Commercial Leases/Business Goodwill

In the event of a transfer, merger, demerger, universal transfer of assets, or partial contribution of assets, Article L. 145-16, para. 3, of the Commercial Code specifies that “if the guarantee obligation can no longer be ensured under the terms of the agreement, the court may substitute any guarantees it deems sufficient.” Any interested party, especially the lessor, may, at any time, bring the matter before the competent court for a ruling under this text . If no deadline is provided for making this request , no text requires the judge to be seized prior to the signing of the transfer . Article L. 145-16, para. 3, leaves the court the discretion to grant or refuse the substitution of guarantee provided by this text .

Thus, in a case where the assignor of the lease right, subject to judicial liquidation proceedings, was unable to provide the joint and several guarantee stipulated in the lease, the trial court was able to substitute it with a bank guarantee pursuant to Article L. 145-16, para. 3, of the Commercial Code. This substitution of guarantee must be considered legitimate insofar as the assignee was imposed on the lessor, who could not assess the assignee's solvency, even if, on the one hand, before the assignment, the lessor had a security deposit and, on the other hand, in the event of a new assignment, could benefit from a joint and several guarantee from the current assignee . It was also ruled that a bank check, guaranteeing six months of rent, constitutes a satisfactory substitution of guarantee insofar as the assignor, in judicial liquidation, is unable to fulfill the contractual obligation of solidarity with the assignee .

Finally, according to the Paris Court of Appeal, the serious breach of the contractual obligation by the assignee, who was unable to provide the substitute guarantee that the lessor is entitled to require, results in the judicial termination of the commercial lease at its exclusive fault .

CA Paris, 19 March 2008, LawLex202300014420JBJ.

Cass. civ. 3e, 13 November 1997, LawLex202100004561JBJ; 15 September 2010, LawLex202300011899JBJ: since a substitution of guarantee can be requested from the court at the initiative of either party and no deadline is provided for making this request, the assignment of the lease of a lessee in judicial liquidation, without mention of the joint guarantee clause imposed on the assignor, is valid if the lessor has not requested this substitution.

CA Paris, 19 March 2008, LawLex202300014420JBJ, préc.

Cass. civ. 3e, 13 November 1997, LawLex202100004561JBJ, op. cit.

CA Paris, 27 November 1992, No 91/013770.

323. Substitution of guarantees