Written commercial agreement

Significant imbalance

Sudden termination of established relationships

Competition investigation – French law

Civil competition action

French competition law

Competition investigation – European law

European competition law

Vertical restraints

Distribution law

Liability for defective products

Consumer law

Prohibition of measures having equivalent effect

European business law

Corruption

Compliance

Economic law

Shareholders' agreements

Removal of company directors

Abuse of voting rights

Companies

Action for infringement (counterfeiting)

Rights conferred by the trademark

Patentability

Industrial property

Commercial rent review

Renewal of the commercial lease

Despecialization (change of use)

Commercial leases

Reform of contract law

Reform of the law of special contracts

Preliminary sales agreement

Obligation to deliver goods in conformity

Classification of the contract for services (contrat d'entreprise)

Effects of the agency agreement with respect to third parties

Business contracts

Ongoing contracts

Recovery claims

Court-approved transfer plan

Bankruptcy proceedings

Personal data breaches

White collar crime

Commercial law

500 Questions - Business Law

In accordance with Article L. 661-6, III of the Commercial Code, the appeal of judgments that approve or reject the transfer plan of the undertaking constitutes a specific action whose exercise is reserved, so as not to unnecessarily delay its implementation:

to the public prosecutor;
to the debtor;
to the transferee, if the plan imposes obligations on them other than the commitments they made du …

What remedies are available to oppose a transfer plan?

Article L. 642-3, para. 1, of the Commercial Code prohibits making an offer, directly or through an intermediary :

to the debtor, in  respect of any of its assets;

to the de jure or de facto managers of the legal entity in judicial reorganization proceedings;

to  relatives by blood or marriage up to the second degree inclusive of those directors or the debtor as a natural person; and

to persons having or having had the status of controller during the procedure.

The author of the offer must certify that they are not subject to these incapacities and attach, when required to establish them, their annual accounts for the last three fiscal years and their projected accounts.

However, when the procedure concerns an agricultural operation, the court may waive these prohibitions and authorize the transfer to one of the persons mentioned in the first paragraph of Article L. 642-3, except for the controllers and the debtor with respect to any of their assets.

In other cases and subject to the same exceptions, the court, upon request of the public prosecutor, may authorize the transfer to one of the persons mentioned in the first paragraph by a specially reasoned judgment, after having sought the opinion of the controllers.

Acts executed in violation of this prohibition may be annulled at the request of any interested party or the public prosecutor, submitted within three years from their conclusion. When they are subject to publicity, the period runs from that time.

Advice: Do not assume that the prohibition only concerns de jure directors: based on the exercise of management power, it also applies to de facto directors. However, former directors, even if they are company partners, are not subject to the prohibition, as long as there is no presumption of de facto management against them.

The interposition of persons between the managers of the debtor company and a purchasing real estate investment company (SCI) is established when the assets acquired by the latter do not fall within its corporate purpose, it lacks the financial means for the transaction, and a resolution of its general meeting authorizes it to transfer the acquired assets to a third party, whose managers are the same as those of the debtor.

Cass. com., 8 March 2017, LawLex202100001135JBJ.

Who can submit a purchase offer?

First, the potential buyer must submit a written offer that includes the details listed in Article L. 642-2, II and III of the Commercial Code. The offer must specify the precise designation of the assets, rights, and contracts included, mention the activity and financing forecasts, the offered price, the terms of payment, the quality of the capital contributors and, if applicable, their guarantors. If the offer relies on borrowing, it must specify the conditions, particularly the duration. The offer must also include the date of completion of the transfer, the level and employment prospects justified by the considered activity, the guarantees subscribed to ensure its execution, the forecasts of asset transfers within the two years following the transfer, the duration of each commitment made by the offeror, and the financing terms of the financial guarantees envisaged when required under Articles L. 516-1 and L. 516-2 of the Environmental Code.

Then, once issued, the offeror can only modify their offer in a way that is more favorable to the objectives of maintaining the activity, all or part of the jobs attached to it, and settling the liabilities . Even if more favorable, an offer cannot, under penalty of inadmissibility, be modified less than two working days before the date set for the hearing to examine the offers by the court. The author of the offer cannot withdraw it either: they are bound by their offer and incur liability in case of withdrawal .

When the offer provides for a substitution option, the court can only authorize its implementation if the initial acquirer guarantees the commitments it has undertaken in the plan. However, case law limits the scope of this commitment to the content of its takeover offer and does not consider it as guaranteeing the proper performance, by the substituted transferee, of the obligations resulting from the assigned contracts .

In particular, if he remains jointly liable for the performance of the commitments he has undertaken, notably the commitments to maintain jobs, the initial buyer does not guarantee:

the maintenance of these by the substituted assignee;

nor the assignee substituted for the obligation to pay the installments of the transferred loan.

The candidate for the takeover may, in the event of an appeal against the judgment approving the plan, make any modifications to their offer that improve it.

Cass. com., 26 June 1990, LawLex202200010068JBJ.

A candidate buyer commits a fault by unilaterally withdrawing their offer during deliberation.

CA Versailles, 8 December 2020, LawLex202300002518JBJ.

The commitment to continue the lease agreement resulting from the plan approved by the court does not extend to the guarantee, towards the assigned contracting parties, of the proper performance of obligations by the substituted assignee, unless otherwise agreed by the offeror with the creditor.

Cass. com., 7 October 2020, LawLex202200007455JBJ.

What are the obligations of the offeror?

The administrator must provide to the court all elements that enable it to assess the seriousness of the offer and the status of the third party making it. He also attaches all elements allowing the assessment of the conditions for clearing liabilities, particularly with regard to the offered price, the residual assets to be recovered or realized, the debts of the continuation period, and, if applicable, other debts remaining the debtor's responsibility.

The court accepts the offer that best ensures the most sustainable employment attached to the transferred entity and the payment of creditors, and that provides the best guarantees of performance .

The takeover offer made in connection with a disposal plan, which does not provide for the retention of all employees of the transferred undertaking, although a mandatory public policy provision, cannot be accepted.

CA Paris, 18 May 2017, LawLex202300002519JBJ.

How are offers selected?

Pursuant to Article L. 642-7 of the Commercial Code, the court determines the leasing, rental, or supply contracts for goods or services necessary for maintaining the activity in view of the observations of the debtor's contracting parties submitted to the judicial representative or the administrator when one has been appointed. The judgment approving the plan entails the transfer of these contracts, even when the transfer is preceded by a period of management lease.

The objective of the plan is to maintain the activity transferred to the buyer by the transmission of ongoing contracts  concluded by the debtor company . When the contract is no longer ongoing, the assignee may still, with the agreement of the co-contractor, waive the termination and take it over . Any contract necessary for maintaining the activity must be transferable, including contracts concluded intuitu personae such as concession contracts, and, under certain conditions, franchise contracts. However, the court cannot impose on the buyer the transfer of a contract whose execution would worsen the commitments made during the preparation of their offer.

Furthermore, when assets encumbered with securities are included in the transfer plan, two scenarios must be distinguished, depending on whether the security guarantees the repayment of a loan or not:

When the transfer involves assets encumbered with a special privilege, pledge, lien, or mortgage that do not secure financing granted to the debtor, the court must allocate to each of these assets, for the distribution of the price and the exercise of the right of preference, the portion of the price determined based on the inventory and appraisal of the assets and corresponding to the ratio between the value of that asset and the total value of the transferred assets. The deposit of funds paid by the transferee to the Caisse des dépôts et consignations, which is equivalent to a consignment for the distribution of the price and the exercise of the right of preference, exempts creditors, from that date, from renewing mortgage registrations on the concerned assets. However, their rights are significantly reduced, as the price agreed upon in the transfer plans is often symbolic or, at best, considerably reduced compared to the real value of the transferred assets, and their pledge is only exercised on a portion of this price. Furthermore, until full payment of the price, which results in the clearing of registrations, creditors benefiting from a right of pursuit can only exercise it in the event of the alienation of the transferred asset by the transferee. Finally, the payment of the transfer price prevents the exercise against the transferee of the rights of creditors registered on these assets.

When special real securities guarantee the repayment of a loan granted to the undertaking to finance an asset, the burden of these securities is transferred to the assignee by operation of law. In reality, more than a transfer of securities, the text entails the transmission to the assignee of the burden of repaying the loan installments due after the transfer, and, correspondingly, the release of the debtor. In the event of the assignee's default in paying the installments due after the transfer of ownership, the creditor bank may exercise its right of pursuit by seizing the property encumbered with a mortgage, transferred as part of the transfer plan.

Regarding employment contracts, the transferee is not required to retain all the employees that the debtor assigns to the transferred units, but only those necessary to maintain the activity. When the transferee has expressed such an intention in their offer, the transfer plan must specify, in particular, the dismissals that must occur within one month after the judgment, upon simple notification by the administrator, subject to the notice rights provided by law, collective agreements, or labor agreements. When the undertaking has fifty employees or more, an employment protection plan must be established by the administrator. When the dismissal involves at least ten employees in an undertaking with at least fifty employees, this plan must be validated or approved by the administrative authority. All employees who have not been dismissed under the transfer plan are automatically retained pursuant to Article L. 1224-1 of the Labor Code.

The assignee may also take over the commercial lease when it is necessary for the continuation of the activity. In this case, the contractual clauses stipulated between the lessor and the debtor that could hinder the transfer plan are inapplicable to the assignee . The right of first refusal included in a commercial lease, transferred as part of a transfer plan, is also not passed on to the assignee as it constitutes a personal claim. Furthermore, by way of derogation from the principle that the contract must be executed under the conditions in effect on the day of the judgment, any clause imposing joint obligations on the assignee of a lease with the assignor is deemed unwritten.

Advice: In franchise networks, it is recommended that the franchisor include a clause whereby the intuitus personae concerns only the franchisee and not the franchisor, in order to allow the transfer of contracts to the successor of the latter in the event of voluntary or judicial transfer of contracts and to address the uncertainties of case law.

The loan agreement for funds fully disbursed to the borrower before the commencement of their insolvency proceedings, which does not constitute an ongoing contract, cannot be assigned as part of the contracts necessary for the continuation of the activity.

Cass. com., 9 February 2016, LawLex202200001183JBJ.

The guarantee concluded between the creditor and the guarantor of the debtor cannot be assigned as part of a transfer plan since it is not a contract of the debtor company.

Cass. com., 10 July 2001, LawLex202300002723JBJ.

The assignee, who is not the universal successor of the debtor, may, with the agreement of the contracting party, waive the termination of certain contracts not continued by the administrator and take them over.

CA Orléans, 20 February 2014, LawLex202300004927JBJ.

The contractual clause that requires the prior agreement of a landlord in the event of an assignment by the lessee is rendered ineffective in the context of a transfer plan.

CA Paris, 23 January 2020, LawLex202000000104JBJ

The lease contract clause that prohibits any transfer of the commercial lease in the event of prior unpaid amounts cannot take effect during the review of the transfer plan when it involves a contract necessary for maintaining the activity.

CA Lyon, 12 January 2006, LawLex202300002522JBJ.

What contracts or assets can be included in a transfer plan?

In accordance with Article L. 661-6, III of the Commercial Code, the appeal of judgments that approve or reject the transfer plan of the undertaking constitutes a specific action whose exercise is reserved, so as not to unnecessarily delay its implementation:

to the transferee, if the plan imposes obligations on them other than the commitments they made during the preparation of the plan, and

to the assignee co-contractor, solely with respect to the part of the judgment that entails the assignment of the contract.

On the other hand, the appeals of the excluded buyer , the contracting parties whose contract was neither mentioned nor included in the transfer plan, and the secured creditors are not admissible, as they are not parties to the judgment approving the transfer plan. Finally, the judgment approving the transfer plan cannot be subject to third-party opposition, except in cases of abuse of power by the court.

Even more restrictive than Article L. 661-6 of the Commercial Code regarding appeals, Article L. 661-7 allows only the public prosecutor to file an appeal in cassation against judgments concerning the adoption or rejection of a company's transfer plan. Only an abuse of power or a violation of an essential procedural principle allows any other person to file an appeal in cassation in this area.

Advice: Do not confuse the debtor's right of appeal with the director's right of appeal. The debtor company that does not propose a recovery plan or does not itself oppose the transfer is not admissible to act to defend the director's interests with respect to the sureties he has provided.

.A judge who declares an appeal by an ousted buyer against the supervising judge's order admissible is committing an abuse of power.

Cass. com., 28 June 2011, LawLex202100001144JBJ.

The transfer offer, when accepted by the court, imposes a whole series of obligations on the transferee:

first, the transferee must sign the transfer deed: if enforcement is theoretically an option , case law prefers holding them liable to the debtor and the rescission of the plan;

Then, he must fulfill all the obligations provided in the plan, but only those. Indeed, they cannot be required to bear any burdens other than those they have undertaken in their offer, or mentioned in the financing plan submitted to the judicial administrator . In particular, the commitment to make current account contributions, if necessary, cannot be transformed into a guarantee obligation.

Advice: The transferee must be sufficiently precise regarding the assets they intend to take over, to avoid having to bear costs not provided for in the plan. Concerning the inventory taken over, the transferee will notably specify that the pledged inventory is not included in the proposal and will verify that the restrictions on the scope of the offer have indeed been included in the judgment approving the transfer plan. If this is not the case, they will request the reversal and/or correction of the judgment.

Furthermore, the transferee is required to pay the transfer price as soon as the judgment approving the plan is delivered . A co-contractor may terminate the contract taken over by the transferee if it appears that the latter does not provide the financial guarantees it claimed and will not be able to pay the transfer price.

must apply the assigned contracts under the conditions in effect on the day the procedure is opened , notwithstanding any contrary clause, even if they have not been reproduced in the order of the supervising judge authorizing the assignment;

must reimburse the assumed loans  if they have financed the acquisition of an asset or improvement work on the business ;

may, pending the completion of the necessary acts for the realization of the transfer, be entrusted with the management of the undertaking, under their responsibility: they are therefore responsible from that date, in particular, for making payments of contributions  or royalties  due in execution of this plan, or the performance of the contracts taken over;

commit - when the court has authorized a management lease period -  to acquiring the business at its conclusion : Article L. 642-15 indeed provides that the undertaking must be transferred within two years of the judgment approving the plan;

may, until the transfer price is not fully paid, may,  pursuant to Article L. 642-9 of the Commercial Code, except for stocks, alienate or lease the tangible or intangible assets acquired, unless specifically authorized by the court; furthermore, the court may, pursuant to Article L. 642-10 of the Commercial Code, provide in the judgment approving the transfer plan that, once the transfer price is fully paid, all or part of the transferred assets may not be alienated, for a period it determines, without its authorization .

Advice: Do not overlook other substantive rules applicable to insolvency proceedings: having to perform the contract under the current conditions does not mean having to settle a prior claim, even if its installments have been spread over time.

Do not hesitate to challenge the scope of inalienability: Article L. 642-10 of the Commercial Code indeed only authorizes the judge to declare the inalienability of the transferred assets, not the shares constituting the capital of the transferred companies. Similarly, the inalienability clause, inserted in the transfer plan by the court, cannot concern all the transferred assets when the takeover offer excepted the transfers necessary for the renewal of equipment or related to the ongoing operation of the acquired activities. Finally, it is advisable to request the lifting of the inalienability clause when it proves to be an obstacle to achieving the objectives of the plan, by preventing financing through borrowing for the renovation of the production tool, since a bank cannot establish a mortgage on an inalienable asset.

The transferee, who, at the end of the lease-management period, announces that they will not be able to purchase the debtor's assets, must be ordered to execute the transfer plan they proposed, by a judgment equivalent to a sale.

Cass. com., 12 February 1991, LawLex202300004736JBJ.

The court cannot, without increasing the assignee's burdens, stipulate the inalienability, for a period of two years, of all the transferred assets when the takeover offer excepted transfers necessary for the renewal of equipment or related to the ordinary operation of the acquired activities.

CA Rouen, 19 May 2022, LawLex202300004774JBJ.

The transfereecannot refuse to carry out the transfer under the conditions of their offer if they have made a reduced price proposal following their assessment of the transaction risks and the transferor has not breached their delivery obligation.

Cass. com., 14 October 1997, LawLex202100001194JBJ.

The transfereeis required to replenish the security deposit under the conditions of the commercial lease transferred by the previous tenant, as the contracts assigned under the transfer plan must be executed under the conditions in effect on the date of the commencement of judicial reorganization, notwithstanding any contrary clause.

Cass. com., 16 September 2008, LawLex202300002527JBJ.

The transferee company that accepted the takeover of the loan granted to the debtor, which was restructured outside the recovery plan subsequently rescinded, is bound by the terms of this commitment.

Cass. com., 7 October 2020, LawLex202300004440JBJ.

The obligation to repay a loan taken out by the debtor is not transferred to the transferee when the borrowed sums have not been used for improvements to the business assets, contrary to the statements in the deed.

Cass. com., 4 October 2005, LawLex202100003093JBJ.

The transfer plan, which includes the mention that the takeover project is effective immediately, authorizes the transferee, from the moment the decision is pronounced, to continue the activity of the undertaking under their own responsibility and not under that of the administrator, with the corresponding obligation to assume the payment of social contributions related to the employment contracts maintained in execution of this plan.

Cass. com., 31 March 1998, LawLex202300004766JBJ.

The transferee who was granted a two-month management lease contract pending the signing of the transfer deeds but who, during this period, does not pay all the fees due, must be evicted at the end of the contract.

CA Aix-en-Provence, 26 November 2009, LawLex202300004833JBJ.

The management lease, which is only possible within the framework of a recovery plan by transfer and not by continuation, in order to allow the partial or total transfer of the undertaking, involves the commitment to acquire at its conclusion.

CA Bordeaux, 24 February 1993, LawLex200200005980JBJ.

The transfer of plots of land covered by a non-transferability clause provided for in the transfer plan may be annulled within three years of the publication of the judgment.

CA Besançon, 19 June 2018, LawLex202300004877JBJ.

What are the obligations of the transferee?

The personal nature of the surety prevents the guarantor, who has committed to securing certain unpaid amounts by the debtor, from being considered as having contracted a coverage obligation for the benefit of the transferee, whose solvency they did not know. Therefore, they are not required to guarantee new claims arising from the transferee since the transfer , even though they remain liable for those arising from the debtor prior to it .

It is different when the amounts guaranteed by the guarantor correspond to the installments of a loan. Indeed, if the transferee of the undertaking is required to pay the loan repayment installments after the transfer of the financed asset, the guarantor of the debtor remains obliged, under the same conditions as the debtor, to repay the entire loan, deducting the amounts paid by the transferee, including the installments due after the commencement of the insolvency proceedings .

Advice: Avoid any behavior likely to deprive the guarantor of the benefit of subrogation, under penalty of not being able to benefit from its coverage obligation. In particular, do not forget to register a pledge of the business assets, which would allow for easy recovery of the claim, or do not expressly waive it.

The lessor is not entitled to claim from the debtor's guarantor the loss of profit resulting from a re-leasing of the equipment at a lower rent to the assignee, as it only affects the rents subsequent to the assignment, which it does not guarantee.

Cass. com., 13 February 2007, LawLex202300003819JBJ.

When a leasing contract, whose performance is guaranteed by a surety, is assigned, the surety remains liable for the rents due prior to the assignment, arising from the ceded debtor, but not for subsequent rents owed by the assignee, unless there is an additional commitment on their part.

Cass. crim., 21 November 1995, LawLex202100001910JBJ.

The guarantor of a loan granted before the initiation of the procedure and the adoption of the transfer plan is not released as long as the bank has not agreed to release the debtor from the payment of the loan installments starting from the transfer plan.

What are the effects of the transfer on the guarantors?

Pursuant to Article L. 642-6 of the Commercial Code, a substantial modification in the objectives and means of the plan can only be decided by the court, at the request of the transferee, which must be submitted by petition.

The court rules after having heard or duly summoned:

the court-appointed administrator when one has been appointed;

the person or persons designated by the social and economic committee; and

any interested person, after obtaining the opinion of the public prosecutor.

Constitutes a substantial modification, justifying a modification of the plan:

an event rendering an assigned contract useless for maintaining the activity ;

the request of the transferee to be granted a right of substitution in favor of a third party .

On the other hand, do not constitute a substantial modification in the objectives and means of the plan requiring or justifying its adjustment:

the transfer of the shares of the transferred group, as long as the transferee has not committed to retaining them and the transfer has not resulted in depriving the transferred company of the financing provided for in the plan;

the extension of the duration of the plan;

a request for the retroactive exclusion of certain contracts from the scope of the takeover to address the deficiency of the buyer, who did not notify their termination at their first expiration;

the transfer of employment contracts of the employees of the debtor company by the acquirer, a non-operational holding company, to one of its subsidiaries, as long as the modification cannot affect the employees.

Finally, the amount of the transfer price as set in the judgment approving the plan can never be modified .

In accordance with Article L. 661-6, IV of the Commercial Code, judgments modifying the transfer plan or rejecting a request to that effect are only subject to appeal by the public prosecutor's office or the transferee.

On the other hand, the appeal to the Court of Cassation is only available to the public prosecutor, and not to the transferee except in cases of abuse of power .

Modification of the transfer plan, by removing a transferred lubricant supply contract, is necessary when the subsequent termination of a motorcycle distribution contract affects the operating conditions of the transferred economic entity in ways that were undetectable at the time of the plan's approval, rendering the contract unnecessary for maintaining the activity.

CA Paris, 2 July 2009, LawLex202300004955JBJ.

The request to modify the transfer plan submitted by the transferee and its manager, aiming to grant a substitution option in favor of a third party, which is substantial in nature, can only be approved if both commit to ensuring the proper execution of the plan.

CA Paris, 18 May 1989, LawLex202300004919JBJ.

The action of the assignee seeking a reduction in the transfer price is barred by the prohibition set out in Article L. 642-6, para. 3, of the Commercial Code, even if a significant number of contracts included in their takeover offer were not assigned to them.

Cass. com., 15 March 2005, LawLex202300004921JBJ.

The modification of the transfer plan, which concerns the financial commitment made by the transferee in exchange for the acquisition of a non-existent asset, is not possible if it would result in a prohibited modification of the transfer price.

Cass. com., 15 November 2016, LawLex202300003802JBJ.

A court cannot, without exceeding its authority, reduce the sale price of the stock, which constitutes a component of the overall sale price, since Article L. 642-6 of the Commercial Code prohibits any modification of the sale price of the undertaking set by the judgment approving the plan.

Cass. com., 26 November 2002, LawLex202300004920JBJ.

The refusal to grant a request for modification of a financial commitment undertaken as part of the transfer plan does not constitute an abuse of power that would allow the transferee to appeal to the Court of Cassation, as it would result in a prohibited modification of the transfer price.

Can a transfer plan be modified?

When the non-performance of commitments is established, Article L. 642-11 allows the court, without disregarding the res judicata effect attached to the judgment that approved the plan, to pronounce the rescission of the plan, without prejudice to damages, at the request of:

of any interested party or ex officio, after obtaining the opinion of the public prosecutor.

The following constitute breaches justifying rescission:

the transferee not repaying the loan installments taken over ;

the dismissal of employees whom the transferee had agreed to retain .

The same applies to the failure to pay the purchase price of the business, the stock, the rent, or the waste collection tax.

On the other hand, rescission is not justified in the event of a transferee's default on a loan payment, when the commitments contained in the plan have all been fulfilled, as the legal obligation to pay the remaining installments of a loan, when an asset encumbered with securities, financed by this loan, has been transferred to the buyer, is not undertaken with respect to the insolvency proceedings, but to the lender who benefits from the transfer of the security burden.

Advice: Do not assume that the rescission of the plan, with the return of assets and contracts taken over by the debtor, necessarily has a retroactive effect and releases the transferee from all obligations. The court may, in fact, by an express provision, deprive the rescission of any retroactive character, so that the installments of contracts and loans arising from the period of operation of the undertaking by the transferee, as well as the debts incurred during the operation of the business by the latter, remain their responsibility. Furthermore, the amount paid as a deposit into the hands of the administrator remains acquired by the procedure despite the rescission of the transfer plan, as it is considered an advance on the price and takes on its legal nature.

The rescission of the transfer plan for non-performance by the transferee is justified when the latter fails to pay the acquisition price of the business, the stock, the rent, the waste collection tax, and also does not repay the installments of the assumed loan. CA Chambéry, 10 May 2022, 21/02347: LawLex202300005033JBJ.

The dismissal of two employees whom the transferee had committed to retain leads to the rescission of the transfer plan, as the social aspect gave full value to the accepted offer and justified a low acquisition price.

CA Paris, 20 September 2016, LawLex202300005015JBJ.

What are the causes for rescission of the transfer plan?

The supervising judge may order the sale of a debtor's real estate asset through judicial or amicable auction. Both methods of sale follow common rules but are also subject to specific provisions.

First, the order of the supervising judge must determine the reserve price for each of the assets to be sold, the essential conditions of the sale, the advertising methods considering the value, nature, and location of the assets, and the arrangements for visiting the assets. The supervising judge may specify that if bids do not reach this reserve price, the sale may proceed at a lower reserve price that he sets. The order of the supervising judge must then be notified by the clerk by registered letter with acknowledgment of receipt to the debtor and to the registered creditors at the elected domicile whose names are indicated in the order. The pursuing party or the appointed notary must prepare a schedule of sale conditions that refers to the order with the mention of its publication, the designation of the property to be sold, the origin of ownership, the easements encumbering the property, the leases granted on it, and the description report, as well as the mention of the reserve price, the conditions of the sale, and the terms of payment of the price.

The order of the supervising judge has the effects of the notice provided for in Article R. 321-1 of the Code of Civil Enforcement Procedures. It is published in the real estate file at the diligence of the liquidator or the pursuing creditor, under the conditions provided for said notice. The land registration service carries out the publicity formality of the order, even if notices have been previously published. These notices cease to have effect from the publication of the order. Subject to incapacities related to the functions exercised, any person may bid if they provide payment guarantees. In accordance with Article L. 322-10 of the Code of Civil Enforcement Procedures, the adjudication results in the forced sale of the seized property and transfers ownership to the successful bidder. It grants the latter no other rights than those belonging to the debtor. The debtor is obliged, with respect to the successful bidder, to deliver the property and guarantee against eviction. The successful bidder must publish the act or judgment of adjudication with the land registration service within two months of its date and, in case of appeal, within two months of the confirmatory judgment, under penalty of re-auctioning at the diligence of the liquidator. Within three months of the adjudication, the successful bidder must also deposit the total adjudication price, including interest at the legal rate from the day the sale became final until the day of payment, into the deposit account opened by the liquidator at the Caisse des Dépôts et Consignations. Payment of the price to the liquidator and the sale costs results in the discharge of mortgages and any privilege of the debtor.

The supervising judge may order the sale by judicial auction of the debtor's real estate assets, known as a “sale at the courtroom bar” (vente à la barre du tribunal). The sale by judicial auction is not subsidiary to the private sale : it is even the preferred method for disposing of the debtor's isolated assets because, through its transparency, it avoids the pitfalls of private sales, namely undervaluation of the price and sometimes fraudulent acquisitions. The liquidator must file the terms of sale with the registry of the enforcement judge of the competent Judicial Court within two months from the publication of the supervising judge's order. Then, by act of a judicial officer, he notifies the registered creditors at their elected domicile and, if the sale involves community property, the debtor's spouse, of the date of the auction hearing. The date is set, at his diligence, within a period between two and four months following the notice. The notice must contain, on pain of nullity, the indication of the place, day, and time of the auction hearing of the enforcement judge, the summons to review the terms of sale, and the indication, in very conspicuous characters, that, on pain of inadmissibility, only objections relating to a procedural act subsequent to the supervising judge's order may be raised, within fifteen days of the act or, if applicable, of its notification, by lawyer's submissions filed with the registry of the enforcement judge. The auction of the property takes place at public auction at the judge's hearing. Neither the debtor nor any interposed persons may bid:

the legal auxiliaries who were involved in any capacity in the proceedings;

the judges of the court before which the sale is pursued.

The judge recalls that the auction will start from the reserve price set in the terms of sale. The conduct of the auction is subject to the provisions of the Code of Civil Enforcement Procedures.

The supervising judge may also, if the nature of the assets, their location, or the offers received are likely to allow an amicable transfer under better conditions than an auction, order the sale by amicable adjudication at the reserve price he sets. The sale is then conducted under the supervision of a notary. The seized debtor, legal assistants who have intervened in any capacity in the proceedings, or the judges of the court before which the sale is pursued, may not bid, either directly or through intermediaries. In the case of amicable adjudication, an overbid can always be made. The title of sale consists of the issuance of the terms of sale document bearing the enforceable formula, followed by the transcription of an adjudication report drawn up by the notary.

Advice: Do not act hastily once the offer is accepted. Indeed, no act of disposal is permitted on the property before the payment of the price into an escrow account or its deposit with the Caisse des Dépôts et Consignations and the payment of the sale costs, except for the establishment of a mortgage ancillary to a loan agreement intended to finance the acquisition of this property.

The impossibility of proceeding with the private sale of real estate does not constitute a condition for the validity of the order authorizing its sale by auction.

CA Grenoble, 29 January 2015, LawLex202300005384JBJ

A private sale to a potential buyer who makes an offer significantly lower than the value determined by the expert and the reserve price set by the supervising judge, which, to make the sale attractive, is already below the market value of the real estate to be sold, cannot be upheld to the detriment of a sale by auction.

CA Bourges, 20 March 2014, LawLex202300005392JBJ.

What rules govern the sale by auction of an isolated immovable asset?

Private sales are regarded with suspicion and are subject to closer scrutiny by the court because they have previously led to abuses due to their lack of transparency and the unnecessary dismantling of certain undertakings .

500 Questions - Business Law

488. What remedies are available to oppose a transfer plan?

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488. What remedies are available to oppose a transfer plan?

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