After 5 months of enjoying exceptional government aid, troubled French companies have only 45 days to announce their inability to pay their dues before the Commercial Court, and this will lead to a wave of bankruptcy cases in the coming weeks.
In an article published in the French newspaper Lesechos, writer Guillaume de Calignon says that the measures taken by the French authorities to support the affected companies from March 12 to August 24 have led to the mitigation of the devastating economic effects of the Corona pandemic, but that may not It stops the wave of bankruptcy that experts expect in the coming period.
Governmental actions
Bruno de Mora Fernandes, an economist at the French foreign trade insurance company, Coface, confirms that “in most European countries, such as Spain, Italy or the United Kingdom, there have been temporary amendments to bankruptcy law to try to delay the declaration of bankruptcy by troubled companies and give them a chance to recover. During the closing period. "
According to the writer, France has succeeded in achieving this goal to a large extent at least until mid-August, when the "Altaras" Foundation has monitored only 20 thousand and 250 bankruptcies since the beginning of this year, which is 40% less than the bankruptcy cases that were recorded during The same period last year.
But things may deteriorate sharply in the coming period, and the director of studies in Altares, Terry Mellon, believes that "from now on it will be difficult to avoid waves of bankruptcy," especially in sectors such as tourism, hotels and restaurants, and even in the sector of organizing parties and events. .
Fernandes expects that in 2021 bankruptcies will reach the level they reached after the 2009 financial crisis, that is, about 62,000 bankruptcies annually.
Troubled French companies have only 45 days left to announce their inability to pay their dues before the Commercial Court (Al-Jazeera)
Threatening corporate issues
Dennis Lobos, President of ARC, a company specialized in debt collection, talks about what happened in the past period, saying, “During the period of closure and the decline in economic activity, companies took two different approaches, some of which benefited from government measures to the maximum and did not pay suppliers despite obtaining loans from the state. On the other hand, other companies paid their bills on time as much as possible, and this prompted suppliers to file cases against the first category, and leniency with the second category.
Terry Mellon believes that the longer the owners of troubled companies resort to commercial court, the less likely they will receive support, the problems accumulate more and the possibility of their continuation becomes very slim.
Mellon adds, "Since the beginning of last April, cases have been filed against at least 100 small and medium-sized companies, each employing more than 100 employees, and achieving sales of more than 20 million euros. Most of the cases have been filed before the bankruptcy court, and they have managed Some companies were able to conclude reconciliations and were able to continue their activities according to the restructuring plan. "
Loan repayment postponement
The French government has made progress in its negotiations with banks to extend the period of repayment of loans owed by troubled companies.
Fernandes comments, saying that the French authorities have no interest during the current period in pressuring companies to quickly pay off those loans that they obtained last spring.
French Economy Minister Bruno Le Maire announced in an interview with Les Echos that he wanted to establish a long-term loan system for at least 7 years, in order to support French companies.
Dennis Lobos expressed his support for this approach, saying that the real difficulty facing small and medium-sized companies is their lack of sufficient capital to face the crises.