The Florange Law

Law n°2014-384 OF MARCH 29, 2014 aiming at recapturing the real economy

The Florange Law and the obligation to search for a buyer

As of March 29, 2014, companies and groups with at least 1,000 employees that intend to close down a site, now have the obligation to search for a buyer under the so-called Florange Law.

It is an obligation of means, not one to divest the establishment concerned. The legislator sought to ensure that prior to the validation or accreditation of the contemplated closure, the employer is held to search for all potential takeover solutions with the following declared objectives:

  • Maintenance of skills and know-how on the territory
  • Guarantee of a future for the site before the disengagement process has gone too far

First and foremost an obligation of means

The relevant employer must carry out a serious and active search, distribute as much information as possible about the potential buyers and justify its actions throughout the entire procedure to the ERBs and Labour Administration. Thus, all and any promotional measures may be considered and should be instituted in order to publicize the takeover opportunity.

Accountability and traceability of your search for a buyer

Title 1 of the Law refers to an obligation to search for a buyer in the event of a contemplated closure of a site. At the end of the search for a buyer period, the company must issue a summary report detailing the actions undertaken, the ensuing results as well as the purchase offers received.

Who is concerned?

Any company and group with at least 1,000 employees (Art L1233-71 of the Labour Code).

In what framework?

  • The intent to close down a site with the consequence that a collective lay-off plan would be implemented.
  • The Decree n°2015-1378 dated 30 October 2015 clarified the concept of the establishment. Within the meaning of article L1233-57-9 the definition of the establishment must be understood as an economy entity, which must implement a Works council.

What does the legal constraint entail?

Employer obligations:

  • Inform its Works Committee, the administrative authority, and the potential buyers
  • Prepare a presentation document of the relevant site intended to potential buyers
  • Carry out an environmental assessment if need be (article L623-1 of the Commercial Code)
  • Grant access to all necessary information to the applicant companies
  • Conduct a proper assessment of the purchase offers
  • Submit reasoned replies to the each of purchase offers received.

Role of the Works Council:

  • Must be informed of the purchase offers within a maximum of eight days as from their receipt by the employer
  • If the WC wishes to take part in the search for a buyer, the employer must grant it access to information under the obligations provided by the law
  • The WC may seek the assistance of an expert whose missions are:

    • To analyze the search for a buyer procedure, its methodology and scope
    • To evaluate the information made available to the potential buyers
    • To examine the purchase offers and provide support in the search for a buyer and the preparation of takeover projects.

End of the search process

The employer must consult the WC with regards to any offer deemed acceptable. The WC shall then deliver its opinion on the offer.

Before the end of the information and consultation procedure (Art. L 1233-30), if no purchase offer has been received or accepted, the employer must present a report to the WC and submit it to the administrative authority. This report shall detail:

  • The actions undertaken to search for a buyer
  • The purchase offers received and their characteristics
  • The reasons for which offers were refused

The actions undertaken by the employer under the obligation to search for a buyer are taken into account in the revitalization agreement (Art L 1233-57-21 and art. L 1233-84 to -90).

Risks / constraints

  • Limited by decision of the Constitutional Court (n°= 2014 -692 DC dated March 27, 2014)
  • No obligation to sell but obligation to find a buyer (free initiative reasserted by decision of the Constitutional Court)
  • Risk of non-approval of the PSE (employment protection plan) by the DIRECCTE
  • Repayment of public aids