At the End, the Creditors Win. Pre-Insolvency Proceedings in France, Belgium and the Netherlands (1807-c. 1910)

In nineteenth-century France, Belgium and the Netherlands, laws imposing pre-insolvency proceedings had different goals. In a first stage, from around 1810 until about 1860, continuity of businesses in distress was not a policy consideration. Rather, legislators purported to give the creditors early control over the insolvent’s estate, which was most often liquidated. Debtor-in-possession features were mostly conceived of as a temporary reward for cooperation; lowered requirements for re-entry in the market after the winding-up of their business were another advantage for cooperating debtors. This was the same in the three aforementioned countries. In the 1870s and 1880s, the French and Belgian legislators created new pre-insolvency proceedings, which allowed debtors to keep their assets. In the Netherlands, fixed-term moratoriums prevented such an approach. Yet, also in Belgium and France, the exemption of secured creditors hampered the feasibility of compositions, and a goal of saving firms in financial peril.