Bankruptcy Law

In order to promote access to credit for businesses, even when they are experiencing difficulties, Article L. 622-28(1) of the Commercial Code excludes from the rule of stopping interest, interest resulting from loan contracts concluded for a term equal to or greater than one year  or from contracts with a deferred payment of one year or more, even if they were terminated before its opening judgme …

Scope of the exception

In order to promote access to credit for businesses, even when they are experiencing difficulties, Article L. 622-28(1) of the Commercial Code excludes from the rule of stopping interest, interest resulting from loan contracts concluded for a term equal to or greater than one year  or from contracts with a deferred payment of one year or more, even if they were terminated before its opening judgment . The text specifies that natural persons who are co-obligated or who have granted a personal guarantee or who have assigned or transferred property as security may avail themselves of this right.

The exception applies to both statutory interest and contractual interest on arrears , even if the contract from which they derive was terminated before the opening of the insolvency procedure . Indeed, in the absence of a distinction provided for in the text, the rule applies whether or not the loan contracts in question are in progress on the date of the opening of the insolvency procedure . A creditor who, prior to the opening of the insolvency procedure, granted the debtor a loan for a period of at least one year and for whom the continuation plan imposes longer repayment periods than those contractually provided for, is entitled to payment of the interest provided for in the contract by reason of the extension of these periods .

Which loan contracts are covered by the exception? The Court of Cassation may have seemed hesitant as to whether an opening of credit should be treated as a loan agreement in terms of the exception to the rule that interest should not run: While it initially equated a credit facility with a loan agreement , it then refused to equate it with a loan agreement , before returning to its initial position and considering that when it is granted for a period of one year or more, the credit facility from which the debtor benefits is comparable to a loan for the purposes of Article L. 622-28 . However, the exception does not apply to a leasing agreement, so that a lessor cannot obtain an order for the debtor's guarantor to pay contractual interest . Similarly, a current account agreement that does not specify the period for which the funds are made available or the terms of repayment does not constitute a loan of more than one year within the meaning of Article L. 622-28 . In addition, amendments to a loan contract concluded for a period of six months, which grant three successive extensions of the period offered to the debtor for its repayment, cannot give it the character of a loan concluded for a period equal to or greater than one year, in the light of the provisions of Article L. 622-28 .

Finally, a penalty clause that punishes any delay in payment and provides for increased interest compared to that resulting from a loan concluded for a term equal to or greater than one year, applies, subject to the court's power of moderation, even in the event of the opening of a safeguard procedure against the borrower .

Cass. com., 4 April 2006, LawLex202100002799JBJ (RJ).

Cass. com., 6 July 1993, LawLex202200002781JBJ (RJ).

Cass. com., 23 April 2013, LawLex202100002771JBJ (RJ).

Cass. com., 29 April 2003, LawLex202200002765JBJ (RJ).

Cass. com., 2 July 2013, LawLex202200002772JBJ (S).

Cass. com., 16 June 2021, LawLex202100005854JBJ (RJ); 27 November 1991, LawLex202200002769JBJ (RJ) ; 2 November 2016, LawLex202100002412JBJ (RJ).

Cass. com., 27 November 1991, cited above.

Cass. com., 16 April1991, LawLex202100002768JBJ (RJ) ; 11 May 1993, LawLex202200002770JBJ (RJ).

See by analogy, Cass. com., 14 October 1997, LawLex202200002777JBJ (RJ).

Cass. com., 19 March 1996, LawLex202200002780JBJ (RJ).

Cass. com., 6 May 1997, LawLex202100002770JBJ (RJ).

Cass. com., 9 January 2001, LawLex202100002769JBJ (LJ) ; 17 October 2018, LawLex202100002838JBJ (LJ).

Cass. com., 29 May 2001, LawLex202200002764JBJ (RJ).

Bankruptcy Law

191. Scope of the exception

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191. Scope of the exception

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Les notions juridiques connexes

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