To better understand efficiency of a system, it is sometimes useful to compare it to others. This is what Sébastien Laye, associate researcher at the Thomas More Institute, did. In his note, the Economist describes a insolvency regime which need a improvement.
The comparative analysis carried out by Sébastien Laye shows that the support for companies in difficulty in France is out of step with what is practiced in other Western countries. And there is an urgent need to improve the French insolvency regime. The pandemic has caused a economic crisis of incredible violence. The economy is recovering, with a certain number of indicators which are green. But there are also many companies which toil has stick out your head of the water, or even threaten to go bankrupt. The businesses that risk failing number in the tens of thousands, and unemployment, although falling, remains at a high level.
The economic devastation and social problems of the pandemic affect all countries. This is why it is interesting to have a comparative approach to the systems put in place in different countries to to accompany the sectors in difficulties. The researcher thus proceeded to examine the adequacy of France's solvency regime and compared it, on the basis of twenty-two criteria, with that of eight other countries.
The Thomas More Institute focused on supporting companies in difficulty in Germany and Denmark but also in Spain, the United States, Finland, Ireland, Italy and the United Kingdom. The organization took into account different indicators general practitioners but also carried out a multifactorial analysis of the various aspects of a corporate restructuring. By combining this data, the institute was able to determine five main points of analysis.
The analysis clearly underlines that the French regime is unsuitable in particular given the scale of the difficulties that businesses are experiencing. Sébastien Laye's benchmarking note also makes the World Bank's Doing Business ranking of insolvency regimes: when the United States and Finland are respectively in first and second place, Germany and Denmark in fourth and in sixth place, France is content for the hour of the 26rd rank.
But how, precisely, does French diet is it performing so poorly compared to other Western countries? The institute's note highlights in particular the rigidity and lack of protection of procedures for creditors. The document also points out the opacity and lack coaching of job of insolvency practitioner.
The administrators and legal representatives are a very French specificity. Their functions are carried out in the eight countries compared in particular by lawyers and accountants, or sometimes also actors from the economic world. To fundamentally reform the insolvency regime in the French way, it will therefore also be necessary to open up the profession and better regulate remuneration. Countries with best diets are those whose profession is not undermined by conflicts of interest.
The effectiveness of a insolvency regime also depends on preventive measures. In fact, in many Western countries, the authorities have put in place systems to alert on cases of “pre-insolvency”. Companies in difficulty thus benefit from support before it is too late. And it works, since it limits the number of bankruptcies.
In some countries we find a insolvency regime specific to PME. Restructuring tools are among the obstacles to financing companies established in France. However, it is more important than ever that this question returns to the heart of the debate, particularly from the perspective of reimbursement of secured loans by the state. There are several ways to improve this situation. The French authorities could, for example, draw inspiration from what other European countries are doing which are setting up mechanisms of security of the investors before a bring of funding.
If the French insolvency regime has defaults, it also presents a certain number of advantages, particularly in terms of employee protection. Comparative analysis with countries such as Germany, the United States or Denmark allows us to highlight the importance of guarantee of the wages what does the French regime. This gives priority to receivables salaries compared to others, with additional higher compensation than in other countries.
The speed of treatment of the compensation files is another asset for France. And when we consider the economic and social consequences of the crisis, this aspect takes on particular importance. The Ministry of Justice plans a regime who will have incidences on the insolvency regime hexagonal. Economists and professionals in the sector already fear that the few assets of French diet are not weakened.
