Foreign investment law and the law of businesses in difficulty seem, at first sight, to operate in separate spheres. The former falls within economic security policy and the Monetary and Financial Code (code monétaire et financier); the latter within the logic of rescuing jobs and businesses, governed by Book VI of the Commercial Code (code de commerce). And yet, at the intersection of these two bodies of rules lies a structural vulnerability, which a parliamentary report of 22 May 2025 evaluating foreign investment screening in France explicitly identifies as one of the system’s blind spots: the takeover of a strategic company by a foreign entity at the end of insolvency proceedings (procédures collectives).
I. How the problem arises
The procedural framework for judicial reorganisation (redressement judiciaire) and judicial liquidation (liquidation judiciaire) follows its own logic: protecting creditors, safeguarding jobs and ensuring business continuity. The Commercial Court (tribunal de commerce), which rules on the sale plan (plan de cession), assesses takeover bids according to how serious they are, the price offered, the number of jobs retained and the guarantees given as to the long-term future of the business.
Economic sovereignty is not, under current law, a formal criterion for this choice.
Yet the timeframe of insolvency proceedings is incompatible with that of standard foreign investment (IEF) screening. The observation period lasts in principle 6 months, renewable once, and the time limits may be even tighter where judicial liquidation is ordered without prior judicial reorganisation. In this context, as the French Defence Procurement Agency (Direction générale de l’armement) observes in the parliamentary work, “conditions are then not optimal for negotiating commitments with the investor, and it is often too late to look for an alternative to a takeover by a foreign investor”.
There is also a cultural factor: court-appointed administrators (administrateurs judiciaires), who are experts in the law of businesses in difficulty, do not have a culture of foreign investment screening. They operate in an environment where speed of decision is a necessity, where the spectre of total liquidation and the resulting job losses weighs on every decision, and where economic security is little known or poorly understood. This lack of awareness may lead them, unintentionally, to approve takeover bids that should have been subject to in-depth review under foreign investment screening.
II. Manurhin and Vencorex: two illustrations of the loophole
The Manurhin case in 2018 is the example most often cited. This company, which specialised in manufacturing munitions (an activity listed in Article R. 151-3 of the Monetary and Financial Code under the research, production or marketing of arms and munitions), was sold following judicial reorganisation proceedings to the Emirati group Emirates Defence Industries Company.
The brevity of the court timetable did not allow the State to put together a credible alternative.
More recently, the Vencorex case, a chemicals company supplying materials used in the manufacture of M51 missiles and Ariane 6 rockets, shows that this vulnerability persists. Placed in judicial reorganisation in September 2024, the company was partly taken over on 10 April 2025 by the Chinese group Wanhua, through its Hungarian subsidiary BorsodChem, by decision of the Lyon Commercial Court (tribunal des activités économiques). This takeover took place without the State acquiring a stake or imposing conditions at the end of a foreign investment screening procedure, in a context where the time limits of the insolvency proceedings did not allow the usual interministerial dialogue to be conducted in proper conditions.
III. What current law provides, and what it does not
Under current law, takeovers in the context of insolvency proceedings are not exempt from foreign investment (IEF) screening. Where the eligibility criteria are met (foreign investor, entity governed by French law, strategic activity), the obligation to apply for prior authorisation applies in principle. But the interplay between the Commercial Code and the Monetary and Financial Code is deficient in several respects.
First, the legislation does not provide for a fast-track procedure or priority handling for foreign investment screening files linked to insolvency proceedings, even though court time limits make the standard review difficult to absorb.
Second, there is no formal mechanism for informing Commercial Courts of the economic sovereignty issues that may be attached to the business in difficulty whose reorganisation or liquidation they are overseeing.
Finally, court-appointed administrators (like creditors’ representatives and liquidators) do not receive the information held by the SISSE on the companies on its strategic lists, which deprives them of the elements that would enable them to identify the risks associated with the takeover bids submitted.
IV. Avenues for reform: forward-looking law
The parliamentary report of 22 May 2025 makes two proposals that could remedy these shortcomings, which at this stage are law in the making.
The first is the publication of a Ministry of Justice circular establishing a procedure for informing Commercial Courts of the risks of technology predation in companies undergoing judicial reorganisation. This circular could provide for creditors’ representatives (mandataires judiciaires) to systematically seek a technical opinion from the SISSE and the DGA whenever the business of the company in difficulty is likely to fall within the strategic sectors referred to in Article R. 151-3 of the Monetary and Financial Code. Such a measure would not require legislative reform: it would be a matter for interministerial instruction, which makes it quicker to implement.
The second proposal has a broader legal scope: it involves amending the Commercial Code to ensure that foreign investment (IEF) screening is systematically carried out where strategic activities are taken over by a foreign company at the end of insolvency proceedings. This legislative amendment would create an explicit link between the two bodies of rules by imposing a formal obligation on the court or the court-appointed administrator to trigger the screening procedure whenever a foreign bid concerns a strategic activity. As a corollary, it would require court time limits to be adjusted to allow a minimum interministerial review, which calls for reflection on how compatible this requirement is with the imperatives of insolvency law.
These reforms have not yet been adopted. They are, however, part of a broader trend: in 2024, the French Defence Procurement Agency (Direction générale de l’armement) recorded a marked increase in the number of foreign investment screening files linked to court proceedings, a sign that the convergence between the law of businesses in difficulty and economic security policy will be one of the most active areas of practice in the years ahead. For practitioners working in both fields, this intersection is an area of expertise in its own right, which deserves to be treated as such from the earliest stages of insolvency proceedings concerning a company operating in a sensitive sector.
