FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
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(a) to obtain an order for, or payment of, a sum of money by the debtor to the creditor;<br />
(b) to set aside a contract for non-payment of amounts owed by the debtor; or<br />
(c) to enforce the creditor’s rights against any asset of the debtor (including pursuant to any security<br />
arrangements).<br />
Contractual provisions such as those contained in the Commercial Mortgage Loan Agreement that would<br />
accelerate the payment of the relevant Borrower’s obligations upon the occurrence of a bankruptcy event<br />
are not enforceable under French law.<br />
An administrator may renounce or set aside ongoing contracts (including the Occupational Leases). The<br />
administrator can be required to decide, within a maximum of two months following the start of the<br />
observation period, whether to continue the performance of the relevant agreement or to allow the<br />
agreement to be terminated. If the administrator elects to continue an agreement, the administrator must<br />
ensure that the tenant fully performs its contractual obligations arising after such election is made. It is<br />
however possible that the administrator could elect to terminate the Occupational Leases in these<br />
circumstances.<br />
French bankruptcy law assigns priority to the payment of certain creditors, including the French treasury,<br />
employees, secured creditors and post-petition creditors (see ‘‘Enforcement of Obligor Security’’ above ).<br />
If the court orders a judicial reorganisation, it can prohibit the sale of an asset that it deems to be essential<br />
to the continued business of the debtor (including the Property Portfolio) and postpone the payment of<br />
debts owed by the debtor.<br />
In a judicial liquidation of an Obligor, the judicial liquidator would realise the Secured Property (in the<br />
case of a Borrower) on account of the creditors. He would use, to that effect, powers given to him by<br />
insolvency legislation including that of selling the Secured Property or the shares (as relevant) by private<br />
treaty (vente de gré à gré) pursuant to article L.622-18 of the French Commercial Code or organising a<br />
speedy sale at auction. The aim of the procedure is to maximise the revenue accruing from the sale of the<br />
assets.<br />
In a judicial liquidation, all the debts of the insolvent Borrower would be accelerated, the Borrower’s<br />
assets would be sold by the liquidator, and the proceeds would be distributed to the creditors according<br />
to their respective ranking (preferred, secured or unsecured). Preferred claims (i.e. legal costs of the<br />
liquidator, certain employees’ wages, certain taxes and all unpaid sums arising from the continuation of<br />
the activity of the companies during the observation period) will rank ahead of secured creditors. Unless<br />
the liquidator has remained inactive for more than three months, secured creditors such as the Issuer may<br />
not enforce the security themselves.<br />
The time between the beginning of the insolvency procedure and the distribution of the proceeds to the<br />
creditors could be shorter than between a call by the Issuer under its security and the final distribution of<br />
the proceeds after a court sale and a procedure for the allocation of the price. This is due not only to the<br />
fact that auction sales at the insistence of a creditor are relatively slow, but also to the fact that in an<br />
insolvency, the various ranking of creditors are determined more quickly than in the procedure which<br />
follows an auction sale.<br />
The judicial liquidation procedure is controlled by the judicial liquidator and the insolvency court and not<br />
by the creditors of the company. A mortgagee can propose a prospective purchaser to the liquidator or<br />
he can offer to co operate (including via paid advertisement, for instance) in the advertisement of the sale<br />
or in the search of prospective purchasers in order to expedite the process of enforcement and distribution<br />
of the liquidation proceeds.<br />
At the end of the observation period, should the court rule out liquidation of the debtor, then it would<br />
adopt one of the two following recovery plans:<br />
(a) a continuation plan (plan de continuation), under which an insolvent company would continue as an<br />
individual entity and such plan may provide for delayed payments. The Obligor Security would<br />
continue to secure the rescheduled indebtedness but could only be enforced in the event that the<br />
Obligor defaults in the payment of any of the debts as rescheduled. Upon failure by the debtor to<br />
comply with its obligations under the continuation plan, any creditor may request the termination of<br />
the plan. Such termination would result in the commencement of liquidation proceedings and would<br />
not permit a direct enforcement by the Management Company; or<br />
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