European Union: EuroResource - Deals and Debt - August 2012

Recent Developments

The UK—On 26 July 2012, the UK Pensions Regulator issued a statement on financial support directions ("FSDs") with the intention of providing further guidance regarding the circumstances in which it will issue an FSD after a company has been placed into administration.

Following the October 2011 rulings in Lehman Brothers and Nortel Networks (Bloom v. The Pensions Regulator [2011] EWCA CIB 1124), an FSD issued before a company goes into administration will rank as a general unsecured debt, whereas an FSD issued post-administration will rank as an expense of the administration. An FSD issued after administration will therefore be discharged from floating (not fixed) charge realizations and will rank above payment of the administrator's own remuneration. The priority of FSDs over floating charge holders could have a material impact on the return to secured creditors, particularly where there are few or no fixed charged assets.

The current ranking of FSDs issued after administration is of great concern to insolvency practitioners and lenders. In response to these concerns, the Pensions Regulator has stated that it has no intention of deliberately delaying the issue of an FSD until a company goes into administration and to therefore take advantage of post-insolvency priority ranking. Further, the Pensions Regulator has stated that in most circumstances it will not object to an application issued by an administrator to reorder the statutory order of priorities so that the payment of the administrator's own reasonable remuneration will rank ahead of an FSD. The Regulator also advised that in the forthcoming appeal to the UK Supreme Court on this issue (scheduled to be heard on 14 May 2013), it will argue that an FSD issued after administration is a provable debt which will rank as a general unsecured debt as an alternative to an administration expense. Whilst the statement is welcomed, it is unlikely to provide the certainty stakeholders are seeking and which they hope the Supreme Court will deliver in respect of the Lehman Brothers and Nortel Networks appeal.

France—On 25 July 2012, the French Government unveiled a program to support France's automobile industry. The purpose of the program is to boost employment in the industry and support purchases of greener, less-polluting cars. Pursuant to the program, existing subsidies for the acquisition of electric vehicles will be increased to a maximum of €7,000 and existing subsidies for the acquisition of hybrid vehicles will be doubled to a maximum of €4,000. The rebates will be financed by an increased tax on polluting vehicles. The French Government will also redeploy several hundred million euros to manufacturers that invest in green technology. The program was prompted by PSA Peugeot Citroën's plan to lay off 8,000 employees in France. The French automobile-manufacturing industry currently employs 800,000 persons, 30 percent fewer than a decade ago. The French Government's move also reflects the importance of the automotive sector in the EU economy. According to the European Commission, the EU is the world's largest producer of motor vehicles, with 18 million vehicles manufactured annually. The EU automobile industry accounts for approximately 12 million jobs. The industry is the EU's largest private investor in R&D (€20 billion per year) and accounts for 20 percent of the EU's steel production and 36 percent of the aluminum production.

France—The second interim Finance law for 2012 introduces material changes to the tax treatment of financial support granted to distressed subsidiaries. Historically, parent companies providing financial support to distressed subsidiaries could use various tools. In the case of debt forgiveness, the parent company was able to recognize a tax-deductible loss up to the amount of the negative equity of the subsidiary (the excess of the forgiven debt over the negative equity, if any, treated as additional basis in the subsidiary's shares), while the subsidiary recognized taxable income. Alternatively, the parent company could inject additional equity into the subsidiary. At the parent level, such an injection was treated in full as additional basis in the subsidiary's shares and was therefore nondeductible, whereas the equity injection was not taxable at the level of the subsidiary.

Under the new law, subsidies and debt waivers are no longer tax deductible except if they are granted within the scope of a conciliation agreement approved by the French bankruptcy court or in the course of safeguard, reorganization or liquidation proceedings pursuant to French bankruptcy laws. In case one of these exceptions applies, the parent company is still entitled to deduct the debt waiver up to the amount of the negative equity of the distressed subsidiary. Where the legislation initially proposed by the French Government also provided that equity injections by a parent company would be taxable at the level of the distressed subsidiary to the extent they did not exceed the subsidiary's negative equity, this proposed provision was omitted from the final legislation, and equity injections remain tax neutral at the level of the distressed subsidiary. However, to avoid abusive schemes, the new law provides that the parent company may not realize a tax-deductible loss if it sells the subsidiary's newly issued shares.


Jones Day acted as tax counsel to Blackstone Group LP ("Blackstone") in connection with the acquisition of substantially all of the logistics assets of French real estate investment trust Gecina SA ("Gecina") for €203 million. The portfolio includes 28 assets, all located in France, and represents nearly all of Gecina's remaining logistics holdings. Gecina, which has seen its rental income fall 5.6 percent since last June, is close to its goal of selling €1.2 billion in assets this year to focus on its office portfolio, France's largest. Blackstone is a US-based alternative asset management and financial services company that specializes in private equity, real estate and credit and marketable alternative investment strategies, as well as financial advisory services. Most of Blackstone's real estate holdings are malls, hotels and housing, but the firm has been building a logistics platform, spending more than $3.1 billion over the past six months to add industrial warehouse space.

Jones Day is advising Paris-based Veolia Environnement SA ("Veolia") in connection with the sale of its North American solid waste business, Veolia Environmental Services Solid Waste, Inc. to Star Atlantic Waste Holdings, LP, a US infrastructure private equity fund. Veolia's US solid waste operations include 29 landfills, 72 collection operations, 17 recycling facilities and 43 transfer stations, most east of the Mississippi River. The transaction, valued at $1.909 billion, is Veolia's second largest divestiture.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.