur:

• Assuming direct effect of the Directive: As noted above, Directive 2026/799 does not directly alter French domestic procedure before transposition. Foreign clients who proceed on the assumption that the Directive's rules already apply risk misjudging the procedural requirements.
• Underestimating creditor committee dynamics: French insolvency law provides for creditors' committees in proceedings involving companies above certain thresholds. The dynamics of committee consultation can affect the pace and terms of a pre-pack. International creditors who do not engage proactively in the committee process may find their interests inadequately represented.
• Inadequate due diligence on avoidance risk: Buyers who acquire assets through a process that later proves to have been non-compliant face the risk of avoidance actions. Under French law, as under the incoming Directive framework, the procedural integrity of the pre-pack is central to the buyer's protection.
• Overlooking the injonction de payer route: In some situations involving smaller claims against the distressed debtor, creditors may consider whether an injonction de payer or other debt recovery mechanism is appropriate in conjunction with or prior to the insolvency proceeding. The interaction between these mechanisms requires careful coordination.
• Failure to plan for director liability exposure: Where foreign clients are directors of a French entity entering insolvency proceedings, the exposure to personal liability under French law – including the duty to file in a timely manner – must be assessed independently of the pre-pack transaction itself. The Directive's incoming provisions on directors' duty to file provide useful comparative context, but French law governs until transposition.
• Neglecting post-closing monitoring: The insolvency proceedings do not close the moment the sale plan is approved. Ongoing obligations, potential avoidance claims, and employee-related matters continue to require attention in the months following closing.

Ferraz & Whitmore advises buyers and creditors on the full lifecycle of French pre-pack transactions, from early due diligence through post-closing monitoring. For an initial discussion of your situation, write to info@ferrazwhitmore.com or visit our contacts page.

Decision Checklist for Buyers and Creditors

Before committing to participation in a French pre-pack proceeding – whether as a buyer of assets or as a creditor evaluating your position – consider the following:

• Has an independent valuation of the assets been commissioned, and does it support the proposed purchase price?
• Has the marketing process been sufficiently broad to withstand scrutiny in an avoidance action challenge?
• Has the applicable Book VI procedure been correctly identified, and are the statutory timelines for the observation period and plan approval understood?
• Are there regulatory licences, AMF-listed securities or ACPR-supervised activities within the target that require parallel regulatory engagement?
• Have employee transfer obligations and associated costs been fully modelled?
• Has the creditors' committee been constituted, and if so, has appropriate engagement with the committee been planned?
• Have the directors of the target been advised on their personal duty-to-file exposure under current French law?
• Is there exposure to avoidance actions in respect of pre-insolvency transactions, and has that exposure been mapped against the période suspecte rules?
• Has post-closing monitoring been planned, including any contingent liabilities that may crystallise after the sale plan is approved?

Looking Ahead: Transposition by January 2029

France has until 22 January 2029 to transpose Directive 2026/799. The French legislative process will determine the precise shape of the implementing rules, and consultation processes are expected in the intervening period. Parties with a long-term interest in the French insolvency market – including restructuring funds, strategic buyers and institutional creditors – should monitor the transposition process closely.

Once transposed, the Directive will require French law to meet minimum standards across all five pillars. In areas where French law already provides equivalent or stronger protection – such as certain aspects of the conciliation process and the role of the administrateur judiciaire – existing rules may be retained. In areas where the Directive requires changes, the French legislature will have discretion as to implementation method, subject to the minimum-harmonisation floor.

Parties engaged in corporate disputes in France that intersect with insolvency proceedings should also note that the Directive's avoidance action provisions will, once transposed, affect the landscape for post-insolvency litigation. Early legal advice on transaction structuring can significantly reduce subsequent dispute risk.

To discuss how the current French framework and the incoming Directive requirements apply to your specific situation, contact Ferraz & Whitmore at info@ferrazwhitmore.com or through our contacts page.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.