Emergency measures to address the crisis

Two types of measurements:

• The "special Covid-19" emergency measures proposed by the State, to address immediate cash flow difficulties.

Objective : To immediately alleviate the impact of the crisis on cash flow

• Emergency measures under common law to get out of the crisis.

Objective : To address the difficulties – To organize the exit from the crisis by implementing a debt rescheduling plan negotiated with creditors – To manage the cessation of payments

The "special Covid-19" emergency measures proposed by the State, to address immediate cash flow difficulties

The solidarity fund

Announcement by the Minister of Economy Bruno Lemaire on March 17, 2020 – pending the decree or order for immediate practical application.

The two conditions for benefiting from this solidarity fund

1. To be an eligible company (A company whose activity has been closed (the decree of March 14, amended by the decree of March 15) or a company which loses 70% of its turnover, it being specified that this loss will be determined by a comparison of the turnovers of March 2019 and March 2020.
2. Having a turnover of less than 1 million euros

The form of aid put in place by the solidarity fund:

1. Quick, simple, and automatic assistance is available upon declaration of €1500. This assistance will be paid by the Directorate General of Public Finances.
2. An anti-bankruptcy measure for companies employing at least one employee : additional financial support would be provided to prevent bankruptcy.

Postponement of URSSAF contribution deadlines

The postponement of the March 15th deadline , in whole or in part, for the employer's or employee's share, for a period of up to 3 months

• Case #1 : The February 2020 DSN (Social Security Declaration) has not been filed. It can then be filed until today, March 16, with a payment adjustment in this DSN.
• Case #2 : The February 2020 DSN has already been filed. It is still possible to modify your Urssaf payment (note, only if the employer's payment is due on the 15th) until Thursday, March 19th at 12:00 PM, on the Urssaf website (practical details: http://www.dsn-info.fr/documentation/telepaiement-services-urssaf.pdf ) .
• Case #3 : If the employer pays their contributions outside of the DSN system , without direct debit (SEPA direct debit), they can either not pay their contributions or reduce the amount paid by making a smaller transfer.
• Case #4 : The decision to postpone payment of contributions only applies to employee contributions , as the employer wishes to pay employer contributions. The employer can then log in to their online account at urssaf.fr and report their situation via the messaging system: "New message" / "A reporting formality" / "Report an exceptional situation".

Postponement of direct tax payments to the tax office

Postponement of the corporate income tax installment due on March 15 or June 15 / Postponement of the monthly business property tax payment

• Case #1: The company has already given instructions to pay its March 15th installment. It may try contacting its bank to contest the SEPA direct debit.
• Case #2: Payment has already been made; the debit has been processed. The company then has the option of requesting a refund from the tax office (SIE). A specific form for requesting a payment extension or tax relief has been created to address the Covid -19 crisis.

Deferral of VAT payment? Neither the press releases nor the form prepared by the Ministry for requesting payment extensions address indirect taxes, and in particular, VAT. The government confirms that only direct taxes appear to be affected by the emergency measures specific to Covid -19, with VAT not being covered by the deferral measures. However, in certain situations, such as the closure of shops or restaurants, it could be considered to offset the VAT due in February (payment to be made between March 19 and 21) against a potential VAT credit that the company's projected results for March 2020 suggest will be available at the end of March. Such an adjustment cannot be implemented without the agreement of the tax office and only upon presentation of accounting data justifying the adjustment.

Direct tax relief: These reliefs will only be granted by the tax authorities after an individual review of each application. To this end, an application justified by the circumstances and supported by accounting data (including a detailed financial forecast outlining the difficulties encountered and a debt repayment plan) must be submitted.

Mobilization of Bpifrance

• Bpifrance is providing a guarantee for cash flow loans granted by French banks to businesses due to the consequences of the Coronavirus. The guarantee covers up to 90% of loans with a term of 3 to 7 years and up to 90% of authorized overdrafts with a term of 12 to 18 months.
• Extension of standard guarantees for investment loans to support restructuring by banks, without management fees.
• Restructuring of medium and long-term loans granted by Bpifrance , upon request justified by the current situation. Bpifrance accepts the suspension of loan repayments effective today, March 16, 2020.
• Exceptional liquidity provision: Atout loans for SMEs or mid-sized companies (see below); Bpifrance mobilizes invoices and adds a cash credit of 30% of the volume mobilized.
• A freephone number has been set up by Bpifrance to support businesses: 0 969 370 240. An online application form is available on the website www.bpifrance.fr

Bpifrance's "Prêt Atout"

An exceptional cash loan set up by BpiFrance : a loan without guarantee on the assets of the company or the manager, dedicated to companies going through a difficult time linked to the Covid-19 health crisis.

• Eligible companies: Micro-enterprises, SMEs and mid-sized companies according to European definition / Minimum 12 months of activity / All sectors of activity, except exclusions (real estate investment companies, financial intermediation companies, real estate development and rental companies, agricultural companies with a turnover of less than €750,000, and companies in difficulty)
• Funded expenses: a one-off cash flow need, an exceptional increase in working capital requirements, linked to the economic situation
• Amount: From €50,000 to €5,000,000 for SMEs. Up to €30,000,000 for mid-sized companies.
• No guarantee on the assets of the company or its director
• Duration/amortization: 3 to 5 years. Capital amortization deferral of up to 12 months.
• Financial terms: Fixed or variable rate
• Terms: Financial partnership (1 for 1). Quarterly payments, capital amortization.

Simplified and strengthened partial unemployment

This system allows the employer to:

• First possible measure : temporarily close all or part of its establishment;
• A second possible measure  : reduce the working hours practiced in the establishment or part of the establishment below the legal working hours.

Two steps: 1) Request authorization from the Regional Directorate for Labor, Employment and Vocational Training (Direccte) to use the partial activity scheme, after consulting the Works Council (CSE) if applicable. 2) Once this authorization is obtained, the employer submits a claim for compensation under the partial activity scheme. See our detailed note on this subject.

Negotiation tools:

1. 1. For rescheduling bank loans: Credit mediator

These rescheduling arrangements must be negotiated with credit institutions, some of which have already announced that they will almost automatically accept a six-month deferral of repayment deadlines. The credit mediator can intervene, in particular, for the following reasons: termination of an overdraft or line of credit and/or refusal to reschedule a debt.

1. 2. For negotiations with clients or suppliers: Business Mediator

The Business Mediator provides free assistance to companies experiencing financial difficulties due to disputes arising from the consequences of the health crisis. See our detailed guide on your options for renegotiating your contracts.

• Other emergency measures announced and dedicated to businesses

Some of these measures can only be implemented with certainty after the adoption of legislation

• • Postponement of bank loan payments for 6 months without fees (pending a law or decree, subject to the agreement of the banking institution)
  • Rent deferral for commercial leases for very small businesses, independent workers, and self-employed individuals (pending a law or decree, subject to the landlord's agreement)
  • Suspension of water, gas and electricity bills for very small businesses, self-employed individuals, and micro-entrepreneurs

Emergency measures under ordinary law to exit the crisis

The general legal measures aim to help businesses emerge from the crisis by implementing medium- and long-term solutions. These mechanisms go further, through a deeper and more comprehensive process of preventing and addressing difficulties.

Ad hoc mandate / Justice conciliator

Companies can request the appointment of an ad hoc representative or a conciliator by the President of the Commercial Court to negotiate the necessary concessions with creditors. These professionals specialize in situations of financial and economic difficulty. They will intervene independently, transparently, and constructively to assess the company's situation and propose appropriate solutions, while encouraging creditors to make the necessary efforts to ensure the company's survival. In both cases, the objective is to obtain: payment extensions; new loan repayment schedules; and reductions and abatements of social security contributions and taxes. These procedures are confidential and regulate the duration of the negotiations, with a system in place to protect the company (e.g., during the negotiation period, banks or the French social security agency (Urssaf) may voluntarily suspend their debt collection efforts).

Essential condition : not to be in a state of cessation of payments (for the ad hoc mandate), or at the very least, in the case of conciliation, not to have been so for more than forty-five days.

Judicial safeguard

A preventative procedure to help a company address its insurmountable difficulties before it becomes insolvent. The goal is to allow the company to continue operating (if necessary, by reorganizing), maintain employment, and settle its debts. The procedure begins with an observation period (between 6 and 18 months) during which an economic and social assessment of the company is conducted to determine its recovery options (inventory of assets, statement of receivables, etc.). At the end of this period, a continuation plan is finalized, designed to enable the company to clear its debts while restarting its operations.

Judicial reorganization

This is a procedure, governed by safeguard rules, available to companies that have been insolvent for less than 45 days. The objective is to enable a thorough restructuring of the company so that operations can be restarted, jobs preserved as much as possible, and debts cleared. This procedure also begins with an observation period. At the end of this period, several options are available:

• The business is no longer viable; the procedure is converted into judicial liquidation  ;
• The business is viable, and continued operation is possible . Some assets will be sold, while others will be retained. A continuation plan will be established to allow the company to clear its debts (over a maximum period of 10 years) while simultaneously restarting its operations.

In the event of continuation, the priority objective is to demonstrate that after the implementation of the plan, the company's activity is sufficiently profitable to allow the continuation of current activity (see a development of this) while making the payment of the installments of the debt fixed at the date of the opening of the procedure (generally reduced due to the discounts and abatements obtained).