New money

New money (argent frais) is the new financing that a company in difficulty obtains during the restructuring of its existing debt. French law grants it a priority payment rank in two situations. In conciliation, a cash contribution made under a court-approved agreement benefits from the privilege of article L. 611-11 of the French Commercial Code. In a safeguard plan, the cash contributions mentioned in the plan benefit from the privilege provided for in paragraph III, 2° of article L. 622-17 (article L. 626-10). In both cases, the privilege excludes shareholders’ capital increases and creditors’ earlier facilities. The court that adopts a plan voted by classes checks that any new financing is necessary to the plan and does not excessively harm the interests of the affected parties (article L. 626-31). The Atos restructuring gives an order of magnitude: the accelerated safeguard plan adopted on 24 October 2024 brought €1.6bn of new privileged financing (new money debt) and around €145m of new equity (new money equity). For a mid-sized company, new money takes the form of a super senior facility, a loan from a private debt fund or a subscription of share capital. In return, the providers negotiate their rank, their security and their remuneration.

An automotive supplier owes €160m to its existing lenders and lacks €35m of cash to fund its transformation plan. A private debt fund provides €35m of new money in conciliation, repayable in priority and secured by a pledge over the subsidiaries’ shares. In exchange, the existing lenders accept a three-year deferral of their maturity.

• The rank of new money: the conciliation privilege, or the article L. 626-10 privilege in safeguard.
• The separate mention of cash contributions in the plan (article L. 626-10).
• The security granted to the providers and how it ranks against that of the existing lenders.
• The cost: margin, fees and any equity component the provider asks for.