The Investors Perspective – Finance and Security Regime

French law does not always understand and regulate appropriately circumstances in which large financings and related security interests are put in place. The rigidity imposed by French law on sophisticated market participants is regrettable. The economic efficiency of the security regime is impacted by its heterogeneous nature, in which in addition third parties receive an unsatisfactory level of information. A more homogenised registration regime should be envisaged if not more radically the creation of a single form of security interest for all movable assets. Further, French insolvency laws largely ignore secured creditor rights. The US system is radically different in some respects, while it too seeking to preserve the business as a going concern. Financiers will be keener to provide financing in a legal system which recognises the terms of their bargain. Uncertainty surrounding the efficiency of credit support increases the prudential costs of lenders and therefore financing costs. The forthcoming reforms of French security interest law and insolvency law will need to take this into account.