Bankruptcy Law

Article L. 622-7, II(2) of the Commercial Code allows the bankruptcy judge to authorize the debtor “to pay debts prior to the judgment, to withdraw the pledge or a thing legitimately withheld or to obtain the return of goods and rights transferred by way of security to a fiduciary estate, where such withdrawal or return is justified by the continuation of the business” .
The bankruptcy judge may,  …

Payment for goods needed to maintain the business

Article L. 622-7, II(2) of the Commercial Code allows the bankruptcy judge to authorize the debtor “to pay debts prior to the judgment, to withdraw the pledge or a thing legitimately withheld or to obtain the return of goods and rights transferred by way of security to a fiduciary estate, where such withdrawal or return is justified by the continuation of the business” .

The bankruptcy judge may, in particular, authorize the withdrawal of a pledge of short-term securities held by a bank . However, the deposit of a sum of money with the accountant of the Trésor Public to ensure the recovery of the Trésor's claim  does not constitute a pledge contract for the withdrawal of which the bankruptcy judge may authorize the payment of a prior debt.

The payment of a prior claim of a retaining creditor may also be authorized by the bankruptcy judge to withdraw a thing legitimately retained where the retaining creditor has reported his claim as a liability in order to make his right of retention enforceable in the insolvency proceedings . On the other hand, the lender cannot invoke his right of retention on administrative documents to obtain the proceeds of the sale of the debtor's vehicles if he has not registered his pledge in a special register . A creditor with a legal lien on a debtor's vehicle may suspend the release of the pledge upon the allocation to him of the proceeds of its sale, even in the presence of super-privileged wage claims . On the other hand, the bankruptcy judge may not authorize the creditors' representative to withdraw pledged assets in settlement of the debtor's debt to the creditor holding a pledge on tools and equipment, since the pledge does not confer any right of retention . Finally, guarantors may request to be discharged from their obligation when the creditor, who has a right of retention, has voluntarily divested himself of the thing in favor of the debtor, in order to take action against them .

Article L. 622-7, II(2), adds that “[p]ayment may also be authorized to exercise the purchase option of a leasing contract, where such exercise of the option is justified by the continuation of the business”. This exception to the prohibition of payment of prior claims was introduced by the Ordinance of 18 December 2008 . In fact, the Court of Cassation previously considered that the bankruptcy judge could not, in order to oppose the restitution of an asset, subject to a leasing contract, order the creditors' representative to exercise the option and authorize him to pay the instalments prior to the opening judgment that remained unpaid . From now on, the bankruptcy judge may authorize such a payment, but this faculty does not allow to derogate from the clause of the leasing contract which fixes the duration of the lease, at the expiration of which the lessee has the faculty to exercise the purchase option .

Article R. 622-7 of the Commercial Code specifies that “[w]hen the bankruptcy judge rules on an application for authorization submitted by the debtor pursuant to II of Article L. 622-7, the court registrar shall summon the debtor, the receiver, where one has been appointed, the legal representative and, where applicable, the creditors holding special security interests in the assets whose sale is contemplated. It adds that "[a]n application for authorization of an act likely to have a decisive impact on the outcome of the procedure shall be made by petition of the debtor and, where one has been appointed, of the receiver, unless he has only a supervisory role. At the request of the bankruptcy judge, the court registry shall send a copy of the petition to the public prosecutor no later than eight days before the date of the hearing”.

See for an application, Cass. com, 7 July 2009, LawLex202200000788JBJ (RJ) holding that the bankruptcy judge cannot authorize the payment of claims prior to the opening of the insolvency procedure in the absence of any withdrawal of a pledge or a thing legitimately retained by the creditors.

Cass. com., 11 May 1999, LawLex202200000782JBJ (RJ).

Cass. com., 18 March 2014, LawLex202100001596JBJ (LJ).

Cass. com., 27 October 1998, LawLex202100002695JBJ (LJ).

Cass. com., 20 May 1997, LawLex202200001877JBJ (LJ).

Cass. com., 23 April 2013, LawLex202100001594JBJ (LJ).

Cass. com., 15 October 1991, LawLex202100001591JBJ (LJ).

Cass. com., 4 January 2005, LawLex202100001590JBJ (LJ).

Cass. com., 25 November 1997, LawLex202100001589JBJ (RJ).

Ordinance No 2008-1345 of 18 December 2008 reforming the law on companies in difficulty.

Cass. com., 19 June 2007, LawLex202100002268JBJ (LJ).

Bankruptcy Law

127. Payment for goods needed to maintain the business

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127. Payment for goods needed to maintain the business

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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