Bankruptcy Law

The opening judgment of the safeguard makes the unpaid amount of the share capital immediately payable under Article L. 624-20 of the Commercial Code. Beyond the need to mobilize all possible means of financing the business during the observation period, this provision makes it possible to restore a certain equality between the debtor's creditors and partners, by requiring them to contribute joint …

Release of the entire share capital

The opening judgment of the safeguard makes the unpaid amount of the share capital immediately payable under Article L. 624-20 of the Commercial Code. Beyond the need to mobilize all possible means of financing the business during the observation period, this provision makes it possible to restore a certain equality between the debtor's creditors and partners, by requiring them to contribute jointly to the safeguard of the business.

It is up to the legal representative to give formal notice to the defaulting partner or shareholder to pay the amount of the unpaid share capital , by registered letter with acknowledgement of receipt. This letter must reproduce the provisions of Article L. 624-20 . Based on the partnership agreement, the legal representative's action is subject to the five-year statute of limitations set forth in Article 2224 of the Civil Code, which begins on the date of the opening judgment of the insolvency procedure, which makes the debtor company's contribution claim against its shareholders due and payable . When a safeguard plan is adopted, the commissioner for the enforcement of the plan, who does not represent the debtor, cannot substitute himself for the legal bodies of the company in order to require a partner to pay up his contributions .

Only a person whose status as a partner or shareholder is established may be required to pay up the amount of the outstanding share capital . The determination of the status as the debtor of the obligation to pay up the contributions may prove to be a source of difficulty in the event of a transfer of the shares prior to the action of the legal representative. Article L. 228-28 of the Commercial Code partially circumvents this obstacle for corporations by providing that a shareholder who has sold his shares less than two years prior to the action of the legal representative remains jointly and severally liable, with the transferees, for the payment of the unpaid share capital . On the other hand, in the absence of an equivalent text for limited liability companies and in the absence of a contractual stipulation to the contrary, the obligation to pay up the share capital is not incumbent on the transferee of shares in a limited liability company, but on the transferor, since such an obligation, which is inherent in the initial subscription of the shares, constitutes a debt towards the company independent of the transfer . Finally, the legal representative may not request a minor to pay up a contribution that has been rendered null and void by reason of his incapacity .

The partners called upon to pay up the share capital regularly invoke the set-off of this debt with the positive balance of their partner's current account. However, the debt for the payment of the share capital and the claim on a partner's current account do not arise from the same contract and therefore do not constitute related claims that may be set off .  However, a partner's debt for the payment of subscribed but unpaid capital may become due and payable, and therefore subject to legal set-off, upon the decision of the governing body of the partnership that demands payment .  A partner may not claim to have paid up his contributions by offsetting them against the credit balance of his partners' current account if the board of directors has not established that any payment has been made and if the transaction has not been taken into account in the company's accounts . A contrario, the set-off is acquired if it is established that the payment made into the partners' current account was intended to settle the debt for the payment of the capital and that the allocation to this account results from an error by the accountant . The partner who invokes compensation is required to provide proof of his request for reimbursement of his claim and of its allocation to the payment of his debt, before the opening of the insolvency procedure .

Finally, the application of Article L. 624-20 of the Commercial Code may not render the unpaid portion of the share capital immediately payable where a clause in the articles of association has provided for its payment in instalments . Nevertheless, the payment extension requested by a partner who has been given notice to pay the outstanding portion of the capital may not exceed twenty-four months, in order to expedite the processing of the company's insolvency procedure .

CA Reims, 20 September 2016, LawLex202200003967JBJ (LJ).

CA Pau, 29 March 2018, LawLex202200003966JBJ (LJ).

CA Pau, 21 January 2021, LawLex202200003818JBJ (LJ).

CA Poitiers, 17 October 2017, LawLex202200003812JBJ (LJ).

Cass. com., 1st July 2020, LawLex202200003810JBJ (LJ).

Cass. com., 12 October 2004, LawLex202200004115JBJ (RJ).

CA Riom, 19 September 2018, LawLex202200003819JBJ (LJ); CA Riom, 26 June 2019, LawLex202200003964JBJ (LJ).

CA Riom, 26 June 2019, LawLex202200003964JBJ (LJ).

CA Paris, 16 February 2021, LawLex202200003965JBJ (LJ).

CA Montpellier, 29 January 2013, LawLex202200002929JBJ (LJ).

Bankruptcy Law

234. Release of the entire share capital

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Les notions juridiques connexes

234. Release of the entire share capital

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise