Creditor Coercion by Liquidation Threat

"However, successive administrations by Marcel Boussac, the Willot family, and René Mayer have left a mountain of debt, amounting to no less than 3.6 billion francs. Before figuring out how to repay this debt (meaning which assets he will have to sell), Arnault's primary concern is to reduce this amount by obtaining waivers and payment deferrals from creditors. He will therefore ask creditors to make sacrifices, using a powerful argument: he will only invest 400 million in the company if his conciliation proposals are approved. In the event of rejection, there will be no other option but judicial liquidation. The implication is that in this case, creditors will have nothing left to do but weep."

"Creditors, for their part, have swallowed their pride. On September 30, 1985, 99.35% of the 3,370 present or represented creditors voted for Bernard Arnault's proposals, which resulted in a debt write-off of nearly 1 billion francs. The amount to be repaid now only amounts to 2.7 billion out of the initial 3.6 billion required. But since the repayment is spread over several years, the discounted value of this sum drops to 1.7 billion."

"The difficulty lies elsewhere, in the required majority rules. For a concordat to be adopted, it must be approved by half of the chirographers holding two-thirds of the claims in value. With the help of Lazard, Arnault contacted them one by one to offer to buy back their claims. The task is enormous: there"