English contracts and French safeguarding

Cassini SAS entered a Senior Facilities Agreement (SFA) with Emerald Pasture Designated Activity Co (Emerald) in March 2019. The SFA was governed by English law, contained an exclusive jurisdiction clause. In September 2020, Cassini entered a Sauvegarde or “safeguard procedure” (a French insolvency procedure and form of debtor-in-possession proceeding).

Emerald accepted that Cassini's safeguard procedure would be recognised in England pursuant to the Recast Insolvency Regulation. Fearing that Cassini was going to use the restructuring procedure to benefit shareholders at the expense of the creditors, Emerald sought to rely on the covenants in the SFA to obtain information about Cassini’s business and to access Cassini’s books and records. Cassini argued that the safeguard procedure rendered the covenants unenforceable.

Emerald issued proceedings in England seeking a declaration that the covenants were enforceable. At first instance, the court found in favour of Emerald. There had been an event of default and, in circumstances where there was a real and present dispute, and declaratory relieve could have a substantial effect, it was appropriate to grant the declaration sought.

Cassini appealed. The Court of Appeal upheld the decision of the lower court. The covenants were enforceable. The French insolvency code provides specific derogations from the operation of contractual obligations and unless there is an express exception, the contract should be performed.

Whilst this case has a very specific set of facts, it is a reminder that insolvency moratoriums can suspend obligations to make payments, but that other contractual obligations may not be suspended.

Cassini SAS v Emerald Pasture Designated Activity Co, [2022] EWCA Civ 102

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