All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

As in any partnership, Article 1857 of the Civil Code provides that with respect to third parties, the partners of civil companies are indefinitely liable for the company's debts. Their obligation to the debts is executed in proportion to their share in the corporate capital at the date of maturity or on the day of cessation of payments . Unlike partners in commercial companies, partners in civil  …

Terms and conditions

GIBIRILA, The obligation for social debts in civil companies, D. 1998, chron., 625; CERATI-GAUTHIER, Pursuits of a partner by a social creditor, JCP E 2007, No 2157.

As in any partnership, Article 1857 of the Civil Code provides that with respect to third parties, the partners of civil companies are indefinitely liable for the company's debts. Their obligation to the debts is executed in proportion to their share in the corporate capital at the date of maturity or on the day of cessation of payments . Unlike partners in commercial companies, partners in civil companies are not jointly and severally , but jointly, liable for the company's debts, so the creditor must divide their claims. Their obligation to the debt is also personal. Therefore, even in the event of insolvency proceedings of this company, the liquidator does not have the standing to exercise the action provided by Article 1857 of the Civil Code to each of the creditors against the partners .

Only those who remain partners of the company on the due date of the corporate debts can be called upon to answer for them . However, it does not matter whether they were partners at the time of the conclusion of the act that gave rise to the claim . Furthermore, the principle of obligation for debts benefits only third parties: a partner who is a creditor of an SCI for advances in a current account cannot invoke the obligation for corporate debts to act for payment against their co-partner in proportion to their share in the share capital .

An important qualification to these principles must be made. Indeed, Article 1858 of the Civil Code establishes a principle of subsidiarity of the liability of partners by stating that creditors can only pursue the payment of corporate debts against a partner after having previously and unsuccessfully pursued the legal entity. The ineffectiveness of creditors' actions against the company for the payment of corporate debts must be established prior to initiating proceedings against the partners, and not during the course of the procedure directed against them. The courts are very demanding regarding the proof of the existence of unsuccessful actions. The formal notice to the SCI to settle its debt several times, as well as its non-appearance following the summons it received, are not sufficient to characterize the existence of prior unsuccessful actions against it. The mere production of reports of unsuccessful searches revealing that the principal debtor has no known address does not demonstrate its insolvency, nor, in the absence of other steps, the existence of prior unsuccessful actions by the creditor. Similarly, a creditor who has only been able to recover part of their claim by seizing the mortgaged property cannot act against a partner of the SCI without establishing that all other actions against the company would have been, due to the insufficiency of the corporate assets, ineffective. The creditor's obtaining of a judgment condemning the SCI, the registration of a second-rank mortgage on its assets, as well as the production of correspondence from a notary revealing the existence of a first-rank registration by another creditor on the same assets, are also inadequate to establish that the actions previously taken against the company were, due to the insufficiency of the corporate assets, entirely ineffective. The mere declaration of the claim in the debtor company's liabilities, when it is subject to a recovery plan, is also insufficient to demonstrate that the claim against the company remained unsuccessful. However, when the company's difficulties are more severe and judicial liquidation is pronounced, the declaration of its claim in the procedure exempts the creditor from establishing the insufficiency of the corporate assets to satisfy them and the implementation of unsuccessful actions. This is also the case, a fortiori, when the liquidation is closed due to insufficient assets. In the case of an amicable liquidation, when the closure occurs before the notification of a tax adjustment and the company no longer has any assets, the payment of its debt can also be pursued directly by the tax administration against one of the former partners. Finally, the enforcement judge seized of the challenge to a protective measure initiated by a creditor of a civil company against the partners must only seek the existence of a claim appearing well-founded in principle against the company and the appearance of its default, which may result from the risk of non-execution of the recovery plan.

The application of the principle of subsidiarity implies that the partners of a civil company, pursued for the payment of corporate debts, are only admissible to file a third-party opposition against the decision condemning the company to payment if they invoke grounds specific to them or if the decision was rendered in fraud of their rights .

Pursued by a creditor, the partner of a civil company, a subsidiary debtor of the social liabilities, is entitled to invoke the statute of limitations on the claim held against the company. Under Article 1859 of the Civil Code, all actions against non-liquidating partners  or their heirs and assigns are time-barred after five years from the publication of the company's dissolution . According to the Court of Cassation, this statute of limitations, distinct from that resulting from the claim held against the company, is specific to the creditor's action against the partner  and its starting point cannot be postponed to the date of the acknowledgment of unsuccessful proceedings against the company . Furthermore, the publication of the judicial liquidation judgment of a civil company in the BODACC triggers the five-year statute of limitations provided by Article 1859 of the Civil Code , whether or not the company was registered .

See, however, Cass. 1re civ., 1 July 2003, LawLex202300009771JBJ, specifying that heirs who have received shares in the succession of the de cujus and have become partners in a civil company are only indefinitely liable to third parties for the company's debts in the double proportion of their shares in the share capital and their respective rights in the succession.

Cass. 3e civ., 18 December 2001, LawLex202300009277JBJ, emphasizing that the partners, who are indefinitely liable for the company's debts in proportion to their share in the corporate capital, cannot be held jointly and severally liable with the company for the settlement of these debts.

Cass. 3e civ., 6 July 2005, LawLex202300009784JBJ.

Cass. com., 20 November 2001, LawLex202300009782JBJ.

Cass. 3e civ., 23 February 2000, LawLex202300009779JBJ.

Cass. mixte, 18 May 2007, LawLex202100003576JBJ. - Cf. previously, Cass. 3e civ., 18 July 2001, LawLex202300009778JBJ, considering that the mere existence of a certain, liquid, and payable claim against an SCI placed in judicial liquidation is not sufficient to establish the existence of fruitless proceedings against it, allowing the creditor to turn against the majority associate.

Cass. 3e civ., 10 February 2010, LawLex202300009788JBJ.

Cass. 3e civ., 12 September 2007, LawLex202300009806JBJ. - See also Cass. 3e civ., 31 March 2004, LawLex202300009804JBJ.

Cass. com., 25 March 2020, LawLex202300002186JBJ.

Cass. 2e civ., 12 September 2024, LawLex202400006141JBJ.

See, applying this text also to the associate liquidator, Cass. com., 15 March 2011, LawLex202300010456JBJ.

See for applications, Cass. 3e civ., 27 February 2008, LawLex202300010447JBJ; 26 September 2007, LawLex202300010446JBJ.

Cass. com., 24 January 2006, LawLex202100002950JBJ.

Cass. com., 20 March 2019, LawLex202100001518JBJ.

Cass. 3e civ., 19 January 2022, LawLex202300009278JBJ, Rev. sociétés 2022, 435, obs. BARBIERI; JCP E 2022, No 1178, obs. BARBIERI; Gaz. Pal. June 2022, 56, obs. LAROCHE.

Cass. com., 12 December 2006, LawLex202300010454JBJ.

Cass. 3e civ., 7 October 2009, LawLex202300010455JBJ.

Cass. 1re civ., 26 November 1991, LawLex202300009767JBJ.

Cass. com., 13 April 2010, LawLex202300009768JBJ.

Cass. com., 3 May 2012, LawLex202100003574JBJ.

Cass. 1re civ., 17 January 2006, LawLex202300009772JBJ.

Cass. com., 27 September 2005, LawLex202300009775JBJ.

Cass. 3e civ., 14 June 2000, LawLex202300009777JBJ.

Cass. 3e civ., 4 June 2009, LawLex202300009786JBJ; 8 October 1997, LawLex202300009773JBJ. - Cf. Cass. com., 25 September 2007, LawLex202300009774JBJ, considering that the creditor who serves a summons on a real estate investment company (SCI) in summary proceedings, transformed into a report of unsuccessful searches, establishes the existence of futile proceedings against it.

Company Law (en cours)

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