• Extraordinary creditors (créanciers sursitaires extraordinaires) are defined as the holders of extraordinary claims covered by the stay (créances sursitaires extraordinaires), i.e. claims covered by the stay secured by a special lien or a mortgage, the claims of creditor-owners as well as the outstanding claims of the tax and social security authorities (hereinafter referred to as ‘Extraordinary Claims’).
  • Ordinary creditors (créanciers sursitaires ordinaires) are defined by default as the holders of ordinary claims covered by the stay (créances sursitaires ordinaires) (hereinafter referred to as ‘Ordinary Claims’), i.e. claims covered by the stay other than Extraordinary Claims.

The above distinction entails a different treatment in some respects and in particular different types of measures that can be imposed as part of a reorganisation plan by collective consent.

Applicability of the stay to Extraordinary Claims

Subject to some subtleties, Extraordinary Claims are subject to a stay on enforcement action on the debtor’s movable or real property (as a result of the exercise of enforcement proceedings) (i) until the judgment ruling on the request to initiate judicial reorganisation proceedings (the ‘Initiation Judgement’) (whether the action was initiated, or the enforcement proceedings commenced before or after the application was filed) and (ii) during the stay initiated following the Initiation Judgement.

Possibility to compromise Extraordinary Claims as part of a reorganisation plan without the consent of the applicable creditors

Article 43 of the New Insolvency Law provides for a list of the various measures that can be agreed as part of the reorganisation plan (e.g. payment terms, capital and interest debt relief, conversion of claims into shares, waiver of interest or reschedule of the payment of such interest, priority allocation of amounts earned against the main amount of the debt) without distinguishing between Extraordinary Claims and Ordinary Claims.

However, article 45 of the New Insolvency Law (which relates specifically to Extraordinary Claims) provides for a limitation of measures as part of the reorganisation plan applicable to extraordinary creditors to a suspension of the exercise of their existing rights for a period not exceeding 24 months from the date of the sanction judgment (subject to extension) and specifies that any other measure ‘affecting the rights of the extraordinary creditors’ must be individually approved by such extraordinary creditor(s).

Article 43 should, therefore, be read in the light of, and in conjunction with, article 45 and the restrictions on the impact of the reorganisation plan on the rights of extraordinary creditors provided therein. To respond to such restrictions, the debtor will need to negotiate with extraordinary creditors new repayment arrangements, where such extraordinary creditors will benefit from a stronger position in light of the protection offered by article 45 of the New Insolvency Law.

One point to note is that the limitation of article 45 of the New Insolvency Law is directly derived from a similar article in Belgian law, which application has been restricted since 1 September 2023 in that it is no longer applicable in context of judicial reorganisations by collective consent applicable to large companies.   

It will be interesting to see how in practice the restrictions of article 45 will be dealt with and how much it will impact negotiations with the various creditors and ability to implement a cross-class cram-down. It will also be interesting to follow how firmly this limitation rule will be applied by courts and whether an evolution similar to Belgian law in the direction of a limited applicability of this high protection of extraordinary creditors will take place.