Chapter 11 vs Sauvegarde: How US and French Restructuring Really Compare

If you're interviewing for a restructuring group, especially one with a Paris or cross-border practice, someone will eventually ask: "What's the difference between Chapter 11 and a French sauvegarde?"

The short answer: both let a struggling company keep operating, freeze creditor claims, and push a plan through over objections. The big differences are who can file, how votes work, and how much power the court and creditors really have. Below is everything you need to answer confidently, with a worked voting example you can use in an interview.

The 30-Second Version

If you only remember one thing, remember this table:

Now let's unpack each piece.

What Is Chapter 11?

Chapter 11 is the reorganization chapter of the US Bankruptcy Code. It's the go-to tool for large US companies that need to fix their balance sheet without shutting down.

The key features

• No insolvency test. A company doesn't have to prove it's insolvent to file. That's why you sometimes see companies file to deal with a specific problem, like mass litigation.
• Debtor-in-possession (DIP). Existing management keeps running the business. A trustee is only appointed in unusual cases, like fraud or gross mismanagement.
• Automatic stay. The moment the company files, creditors must stop collection efforts, lawsuits, and foreclosures.
• DIP financing. The company can raise new money during the case, and the court can grant lenders super-priority or even liens that rank ahead of existing secured debt (a "priming" lien), if existing lenders are adequately protected.
• Executory contracts. The debtor can assume or reject contracts and leases, which is huge for retailers stuck with bad store leases.
• Section 363 sales. Assets, or the entire business, can be sold during the case, free and clear of liens.

How a plan gets approved

The debtor has an exclusive period of 120 days to file a plan, which courts can extend up to 18 months. Claims are sorted into classes of similar claims, and impaired classes vote.

A class accepts the plan if creditors holding:

• More than half in number of the claims voting, and
• At least two-thirds in amount of the claims voting

vote yes.

If some classes reject, the court can still confirm the plan through cramdown, as long as at least one impaired class (not counting insiders) accepts, the plan doesn't discriminate unfairly, and it's "fair and equitable." For dissenting classes, that means respecting the absolute priority rule: junior classes (like shareholders) can't keep anything unless senior dissenting classes are paid in full.

Every dissenting creditor is also protected by the best interests test: they must get at least what they'd receive in a Chapter 7 liquidation.

What Is a Sauvegarde?

The procédure de sauvegarde (safeguard proceeding) was created by France's 2005 law on business safeguard, and was explicitly inspired in part by Chapter 11. Eurotunnel's restructuring in 2006 was one of its first high-profile uses.

The key features

• Must not be insolvent. This is the biggest conceptual difference. The company must face difficulties it can't overcome on its own, but it must not be in cessation des paiements, meaning unable to pay its due debts with its available assets. If it already is, it goes into redressement judiciaire (judicial reorganization) instead.
• Management stays in place. The court appoints an administrateur judiciaire to supervise or assist management, and a mandataire judiciaire to represent creditors.
• Stay on claims. Pre-filing debts can't be paid, and creditors can't start or continue most proceedings to collect them.
• Claims declaration. Creditors must declare their claims, generally within two months of the court judgment being published in the official bulletin (BODACC).
• Observation period. Up to 6 months, renewable once, and exceptionally extended again at the request of the public prosecutor, for a maximum of 18 months in total.

How a plan gets approved

This changed significantly with the 2021 reform, which implemented the EU Restructuring Directive (2019/1023).

For larger companies (above thresholds based on headcount and turnover), affected parties are put into classes of affected parties. Shareholders get their own class too. A class approves the plan with a two-thirds majority of the votes held by those voting. There's no headcount test.

If not every class approves, the court can impose the plan through cross-class cram-down (application forcée interclasses). Similar to Chapter 11, there are protections:

• A best interests of creditors test (dissenters must do at least as well as in a liquidation or sale scenario)
• An absolute priority rule, with some room for exceptions
• Approval by a majority of classes, or by at least one class that would be "in the money" in a liquidation scenario

For smaller companies without classes, creditors are consulted individually. If they refuse, the court can impose uniform payment terms of up to 10 years, but it can't force them to accept write-offs.

Don't forget the "accelerated" version

There's also the sauvegarde accélérée (accelerated safeguard). It's only available to a company already in a confidential conciliation procedure, and it's used to lock in a deal that was mostly negotiated beforehand. Since 2021, it lasts up to 2 months, extendable to 4.

Think of it as France's rough answer to a prepackaged Chapter 11. Orpea's 2023 restructuring is a famous example, where shareholders were heavily diluted through a cross-class cram-down.

Worked Example: Same Vote, Different Outcome

This is the kind of detail that impresses interviewers. Let's take one class of unsecured creditors:

• 10 creditors in the class holding 100m of claims in total
• 8 creditors actually vote, holding 75m of claims
• 3 large creditors holding 55m vote yes
• 5 small creditors holding 20m vote no

Under Chapter 11

• Amount test: 55m out of 75m voting = 73%. Above two-thirds. ✅
• Numerosity test: 3 out of 8 voting = 37.5%. Not more than half. ❌

Result: the class rejects the plan. The debtor would need cramdown to push it through.

Under a French sauvegarde with classes

• Amount test: 55m out of 75m voting = 73%. Above two-thirds. ✅
• No headcount test.

Result: the class approves the plan.

The takeaway: the US numerosity requirement gives small creditors a collective voice. The French system, after 2021, puts more weight on the size of your claim. That's why large funds holding big positions tend to have significant leverage in French class votes.

The Differences That Actually Matter in Practice

1. Timing of the filing

In the US, you can file whenever it makes strategic sense. In France, sauvegarde is a pre-insolvency tool. If the company waits too long and runs out of cash, sauvegarde is off the table, and management loses some of its control in redressement judiciaire.

What this means for you: French restructurings tend to put a heavy emphasis on early, confidential negotiation through mandat ad hoc or conciliation before anything becomes public.

2. The role of the court

Both systems are court-driven, but France builds more court-appointed oversight into the process from day one through the administrator and creditors' representative. In the US, the court mostly steps in when disputes arise, while management and its advisors drive the case.

3. Shareholders' position

For years, French shareholders had strong blocking power in restructurings, which frustrated creditors. The 2021 reform changed that by putting shareholders in a class that can be crammed down. In the US, shareholders have long been at the bottom of the waterfall and can be wiped out if senior classes aren't paid in full.

4. Market depth

Chapter 11 has decades of case law, a deep DIP financing market, and a huge distressed investor base. The French post-2021 framework is newer, so expect more legal uncertainty on how courts apply concepts like the absolute priority rule.

How to Answer This in an Interview

Keep it structured. Something like:

"Both are court-supervised reorganization procedures where management stays in place and creditors are stayed. The main differences are that sauvegarde is only available before insolvency, while Chapter 11 has no insolvency test. On voting, Chapter 11 requires a majority in number and two-thirds in amount per class, while the French class system since 2021 only requires two-thirds in amount. Both now allow cross-class cramdown, subject to a best interests test and an absolute priority rule."

Then, if they push, use the worked voting example. It shows you understand the mechanics, not just the definitions.

Follow-up questions to prepare for

• Why might a company prefer a prepack or accelerated safeguard? Speed, lower costs, less damage to the business and its relationships with customers and suppliers.
• What's the absolute priority rule? A dissenting senior class must be paid in full before a junior class receives anything.
• What happens if a French company is already insolvent? It goes into redressement judiciaire, or liquidation if recovery is clearly impossible.
• Why is DIP financing so important? The company still needs cash to operate during the case, and new money lenders need priority to be willing to lend to a distressed borrower.

Final Thoughts

You don't need to be a bankruptcy lawyer to nail this question. Focus on the three big themes: eligibility (insolvency test), voting mechanics (numerosity vs amount only), and cramdown protections.

Get those right, have the voting example ready, and you'll sound like someone who already thinks like a restructuring banker.