Our Deals and cases

Fusions & Acquisitions - Capital Investissement

Mergers & Acquisitions – Private Equity

GOLDFINGER (Double LBO)
Management and investment fund as purchaser

Target business sector
Two French groups, both competitors in the distribution market of jewelry.

 

Deal context and issues
The difficulty of this deal was to find in the context of an economic crisis partners willing to achieve a simultaneous double LBO on two group which were competing against each other and which were quite different from a managerial and financial standpoint. In addition, taking into account the targets, the antitrust aspect of the transaction proved to be crucial.

 

Our approach
The firm assisted the management of Target 1 in its search of new financial partners willing to invest in this substantial double LBO project as well as in the research in a sluggish market of a bank financing and/or a mezzanine financing in order to carry out this project and its development, particularly in Europe.
After several months of work, the deal was completed with three financial sponsors and a pool of banks. As regards the funding, besides equity and quasi equity contributed by the financial sponsors, a bank debt was finally arranged with a pool of four banks.
Both, in-depth knowledge of the key market players and technical expertise of our firm in similar cases clearly enabled the completion of this double LBO in less than 3 months despite the relatively depressed markets.
In addition, leveraged acquisition finance was suffering from a mistrust due to the lack of protection ofcreditors which prompted some players to demand that large cap LBOs be structured via Luxembourg holding companies (structures known as “double Luxco”).
Hence, with the sole advice of our firm and the support of three investment funds with whom the management was willing to turn such a group into a key European leader in jewelry, the management of the French leader in the concerned industry was able to negotiate the exit of its majority shareholder while negotiating the purchase of its competitor.

Legal team

Mergers & Acquisitions

VISION (Industrial Manufacturing M&A)
One of the world leaders in optical equipment

Target business sector
Manufacture and trade of ophthalmological and optical equipment

 

Deal context and issues
The target group, including the target itself and numerous foreign subsidiaries, was a competitor and significantly larger than the purchaser. At the time of the transaction, the target group was experiencing financial difficulties. Hence, the acquisition was a fine opportunity for the client to continue its growth whilst broadening both its product range and its international positioning subject, obviously, to the recovery of the target group following the acquisition.
During a period where financing was scarce, the funding of the transaction was to be implemented with equity and quasi-equity, in particular through private equity funds some of which already held a stake, and in a second phase via a refinancing by a pool of banks.
In order to specifically define the perimeter of the target group (including the target, various subsidiaries and assets), carve out steps were required prior to the implementation of the acquisition. Moreover, within the economic context at the time, agreements with the banks of the target group were to be entered into in order to maintain the funding of the target group within the framework of the acquisition and thereafter.
Aside from the legal complexity arising from the financing, legal and tax issues of this type of transaction, the deal was also complex in terms of the nationalities and cultures of the parties to the transaction, in terms of the number of players in the case and in terms of the limited time frame available to complete the deal.

 

Our approach

The client, which we had advised on previous transactions, requested our assistance for this new strategic acquisition deal.

Beyond the contribution of our team in terms of know-how and its experience regarding such issues as fundraisings, industrial acquisitions, debt restructurings and the necessary cultural bridge required for cross-border mergers of multinational groups, the solutions proposed by the Firm pertaining to the strategic aspects of the management of various negotiation phases and sessions were one of the decisive factors for a successful transaction.

The operational phase of the deal lasted six months and required the input of several other departments of the firm depending on the periods and on the legal issues encountered.

The resources deployed by our firm afforded the implementation of the transaction within the required deadline and in accordance with the required professionalism in this type of case.

 

Legal team

Corporate Finance

SPARE (Secondary LBO)
A family entrepreneur having created and developed important groups in the catering trade, as well as in distribution and in tourism

Target’s operating sector
Large catering group with a financial sponsor as a minority shareholder. Multi-concept model with significant organic growth and a significant external growth strategy.

 

Deal context and issues
The economic crisis was ongoing and numerous deals failed due to the lack of funding. The issues were the requirement of a minimum yield for the exiting investment fund, the entrepreneur’s desire to remain the majority shareholder and the necessity for the project to have sufficient resources for its growth and build ups.

 

Our approach
The firm acted as a true strategic counsel and as a « Consiglieri » in this deal.
We advised without the support of any investment bank the majority entrepreneur in his search of new financial sponsors as well as in the search of a bank and mezzanine financing in a market experiencing a crisis. The challenge was significant since in addition to the difficult market market t the group’s turnover was 120ME while the amount of the anticipated financing was 70 ME.
Following 12 months of work and with the assistance of our law firm, the entrepreneur found the ideal partner. Two financing structures were considered: a unirate financing and a classical senior/mezzanine debt structure. The transaction was finally entered into on the basis of the latter In addition, the group was afforded the necessary resources both in terms of equity and classical indebtedness in order to finance the external growth program mentioned in the agreed business plan.

Legal teams

Mergers & Acquisitions, Capital Investment
Tax

DEGUSTATION (Turnaround)
To begin with an entrepreneur, who converted to investments in enterprises experiencing difficulties

Target’s operating sector
Specific sector of the food industry
Deal context and issues
The Firm counseled the investor in respect of his takeover project of an industrial operating branch in difficulty. The subject operations, which were no longer strategic for the foreign group to which they belonged, were particular in that they were both significantly entwined with the group’s other operations and they were experiencing major financial difficulties.

One of the main issues was the structuring of the transaction and, more particularly, the identification of all of the required assets to operate on a standalone basis, the attached liabilities and the choice of the carve-out method.
The difficulty was increased by the fact that the terms of the deal had to be finalized very quickly owing to the economic situation of the target and within a context where certain drafts bills in respect to taxes would have a very significant impact on the structuring of this type of transaction.

To this moveable framework, should be added the requirement to comply with certain legal and regulatory procedures and to secure approvals prior to the implementation of the transaction, which caused a lead-time of several months between the signing and the closing of the deal.

In this context, the funding mechanisms of the operations were to be dealt with carefully in light of the very significant changes of the waking capital requirement arising from the seasonality of the subject operations.
Our approach
In a first phase the Firm endeavored to understand the operations, their modus operandi and in particular the flows between the subject operations and the seller. This upstream work allowed us to better understand the future requirements of the standalone operations to guide the operatives in the definition of the constraints of the takeover and the formalization thereof.

The co-operation of the M&A, Private Equity and tax teams of the firm as well as the accounting team of the client enabled the preparation of the opening balance sheet of the target and the working on the issue of the reconciliation of such balance sheet with the valuation of the takeover target.

Two very different structures were presented to the seller and its advisors. The most classical solution was finally chosen and was approved by the Commercial Court under a conciliation agreement.

Legal team

Corporate Finance

TED (Spin-off in the industry sector)
French investors specialising in agribusiness and related industries

Target’s sector
The target was a French company producing traditional patisseries for catering and distribution.

 

Deal context and issues
The target was owned by a French subsidiary, which specializes in the production of breads and is owned by a British company. The British Company planned to sell both its French subsidiaries simultaneously. Our clients, who were only interested in the acquisition of the target, had presented the British seller with a joint offer with an industrialist specialized in bread making, viennoiserie, patisserie and catering, which wanted to acquire the subsidiary specialized in the production of breads.
In light of the planned sale of the two French subsidiaries by the British seller and the joint offer, the issues were the interposition of the “bread” subsidiary between our client’s target and the seller, the fact that several services (inter alia, IT, administrative, logistical, accounting or human resources) and several employees were shared by the two French subsidiaries, as well as the seller’s requirement that the deal be subject to English law.

 

Our approach
The strategy our clients chose was, first, a joint offer to the seller regarding an initially non-separable perimeter in order to steering the seller to the possibility of a coordinated double transfer. This has been the key factor of this deal’s success.
The expertise of our firm in multicultural management of the two different purchasers (a French industrialist and an investment fund) and a British industrialist seller in British and French legal contexts was another determining factor.
Finally, the ability and the experience of the firm on carve-out and group sales have allowed clients to efficiently organize the issues of the separation of activities and transactional services.

Legal team

Mergers & Acquisitions

APOLLO (Primary LBO)
A French investment fund that invests in industrial and tertiary companies, often family companies, with a strong growth potential

Target’s sector
The activities of the target group, described by Jacques Attali as one of the forward-looking business sectors in the world, is related to metrology and management control operations, measurement and trial equipment parks.

Deal context and issues
The target operations were carried out by the seller’s industrial group within a division consists of nine companies (including a foreign joint venture), held by nine different transferor companies and located in seven countries (France, Germany, Denmark, Spain, Italy, Holland and Sweden).
Some of the target operations were regulated or covered by the “secret defense clearance” for which specific authorizations, clearances or certifications were required.

Our approach
Our recognized expertise in both LBO and carve-out as well as in cross border acquisitions enabled us to carry out a deal combining, on one hand, the characteristics specific to these types of deals and the particular complexities of this case, with the specific authorizations “secret defense” required on commercial contracts and on the transfer of the target companies and, on the other hand, the complexities of coordinating concurrent nine acquisitions in seven countries.
Our know-how in coordinating a network of handpicked partners in the relevant jurisdictions has been a major asset in the success of this deal and strengthened us, if need be, regarding our strategy of strict selection of quality partners in each jurisdiction by specialty and expertise (M&A, Finance, etc.).
This deal was one of the most complex to undertake for the client but one of the most profitable investments as well. The client had assumed that the structuring work of this deal would also allow to optimize the subsequent exit conditions. His assumption was confirmed when the investment fund sold the group.

Legal team

Mergers & Acquisitions
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BANQUE & FINANCE

BANKING AND FINANCE

CONSTELLATION (Financial restructuring)
A world leader in manufacturing of concrete implements

Borrower business sector
Design, manufacture and sale of concrete products and prototypes.
 

Deal context and issues
In spite of an earlier financial restructuring in 2011, the borrower, a French group internationally recognized within its sector, had struggled to recover and was again facing financial difficulties. Other than the need for a second restructuring relatively soon after the first, which made the climate of the negotiations more difficult, one of the principal complications of the operation was the diversity of profiles and interests among the lenders. In particular, since the previous restructuring, the pool had been opened to investment funds whose speculative interests and/or intentions to take over the target group in whole or in part differed from the interests of the institutional investors and usual real lenders.
 

Our approach
Our firm assisted the borrower in its negotiations with the senior lenders, the mezzanine lenders and its majority shareholder in order to complete a new financial restructuring to allow it to continue its industrial activities under the best possible conditions.
Given the involvement of such a numerous and diverse pool of lenders and the significant concessions required of all the parties, the rescue of this important French group required long and labor-intensive negotiations, despite the invaluable assistance of the conciliateur appointed by the courts to facilitate the operation. In particular, a number of “vulture” funds tried to take advantage of the group’s difficult financial situation to take it over. In the end, this restructuring required significant conditional write-offs on the part of all lenders and the recapitalization of the group with new money provided by the majority shareholder along with several debt funds in the pool and a number of previous lenders.
The borrower, a client of the firm for several years, benefited not only from our technical expertise in debt restructuring but from our knowledge of and relationships with the market actors involved in the operation.
The firm is proud to have been one of the cornerstones of the group’s rescue, helping to avoid the bankruptcy or takeover and dismemberment of a company with more than 10,000 employees around the world.

LEGAL TEAM

Corporate finance

WONDERLAND (Structured Financing)
Movie theater operator in different European countries and movie distributor

Deal context and issues
The generalization of digitalized projections in movie theaters requires a significant investment which mainly benefits the distributors and producers. Distributors agreed to contribute to the financing of this mutation by setting up a system of Contribution to the Transition to Digital or Virtual Print Fee (VPF). The legislator also became involved with a bill on the subject, restating the same principles in respect to the contribution of distributors. In this context our client decided to equip its movie theaters with digital technology.

 

Our approach
In order to do so, the Group entered into an unusual master agreement with a company acting within the framework of such operation as a third party investor, lessor and VPF collector. An innovative financial structure was devised affording the mutation of our client’s movie theater network and its financing in accordance with an 18 to 24 month deployment schedule. Under the scheme, financial institutions financed the acquisition of the digital equipment by the third party investor company. The latter sub-leased the equipment to our client and paid the leasing rentals with the VPF generated by the movies projected in the theaters of the operator and the sub-lease rentals paid by the latter to the third party investor. At the time it was the largest digitalization financing transaction ever set up in Europe under such a financial package.

Legal team

Corporate Finance

MUSCAT (Debt renegociations)
Several mezzanine investors.

Target’s operating sector

The purchase, preparation and retail sale of all food products, the rental of all table accessories and reception equipment and the operation of all premises and salons for meetings and soirees

 

Deal context and issues

The acquisition of the target was partially financed by senior bank debt, by senior and junior mezzanine funding.

Soon after its acquisition and owing to the economic crisis and, more particularly, the downgraded situation in the catering and event organization sector, the target faced economic difficulties which led it to commence negotiations with the institutions which took part in the above senior bank financing, and the senior and junior mezzanine financing. The value of the target was between the amount of the senior debt and that of the senior mezzanine, it became necessary to completely restructure the transaction. A mandataire ad hoc, followed by the opening of conciliation led to the signature and the acknowledgement of a conciliation protocol.

 
Our approach

Following discussions led by the special administrator, the target, the sponsor, the senior lenders and the mezzanine lenders agreed to restructure the equity and quasi-equity via a new equity contribution, a partial conversion into equity of the senior mezzanine debt, the entire conversion into equity of the junior mezzanine debt and to reschedule the senior debt and the residual mezzanine debt. The difficulty in this case was to provide for a waterfall affording all a seniority ranking which was not too foreign from the initial subordination principles. Different preferential share tranches were thus issued, each preferential share tranche giving priority access to a portion of the net disposal proceeds at the time of a future and possible exit.

Legal team

Corporate Finance

LEONARD (Syndicated Loans)
Five major French banks.

Target’s business sector

Leading group of companies in coiffure with a strong growth potential

The firm counseled the banks in connection with the setting up of the financing for the acquisition of the group, the refinancing of the group’s existing debt and the setting up of a facility for the financing of build-ups growth and a capex credit facility

 
Deal context and issues

The transaction took place in a difficult economic environment in particular for private equity and financing transactions. In this context, the banks requested to be granted, aside from securities on the shares of the companies in the group and on sundry assets of said companies, securities on the shares owned by the ultimate shareholders (majority holding individuals and minority financial investor) in the parent holding company.

Moreover, in light of the significant growth potential of the group by way of the development of brands in France and abroad, mainly by way of build-ups, it was essential for the group to access the financing required for its development and build-ups (some potential external growth transactions had already been identified at the time of the completion of the transaction).

 

Our approach

Although the financial sponsor (FCPR, venture capital mutual fund) held a minority stake in the top tier holding, the banks secured a pledge (security for the benefit of a third party) from the financial sponsor on the securities (ordinary shares and convertible bonds) held by the latter in the holding company. However, as the financial sponsor had a minority stake, the individual shareholders granted, in addition, to the lender banks calls on their shares in order to allow the banks, under certain circumstances, to take control of the holding company. Thus, the fact that the financial sponsor did not own a majority in the top tier holding did not prevent the banks from securing a third party security interest from same investor.

A significant amount of work was put into setting up a credit facility for build ups in line with the group’s specific constraints in terms of amounts and in terms of drawdown conditions. Specific drawdown terms for already identified targets were provided for. In respect to targets not yet identified, the drawdown terms (inter alia, those linked to compliance with financial ratios or the realization of prior due diligence) were tailored in accordance with the size of the relevant target in order to be as proximate as possible to the operations of the relevant group.

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Corporate Finance
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FISCALITÉ

LITIGATION

Medical liability for defective products
A pharmaceutical company among the top five worldwide

Litigation contexte and issues
Several years after some patients received treatment by way, in particular, of an intra-disc injection of the product manufactured by the relevant pharmaceutical company, the latter was sued in tort, on grounds of liability for defective products, which provides for strict liability (i.e. without any default) of the manufacturer of a defective product, namely defective security (this regime assumes an obligation to achieve a particular result for the manufacturer)
It should be noted that owing to the multiple suits brought against the pharmaceutical company, we dealt with several types of cases: i.e. direct action brought by the patient, by the insurance company (in order to be relieved and guarantiedfor the damages paid to the patient who had sued the prescriber) or by the prescriber, against whom the patient had brought action (in order to be relieved and guaranteed for the possible sentences as against him/her in favor of the patient).

 

Dispute settlement

Whatever be the circumstances under which action was brought against our client, our defense always consisted in proving, primarily, that our product was in no manner intrinsically toxic, but that it had, on the contrary, all of the qualities in terms of innocuousness and safety (and was thus not dangerous insofar as it was used in accordance with the terms recommended in the AMM (marketing authorization) as set forth in the product notice), and therefore, that the liability of the pharmaceutical firm could not be triggered, since the invalidating effects noted for the patients at the origin of the legal actions had all developed following injections which fell outside of the scope of the AMM.
As it related to old cases (all of the injections took place in the 80s and side effects appeared 10 years later), all of the jurisdictions agreed that the liability of the pharmaceutical company could all the less be triggered that the scientific literature at the time had not yet identified such side effects, which could have been an incentive for the company to request an amendment of its AMM, or to list certain side effects in its notice.

In all of the proceedings in which our firm participated, the jurisdictions ruled in favor of our submissions and always exonerated the pharmaceutical company.

 

Legal team

Litigation

Litigation between shareholders within the framework of a private equity transaction
Venture capital mutual fund (FCPR), which acquired a majority stake, in connection with an LBO, in a company which specialized in code bars, which caused the original shareholders to subscribe to a share capital increase upon its acquisition

Adversary profile
An operative shareholder who was also an employee of the target

 

Litigation contexte and issues
The FCPR had entered into a shareholder’s agreement, inter alia with the operative shareholder, which provided for (i) a non-compete undertaking (uncompensated) for the entire duration of the duties of the operative shareholder within the target (plus two years after his departure) and (ii) a call on his shares should he leave the target.
An amendment to the shareholders’ agreement was later entered into. The non-compete clause was revised in respect of its scope and provided, inter alia, that the operative shareholder would be compensated during the time period where he was required to comply therewith.
One year later, following a new share capital increase, a new shareholder agreement was executed, drafted along the same terms as the previous agreement cancelling all of the terms of such previous agreement. This time no amendment was agreed.
The operative shareholder was terminated for gross negligence by the target.
Within the deadline set forth in the agreement, the FCPR exercised its call, but the parties failed to agree on the valuation of the shares and the transfer could not be implemented on an amicable basis.
Simultaneously, the operative shareholder claimed that the FCPR was required to compensate him under the non-compete clause from the commencement of his employment agreement with the target and for two years following his termination.

 

Litigation settlement
We were compelled to cause the appointment of a judicial expert in order to value the shares under the call, in accordance with article 1843-4 of the Civil Code.
In parallel, the operative shareholder brought action before the Paris Commerce Tribunal, in order to secure a non-compete indemnification. By ruling of the Paris Commerce Tribunal, confirmed on appeal, it was decided that the performance of the employment contract by the operative shareholder should be construed as a loyalty undertaking, to which all employees are held, without payment of any consideration, but that such undertaking had to be compensated for following the discontinuance of the operative shareholder’s duties as an employee, until released from such undertaking.
With the judicial expert’s report in hand, we petitioned, in a counterclaim, for the acknowledgement of the perfected share transfer with all attendant legal consequences, and that the share price be set in accordance with the appraisal report. The Commerce Tribunal, followed by the Court of Appeal, granted our petition and rejected our adversary’s submissions which petitioned for the annulment of the expert’s report on grounds of a gross error.

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Litigation

Litigation beyond partners
The subsidiary of a group whose business is the caring profession

Adversary’s profile; undisclosed name

The holding and the other individual shareholders of another company operating in a complementary field in the same segment in which the client had acquired a minority stake.

Litigation context and issues
The client acquired a stake in the subsidiary and contributed significant financing toward its growth. At such time, the parties executed different agreements and, in particular, an investment protocol, a shareholder agreement, setting forth, inter alia, the governance rules and the exit terms of the minority shareholder’s, as well as a partnership agreement.
However, the parties quickly realized that their partnership was a failure and disagreements followed, each claiming that the other had failed to perform the agreements.
The disputed issue arose, aside from the construction and assessment of the undertakings of each party under the agreements, in respect of the sanctions for breach of the shareholder’s agreement which a jurisdiction can decide and their efficacy in practical terms (remedy in kind or equivalent).

Litigation settlement: legal proceedings then mediation
The dispute experienced several summary proceedings within the framework of a judicial strategy, several petitions for the appointment of a process server to safeguard evidence and substantive proceedings.
Prior to the end of the latter, the parties were convinced of the usefulness of recourse to a mediation phase, which was court ordered. Thanks to this alternative dispute resolution method, a balanced settlement was found, which ended all of the disputes and organized the exit of our client.

Legal team

Litigation

Post-acquisition dispute within the framework of a private equity transaction
A venture capital fund (FCPR) wishing to invest in e-commerce

Adversary profile
The shareholders of a company developing a classical shop commercialization network and an innovative internet network
Several other American investment funds whose management company was the parent company of the FCPR’s management company.

 

Litigation context and issues
The acquisition of the target was a two-step transaction. Prior to the exercise by the transferors of their put option on their majority shareholding, the transferees realized that they had been misled by willful misrepresentations and refused to pay the balance of the transfer price for the target which had been placed under court liquidation. The transferors then brought action to cause the sole FCPR to pay the balance of the acquisition price.
The initial issue in respect to the dispute rested, on the one hand, on proving willful misrepresentation and, on the other hand, the identity of the committed transferees owing to an imperfect drafting of the share transfer agreement. Thereafter, the dispute was carried over to the liability of the FCPR’s unit holders whose liability was triggered by the transferors, the assets of the FCPR having become insufficient to settle the transfer price. The liability of the initial management company of the FCPR, the custodian, the account holder and the statutory auditor of the latter was also triggered.

 

Dispute settlement
The petitioned jurisdictions ruled, on the basis of a judicial expertise, that the FCPR could not claim willful misrepresentation, although it may have occurred, to the extent that, as a professional, it should have recognized its extent by way of the in-depth review of the documents delivered in the data room. Thus they ruled that, if the initial acquisition of a minority stake jointly committed the French fund and the American funds, only the former was required to acquire the balance of the target’s share capital.
It was also necessary to manage, in the course of the proceedings, provisional and subsequently final performance orders, secured by the transferors which tended to paralyze the operations of the FCPR.
The assets of the latter proved insufficient to satisfy the transferors, the latter brought action against the unit holders, first of all, to cause them to pay all of their undertakings vis à vis the FCPR, and, thereafter, so that they be sentenced to pay the balance of the price as damages on grounds, inter alia, of a claimed breach of the prudential ratios set forth in the by-laws of the FCPR and a claimed intervention in the management of the latter. On the first count of the petition, the transferors were finally dismissed and on the second, they were dismissed by the original jurisdiction, the case is pending on appeal.

Legal team

Litigation
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FISCALITÉ

TAX

CONCURRENCE – DISTRIBUTION – CONTRATS COMMERCIAUX

COMPETITION – DISTRIBUTION – COMMERCIAL CONTRACTS

SOCIAL

Employment

Paillettes
Negotiation of a branch collective agreement

Line of Business
The world of entertainment

 
Context and Issue
A collective agreement was negotiated between the organizations representing the employers and the labor unions representing the employees of the live entertainment. In the course of this negotiation, it became apparent that the live entertainment companies cover multiple realities that don’t have the same needs in term of labor regulation. The parties to the collective agreement therefore agreed that the major types of players (owners of show venues, cabarets, owners of music venues, …) would each negotiate an exhibit to the collective agreement establishing specific conditions to address their particularities.

 
Our Approach
The labor unions representing the employees and the representatives of the employers thanked us eagerly for our creative contributions that led to a happy conclusion of the whole text of the annex and especially for certain clauses specifically implicating labor law exemptions. The mission was two-fold: find an agreement on the clauses and obtain their extension so that they could be applied to all actors relevant in the business area, even if they were not a member of one of the signing unions.

Legal team

Employment

NOMAD
Closing of several industrial sites in Europe, including 2 in France with the implementation of the legal obligation to find a buyer for the site

Line of Business
One of the leaders in the area of smart cards

 
Context and Issue
This group had to reorganize its activities and notably close several industrial sites in Europe to assure its competiveness and have the means necessary for major investments in one of its sites. Two sites in France were affected by the closures and by the layoffs for related economic reasons.

 
Our Approach
The target was to preserve the greatest number of jobs in France despite the site closures. A relocation offer on a third site, the one benefiting from the above mentioned investments, was carried out to the benefit of some employees. A job saving plan still had to be formed for the employees for whom internal relocation could not be possible and for those who did not wish to any geographical mobility. This reorganization was put into action a few months after the entry into force of the employment modernization law that profoundly changed the law related to redundancies. This was therefore one of the first plans put in place under this new regulation. The difficulties of the matter arose in (i) exchanges with the labor administration which power was strengthened under the new legal provisions and (ii) the interpretation of these new provisions with the also new obligation to research a new buyer for the closed sites. Nevertheless, we succeeded—by a unification of the talents of the client with our experience and our skill which enabled a strong conclusion – at signing a collective agreement with the union representatives providing for a job saving plan in a three-month delay and correlatively obtaining the validation of the labor administration.

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Employment

People
Participation in the definition of strategic priorities to be negotiated with employees’ representatives

Line of Business
One of the main media groups

 
Context and Issue
As a result of a succession of mergers following external growth operations, our client had progressively become a sprawling group. Thus, numerous collective statutes and labor organizations coexisted among the employees, which rendered the coherent management of human resources difficult. As, for example, two employees doing the same work, on the same level, and under the same conditions could have had a different number of overtime compensatory days and paid vacation days based on whom their former employer was. Concerned about defining the conditions of a harmonization of collective statutes, the group asked us to perform a deep analysis of the different applicable statutes and to propose the optimal strategy for harmonization.

 
Our Approach
We, therefore, interviewed each group’s HR managers to identify the main common labor law issues (paid vacation, work organization, overtime hours …) in order to gain the best possible understanding of the subtleties and practical nuances of each entity. On the basis of our exchanges with the HR managers and our intimate knowledge of the group, with whom we have worked daily for many years, we were thus able to define a strategy that was pragmatic, not purely theoretical, and render a non very coherent set of statutes legally compatible and harmonized, while adhering to budgetary necessity and preserving as much as possible the advantages historically enjoyed by some and particularities for the different roles represented.

Legal team

Employment
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droit public

PUBLIC LAW

Three Stars // Recognition of a business operating on public property
A public industrial and commercial building

Client business sector
Food services on public property
 

Context and issues
The client had signed an agreement to occupy public property to operate a high-end restaurant with a Michelin-starred chef. While the restaurant had experienced nuisances as a result of construction work, its international reputation contributed significantly to the value of the property. As a result, the restaurant owner requested compensation for the loss of his business upon termination of the agreement.
Historically, administrative judges had refused to recognize the existence of businesses operating on public property. The 2014 “Pinel” law introduced this possibility for businesses with an existing “customer base.” This new possibility constituting a real opportunity in some instances had not yet been however frequently used.
 

Solution: an innovative side agreement
We needed to find a pragmatic, creative solution reconciling the strict rules for occupation of public property, the new requirements to open up these agreements to competition and the possibility introduced by the Pinel law to recognize businesses operating on public property.
After several rounds of negotiation, the parties agreed to sign a side agreement providing for the recognition of the business operating on public property, as well as the possibility of a revaluation in the event that the restaurant were to continue operating after the end of the contract.

LEGAL TEAM

Public Law

Hamster // Litigation surrounding a concession agreement
A global actor in concessions and construction

Client business sector
Infrastructure and transport concessions
 

Context and issues
The client had signed a concession agreement with the government to build and operate a transport infrastructure project. An environmental defense group and several municipalities brought suit, arguing that the agreement would harm the environment.
This was one of the first applications of the Conseil d’Etat’s Tarn et Garonne ruling allowing third parties to challenge government contracts. The question at issue, and our priority, was to show that not all third parties can challenge all concession agreements. To have standing, they must be able to show that their interests are harmed by the agreement in a direct and identifiable way.
 

Solution
The lawsuit was rejected at first instance and again on appeal. The judge adopted our reasoning and found that neither the association nor the municipalities had any interest harmed by the concession agreement. This type of contract, which serves only to set out the legal and financial structure of the project, has no direct environmental consequences in itself.

LEGAL TEAM

Public Law
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IMMOBILIER

REAL ESTATE

VTT « Vacances Tout Terrain » (Real estate restructuring)
A group listed on the stock market

Client’s Business Sector
A Group listed on the stock market, European leader in the holiday market in mobile homes.

 

Deal Context and Issues
In order to create a reserve fund for future growth and also to contribute to the Group deleveraging, the Client sought with the help of an investment bank, a purchaser which could be able to take over the real estate of six campground. The Corporate Finance Team, lead by Bernard Ayache, advised the Client and its notary concerning the real estate selling part of the transaction, while the Real Estate Team advised the Client and the investment bank in the course of negotiations and drafting long-term lease agreements, which were entered simultaneously to the real estate sale.

The first problem was the change in status, from owner to tenant, which must not affect the commercial operation; the second problem was the structuring of a lease agreement sufficiently protective of the vendor’s/tenant’s interests, while securing the purchaser’s purely financial investment.

 

Our Approach
Our Firm assisted the Client in negotiations with the vendor and its advisors, in order to draft a model long-term lease.

Then, our Firm advised the Client in its negotiations to adjust the model long-term lease to the geographic location (marine submersion possibility …) and the administrative situation (administrative authorizations difficulties …) concerning each of the six campground.

Each contract has been elaborated to reflect both investor’s/lessor’s and operator’s/vendor’s interests and considering each particular geographic location and administrative situation of each property.

The close collaboration between the Corporate Finance and Real Estate Teams of our Firm and the investment bank, and complementarity of their experience, made it possible to identify and implement a legal and economic solution, which was sustainable and balanced for all parties.

Legal teams

Corporate Finance
Real Estate

JULES (Real estate management)
A world famous British brand for glamorous and elegant women’s shoes

Client’s business sector
One of the most famous brands in the luxury shoe market, whose clientele is composed of members of the royal families, actors and other public figures.

Deal context and issues
Looking to set up a flagship shop on Avenue Montaigne in Paris, and faced with the scarcity and high cost of an outlet, the manager set his sights on a concierge lodge and its adjoining hallway, located on the ground floor of a building on Avenue Montaigne for residential use only.
The challenge was to conceive and transform these premises into a shop in accordance with local regulations, within a specific budget and timetable.

Our approach
The firm negotiated a lease agreement with the owner of the premises subject to the condition precedent of securing the administrative approval for a change of purpose of the premises.
The firm selected in its professional network a professional likely to find commercial premises within the same disctrict which would be converted to residential premises, and by way of an administrative offset to change the purpose of premises into commercial premises. With its expertise, the Firm has supported the client in all of the administrative procedures (offset request, filing of a construction permit, etc…), and then closed the deal by signing an amendment acknowledging the administrative change of the premises.
The firm utilized its expertise and pragmatism while coordinating the actions of the real estate agents, the architect, the lessor, the lessor’s counsel and of the administration.
Thus the firm was involved in the creation of real value, which allows the client to gain a magnificent outlet on Avenue Montaigne.

Legal team

Real Estate

SO CLOTHE ! (Real estate management)
A large chain of casual clothing for men, women and kids

Client’s business sector
A ready-to-wear brand mainly located in Europe and China and operated since its inception by a group of companies with headquarters in Holland.

 

Deal context and issues
The group wanted to restructure its fleet in order to make it the most profitable within the more global framework of expansion in the French market. One of the stores takes up too much space in relation to its yield. However, the client did not wish to separate from this outlet located in a great shopping mall.

 

Our approach
Our firm, together with a commercial real estate professional chosen within our network, counseled the client in respect of the search for a buyer and negotiated with the latter an agreement covering the partial assignment of the commercial lease of a portion of the premises, subject to the condition precedent, inter alia, of the division of said premises and the approval of the transferee by the lessor as a new tenant.
The firm then counseled the client in negotiating the terms of the division of the premises with the commercial mall and negotiated the new commercial lease for that portion of the premises which the client retained, and completed the transaction upon the execution on the same day of the notice of satisfaction of the conditions precedent to the transfer.
Thus the firm, with its expertise and coordination ability, took part in a cash-out deal, a portion of which was reinvested by the client in the opening of new shops in France, whilst maintaining its presence in the commercial mall (allowing it the achieve the expected return).

Legal team

Real Estate

ENERGIE (Real estate structuring)
A developer of logistical parks

Client’s business sector
An industrial group which coordinates on behalf of real estate investors the development and realization in France of last generation logistical platforms (from 20.000 to 100.000 m2), which are then leased turnkey with technical, economic and environmental services. Their objective is to conciliate ecology with business.
 
Deal context and issues
At the beginning of the expansion of photovoltaic in Europe, the client wanted to be a precursor in France installing on roofs of all of the logistical platforms it developed and marketed, photovoltaic equipment integrated into the building frame, to be connected with the public electricity distribution network and to be operated within the framework of power purchasing agreements with EDF.
For already exploited platforms build on public domain land, this required the renegotiation of temporary occupation agreements pertaining to public domain lands with their managers and the underlying commercial leases with the logistical park operators, and thus reconcile the private and public law contracts in the interest of all (owner of the public domain land, owner of the platform, owner and operator of the photovoltaic power station, commercial lessee operating the platform).
 
Our approach
The firm counseled the client in its negotiations with EDF for the establishment of a partnership protocol and a model construction lease.
The firm then counseled the client in its negotiations with one of the managers of the public domain lands, in order to adapt the occupation of public domain agreement on the basis of which commercial leases were then entered into with the lessees operating the relevant platform.
Each contract with each party was structured by the Firm, in a pragmatic manner, to accommodate the interests of all parties concerned, but also, with the rigorousness and technical expertise of our Firm, to understand and organize the legal and economic consequences related to the expiration of a contract on all the others.

Legal team

Immobilier
Denis Salama
Caroline Champion Thiry
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entreprises en difficulté

INSOLVENCY

LA JOCONDE (The taking-over of a company within proceedings before the Commercial Court of Paris)
A group of investors, constituted by natural persons

Client’s Business Sector
Tourism residencies and holidays hotels

Deal Context and Issues
The target Company, sought by our Client and investors, was expected to have a reputation within its business sector, be a recognized brand, have assets which could be revalued and a business that did not suffered a too severe customer loss.
We identified a Group of eight companies in bankruptcy proceedings. This Group, which was composed of a major actor in the area of holidays hotels (16 hotels) and hotel residences (10 residences), realized 25 M€ in revenue with approximately 300 employees.
The target company owned a business which was sold by the Commercial Court, but it did not own the rooms’ walls themselves, which were the property of private investors (approximately 1500). The main problem of the taking-over was that leases, initially entered into with room owners, had been terminated by the Commercial Court when the operating company could not pay the rent anymore.

Our Approach
Firstly, our Firm identified and analyzed the target Group. Then, we advised the Client in the examination of this project, drafted the taking-over offer, convinced the Commercial Court during the hearing and, finally, negotiated and signed with judicial administrators on the 26 business sale agreements. Amongst approximately fifteen taking-over offers, the Commercial Court accepted the offer presented by our Client as the one that best ensure the sustainability of the sold business.

Our Firm, after accompaniment and success of the offer made, has advised the Client in negotiations with the many owners of rooms’ walls in the successful conclusion of new lease agreements, in spite of many disputes initiated by some of them. Since then, this Group has been able to make several external growth operations, thanks to the target re-development.

Legal team

Insolvency

STOCK (Conciliation and Safeguard proceedings)
A memory cards and mobile computing leader

Client’s Business Sector
A large company listed on the stock market, specialized in design, production and marketing of IT units, memory cards, mobile computing and digital devices.
 
Deal Context and Issues
The Group was confronted with a rapid and significant decline in activity following a decrease in both consumption and the average selling price of product. Given this situation, the Group was concerned that it will not be able to pay its significant debts due to the banks, and thus had to rapidly initiate a drastic expense minimization process. Hence, it was necessary, on the one hand, to restructure the Group’s bank liabilities and, on the other hand, to improve its profit and loss account, particularly with an optimization of its operating costs.
 
Our Approach
Our Firm advised the Group to submit its situation to the President of the Commercial Court of Paris [Editor’s note: in charge of bankruptcy proceedings in France] and to a legal administrator. In cooperation with these stakeholders, it was decided to start conciliation proceedings, in order to renegotiate with the banking syndicate, within a secret and legally secure framework for all parties. The negotiations went on for five months and lead to a reschedule of bank liabilities, which enabled the Group to obtain liquid assets / treasury for its operation. At the end of the conciliation proceedings a settlement agreement has been approved by the Commercial Court.

Then, safeguard proceedings towards the main distributing subsidiary lead to a large restructuring of its most significant expenses. Finally, the Commercial Court approved a partial disposal sale plan of the subsidiary’s assets.

Legal Team

Denis Salama
Vincent Merat

CITADIN (Conciliation)
An investor owning a significant number of shares in a Group experiencing financial difficulties

Client’s Business Sector
A major national actor in real estate services, facing severe financial difficulties.

 

Deal Context and Issues
Because of financial trouble, conciliation proceedings have already been commenced towards this Group. These proceedings were to end if a change of shareholders and a recapitalization operation occur.

Within this framework, our Client intervened, with a pool of investors, in order to take a significant part of shares in the Group’s capital, recapitalize it, and grant the Group an operating loan.

The Group’s financial difficulties of the Group nevertheless remained, which lead to an insufficient profitability to reimburse both bank creditors and new shareholders’ financial inputs.

 

Our Approach
Our Firm stepped in, alongside our Client, to secure the reimbursement of its loan and of its investment.
Under the umbrella of the CIRI (Inter-Ministerial Industrial Restructuring Committee, depending of the Economic and Financial Ministry), another conciliation proceeding was initiated and negotiations were held between bank creditors, bondholders and the management. A disposal sale plan of the Company’s assets has been established, together with a management control system.

Our Client was able to secure the recovery of its investment, financial liabilities were restructured, bonds were renegotiated and transfers of assets were carried out.

Legal Team

Insolvency
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actionnariat salariÉ & épargne salariale

EMPLOYEE SHARE INCENTIVE AND SAVING SCHEMES

Free shares: (sometimes) a poisoned gift – ENTERTAINMENT

Business sector

Media – communications

 

Context and issues

Some of the principal employees of a French company, a subsidiary of an American group, had received free shares from their American parent company. The employees and their French employer were uncertain of the treatment to be applied to these shares in France with respect to taxes and social charges. Following an analysis of the plan, it became clear that French fiscal and social requirements had not been taken into account, and that, as a result, it did not “qualify” for the favorable fiscal and social regime governing free shares in France. In addition, the American parent company had withheld, at the time of attribution, a tax in the United States on the sums paid to the French employees, even though the employees did not work in the United States. The employees were therefore faced with the possibility that they would be taxed twice on their shares, once in the United States and again in France.

 

Our approach

Our first step was to analyze the plan put in place by the American parent company and to compare its conditions with those provided under French law. It became clear following this analysis that the plan was not in conformity with French law (in particular with respect to the length of the acquisition periods and the absence of a share conservation period). As a result, the plan did not “qualify” for the special regime governing free shares, meaning the shares would be treated as ordinary salary. This would lead to the imposition of income tax and social charges on the value of the shares from the moment of their attribution (regardless of whether or not they were later resold).  Analysis of the employees’ individual payslips also showed that an American tax had been withheld at each attribution of shares, which was legally unjustified with respect to employees working in France. Following our analysis, the group decided to correct its situation in France and to compensate the employees for their additional costs. We were entrusted with the calculation of these costs and of the compensation to be paid (taking into account the tax treatment applicable to the compensation, which was itself taxable as salary).

CHLOÉ
One of the world leaders in the conception, production and commercialization of technological systems

Deal context and issues

What is the most appropriate structure allowing our client, a listed international group, to associate its senior managers with group performance? Stock options, free shares or more exotic instruments such as OBSAARs (bond issue with redeemable warrants attached)? These are the questions which our firm handled taking into account the provisions of (i) the December 3, 2008 law providing that stock options and free shares cannot be allocated to managers without entitlement or additional profit sharing for the remaining staff (ii) and those of the July 29, 2011 law on bonus sharing which set the principle of a bonus allocated to employees so long as companies paid a dividend to their shareholders in an amount greater than the average paid during the two previous years, it being noted that the combination of the two laws may give rise to different interpretations impacting the calendar of the operations. Finally, whatever the solution, it must not fiscally and socially penalize the plan’s beneficiaries (located in a dozen countries) as well as our client.

Our approach

In light of our «in-house» decision tree and on the basis of a few simulations based on different assumptions of the share price and the submissions of our correspondents in each of the jurisdictions under consideration, the client determined that the most appropriate formula was a co-investment plan which tied each share purchased on the market by the manager with a certain number of free performance shares, the number of which was set in accordance with the share price and the group’s EBITDA following a two year acquisition period.

Moreover, we defined with the client the calendar of the operations in order to best account for the constraints of the December 3, 2008 and July 29, 2011 laws.

Legal teams

Corporate Finance
Tax
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