Éloïse Lacroix*
What can we learn today from Simone de Beauvoir’s theory, (dating back from the late 1940’s) about the origins of the dissimilitude of behaviours between men and women? More precisely, how can it have a resonance in our today’s insolvency law? The causal connection between the two is not easy, but Dr Lézelle Jacobs brilliantly highlighted it at a “microeconomic scale” (I). However, it seems possible to encounter it again, at a “macroeconomic scale” (II). My focus here will be on the latter.
I – The emergence of a gender-based study of Insolvency Law at a microeconomic scale
As other fields of Law already have an access to an insightful gender-based study, insolvency law should be at oar with the other studies in its domain (a), that should nevertheless, not be regarded with a blindness eye (b).
(a) Embracing the possibility of a new thinking
Starting with the study of Corporate Law, Dr Jacobs itemizes the attributes that can be found while studying the legal practice and conception of female lawyers. Through the different feminist theories, some common traits can be noticed.
Women behaviours tend to look more for an inclusion of all stakeholders, tend to favour decentralised decision-making processes and to flatten hierarchies, to distribute formal authority more widely, to improve communication, and to increase participation by all types of workers. She adds women also “stress the importance of increased individual autonomy and discretion within the institution”.
Dr Jacobs extends the theory to the insolvency law, where the aim is to address both the debtor’s sustainability and the creditor’s repayment. Here too, women’s approaches reveal to be, as well as for corporate law, more inclusive. Instead of only considering the creditors as worthy of interest, according to Dr Jacobs, it seems that women tend to consider other interests than the mere creditor’s ones and not only apprehend the debtor through the spectrum of the shareholders. More specifically, they take into account employees, trade suppliers, and even tax authorities. The author also evokes a search of a social justice[1] whereas a traditional practice could lead to oppression, division and exclusion, in its search of classification and hierarchisation in order to distribute the remaining value of the debtor.
(b) Foiling the potential dangers of such an analysis
Such an analysis of a gender-based practice of insolvency law has a real utility in better understanding the bias engendered by socialisation and spilling over onto the way to treat companies’ financial difficulties. This could enable people aware of their bias to make more objective and rational choices.
However, it is important to keep in mind that the studies only take into consideration an average conduct that cannot be taken as a guide on conduct of every female practitioner[2]. On the contrary, men cannot be considered as not acting in a feminist way and a gender study of law should not merely focus on the sex of the practitioner.
Plus, as the studies express a common tendency, it may be regarded that, as the insolvency practice is more and more mixed-sex[3], the traditional performance should be modified with time.
Another difficulty while embracing the theory of a feminist insolvency law, is hidden behind the concept of social justice that is said to be defended by some women. For a start, it is a difficult concept to be defined. In her article, Dr Jacobs quotes the Oxford dictionary’s definition of social justice that is: “justice in terms of the distribution of wealth, opportunities and privileges within a society”. The inner issue is the complexity in the determination of a commonly accepted understanding of justice when discussing bankruptcy law and redistribution. To whom shall the very first value be distributed to? To the creditors, in order to prevent a domino effect of bankruptcies? To the employees with the aim of compensating their labour? Then, at a more macroeconomic scale, should the company be liquidated? Should the state agree upon a discharge of debts resulting from taxation? And, to a broader extent, is it in the interest of the society to preserve under-efficient companies and an artificial employment?
Those questions come within the economic policy of the states, and this is the reason why accounting for social justice in this field reveals complexity when thinking of insolvency law practice.
II – The possible expansion of the gender-based study of insolvency law to a macroeconomic scale?
The gender-based study has been developed at an individual level, though behaviours are profoundly influenced by national insolvency laws. The author proposes a slight study of French Insolvency Law to determine whether it can be considered as masculinist or feminist (a). Then, she discusses it in light of the future transposition of the directive n° 2019/1023 from June 2019 (b).
(a) A feminist state policy
To set the scene, like in so many other places, French law has established a hierarchisation of creditors, to determine the distribution ranks in a case of liquidation[4].
Nonetheless, besides this ranking, French Law is not setting apart the workers’ rights. In fact, their claims are guaranteed by a special organisation[5] financed by contributions of every employer and repaid upon the outcome of the liquidation, according to the rank according to which the organisation may be subrogated[6] in the employees’ rights.
Furthermore, the creditors’ claim repayment is not the only objective of the French insolvency law and policy. Actually, the order given by article L. 631-1 of the French commercial Code ̶ that sets reorganisation proceedings “enabling a pursuit of the activity of the company, maintaining the jobs and allowing the reimbursement of the creditors[7]” ̶ may be considered as a ranking by importance of the goal[8]. Thus, in this acceptance, the main objective would be the pursuit of the activity and the less important objective is repayment of the creditors. Hence, French insolvency law would be an inclusive law, as it not only favours the creditor’s interests, but also that of other parties. This could be understood as the spirit of this law, as it also contains several preventive proceedings in order to avoid the liquidation[9]. With this in mind, the French insolvency law could be considered as feminist.
However, as France is part of the European Union, it has to abide by the new directive
n° 2019/1023, of June 20th 2019[10], and will have to transpose it into its jurisdiction.
(b) A reconsideration of the French position due to a traditionalist Europeanisation?
As French Law is already more than familiar with the concept of preventive proceedings[11], one of the main aspects the country has to focus on, in order to transpose the directive, is the implementation of classes of creditors.
Indeed, French Law doesn’t know of the concept of classes of creditors. It uses a similar concept of committees, different from the ones in the US Chapter 11, as it gathers some creditors according to their status and not to the nature of the claim they own[12]. The others are to be asked individually whether they would accept or not the remittances and payment terms demanded by the debtor, since the plan is at its initiative (at least in the safeguard proceedings[13]).
What the transposition of the directive may change, is the role played by the creditors, as the article 9 of the directive establishing the classes of creditors also provides that in their transposition, “Member States may […] provide that creditors […] have the right to submit restructuring plans, and provide for conditions under which they may do so”[14]. This possibility of competing plans is possible in French Law since 2014[15], but is today still limited to the members of the committees.
Depending on how France will transpose the directive, its Insolvency Law may become less debtor friendly and may hand a controlling role to the creditors. This could result in a less inclusive Insolvency Law, of creditors making decisions in their very own interest. Thus, this could lead to a more traditionalist and masculinist French Insolvency Law, according to Dr Jacobs criterion.
Thereby, one question is still pending : Will my country remain a strong woman? Everything will depend on the political choices to be made by the Government[16]. Nonetheless, it may reasonably be thought that workers’ rights will still be preserved, in the French tradition. Also, because the directive offers an option to classify workers’ claims (hence enabling them to be cross-class cram-downed) or not classifying them at all, in a more inclusive and so, feminist way[17].
Éloïse Lacroix graduated from the Master of Laws in Business Law of the Sorbonne University, and is currently finishing the Insolvency Master of Laws of the Sorbonne University, as well as at the Paris Bar School.
[1] For instance, Dr JACOBS writes “A clear correlation with this approach and the ideology of inclusion (not isolation) and social justice of the feminist movement can be made”.
[2] This is a point also remembered by Dr. JACOBS : “a feminist approach to insolvency does not necessitate the involvement of women only”.
[3] The field has been very men-only for a long time but tends to be more and more mixed with the arrival of women lawyers, trustee in bankruptcy representing the creditors, then more recently, the arrival of women as trustee in bankruptcy representing the debtors.
[4] See article L. 622-17 for the safeguard and reorganisation proceedings and article L. 641-13 of the French Commercial Code for the liquidation proceedings.
[5] Called the « Association pour la gestion du régime de Garantie des créances des Salariés », or the « AGS ».
[6] It is important to notice that the organisation cannot be subrogated in the workers’ right for every claim, for more precise information, see article L. 3253-16 of the French Labour Code.
[7] Free translation.
[8] Nevertheless, the mere objective of the creditors’ reimbursement may justify the opening of the reorganisation proceedings when the activity already ceased, according to the French Supreme Court, see Com. 4 mai 2017, n°15-25.046, and its comments (in French only) : D. 2017. Actu. 974, obs. LIENHARD ; D. 2017 Pan. 1941, obs. LUCAS.
[9] French Law provides for an ad hoc mandate, a conciliation and a safeguard proceedings to be opened before the insolvability of the debtor, in order to avoid it.
[11] DEGENHARDT J. E. Le droit français est-il conforme à la proposition de directive européenne du 22 novembre 2016 visant à harmoniser le droit des procédures collectives ?, BJE 2017, n° 114h2, p. 153 : assuring that French Law, amongst all European Insolvency Laws is one of the Law for which preventive proceedings are the most important.
[12] According to article L. 626-30 of the French Commercial Code, two main committees are to be recognised, the one of the credit institutions and equivalent, and the one of the main suppliers. Another one, that could be considered as a third one is formed with the bonders (see. article L. 626-32 of the French Commercial Code)
[13] See article L.626-30-2 of the French commercial Code : the debtor with the help of the trustee in bankruptcy, presents its proposals in order to elaborate a safeguard plan. NB : In France, the trustee in Bankruptcy assists the debtor in its restructuring (administrateur judiciaire), and the creditors are represented by another practitioner, the “mandataire judiciaire”.
[14] Today, article L.626-30-2 of the French commercial Code provides for the possibility offered to the creditors, members of the committees (so, some very special creditors), to submit proposals for the plan to the debtor and the trustee in bankruptcy
[15] See DAMMAN R., PODEUR G., Le rééquilibrage des pouvoirs au profit des créanciers résultant de l’ordonnance du 12 mars, D. 2014, p. 752, explaining how the creditor can present an alternative plan.
[16] As a Law of the French Parliament allow the government to legislate for the very purpose of the transposition, and according to diverse rules, see article 60 of the LOI n° 2019-486 du 22 mai 2019 relative à la croissance et la transformation des entreprises.
[17] Article 1, §5, (a) of the directive evokes this option : “Member States may provide that the following claims are excluded from, or are not affected by, preventive restructuring frameworks referred to in point (a) of paragraph 1: (a) existing and future claims of existing or former workers”.
THE HITCHHIKER'S GUIDE TO CORPORATE GOVERNANCE 