Bankruptcy Law

Prior to the Law of 25 January 1985 , creditors prior to the opening of the insolvency procedure were considered as a “body of creditors”, an institution that had legal personality and could therefore sue and be sued. The Law of 25 January 1985 replaced the body of creditors with a mechanism for the judicial representation of creditors, which deprived them of the right to take action for compensat …

Common interest criterion

Prior to the Law of 25 January 1985 , creditors prior to the opening of the insolvency procedure were considered as a “body of creditors”, an institution that had legal personality and could therefore sue and be sued. The Law of 25 January 1985 replaced the body of creditors with a mechanism for the judicial representation of creditors, which deprived them of the right to take action for compensation for common damages. The current Article L. 622-20 of the Commercial Code, applicable to the receivership procedure by reference to Article L. 631-14, which refers to the existence of an action in the name and in the common interest of creditors, exercised by the legal representative, implies mandatory representation of their interests.

However, the text does not define the notion of common interest. Case law has remedied this shortcoming by specifying that common loss, suffered by all creditors and defended by the legal representative, is distinct from personal loss, suffered by only one of them and for which the legal representative may act alone . A liability action brought individually by a creditor cannot be declared inadmissible as a whole without the court distinguishing between the different types of loss claimed . However, where an individual interest overlaps with the common interest of the creditors , the action must be brought by the legal representative, who has sole standing to defend the latter.

The Court of Cassation was relatively late in identifying the criterion of common interest. It was only in 2015 that it laid down the principle that the common interest only covers actions aimed at protecting and reconstituting the common pledge . Consequently, an action for damages brought by a shareholder or a manager, based on the loss resulting from the loss of value of his shareholding in the company's capital, is inadmissible where it is ultimately aimed solely at the reconstitution of the common pledge and where this loss, which results from the opening of the receivership, is indistinguishable from that suffered by the creditors as a whole, whose defense is ensured by the legal representative . A shareholder is not entitled to claim compensation for the financial loss resulting from the loss of his capital contribution, his shareholder's current account or equity, or even the share capital , provided that these claims relate to a fraction of the common loss suffered by all the creditors and not to an exclusively personal loss  and that these losses are suffered indistinctly and collectively by all the creditors . Nor are partners entitled to bring an action for damages in respect of the loss of the business  or the depreciation of the business , since in the first case their action is aimed at reconstituting the joint pledge of the creditors and in the second case the loss is only a fraction of the collective loss suffered by all the creditors as a result of the reduction in the company's assets. In addition, the Court of Cassation considered that a creditor who claimed the loss of the opportunity to be paid in full by the debtor was suffering an individual loss based on an interest distinct from that of the other creditors . It now considers that an action by which a creditor seeks to be compensated for the non-recovery of his claim is aimed at reconstituting the common pledge of creditors . Similarly, the holder of a mortgage registered on the real estate of a debtor in the insolvency procedure who wishes to intervene voluntarily in the incidental real estate seizure proceedings initiated by the debtor  or the heirs of the debtor, joint guarantor of a loan taken out by the family SCI, who are acting in payment, in the hands of the legal representative, of the sums owed by the insurers under the death insurance policies taken out by their author , do not justify a personal interest, distinct from the common interest of the creditors.

On the other hand, creditors are entitled to bring an individual action when they base their claim on a personal loss, distinct from the loss suffered by the creditors as a whole. In the first place, such a loss is the loss of expected remuneration. A company manager or sole trader placed in insolvency procedure may claim compensation for the future loss of any remuneration that he or she might have received, since such a claim, which is unrelated to the protection and reconstitution of the common pledge of creditors, does not fall within the remit of the legal representative . The loss of an additional price in the context of a share sale staggered over time is the same as the loss of remunerartion . Secondly, a personal loss may result from the loss of an opportunity not to incur an expense. Case law in fact accepts the admissibility of the action of a guarantor  or the parent company of a debtor, called in as a guarantee, based on the harm linked to the loss of a chance not to have to perform its commitments . Losses usually considered to be in the common interest of creditors, such as the loss of a capital contribution or a current account, are also personal in nature when they are caused by the fault of a professional accountant or a manager of the debtor company. Accordingly, a shareholder or investor who seeks compensation for the loss of his or her contributions, assistance or investments is claiming a personal loss, distinct from the common loss of the creditors and unrelated to the reconstitution of the common pledge, where the loss is not the result of the failure of the debtor company but of the insincerity of the company accounts provided by its managers . Similarly, a transferee of shares in a company is entitled to sue the debtor company's chartered accountant for breach of his professional obligations where the loss he alleges as a result of the loss of the funds he advanced in a partner's current account is not the corollary of the loss suffered by all the creditors in the procedure but constitutes a loss that is exclusively personal and linked to the investment transaction he carried out . Lastly, certain actions fall outside the scope of the legal representative's monopoly because of the qualities of the person whose interests are being defended. Actions for damages brought by dismissed employees  and ut singuli actions brought to defend the interests of the company  do not fall within the scope of actions on behalf of and in the common interest of creditors. Similarly, a tax collector who relies on a right of his own arising from the immediate attribution to him of a claim seized in the hands of the debtor's bank is admissible in his third-party opposition against a judgment which admits a set-off of the reciprocal debts of the debtors, without having to be represented by the legal representative .

There is no need to consider whether the harm claimed is of a personal nature distinct from that of the creditors if the plaintiff in the action does not establish the existence of a fault , such as the presentation of untrue annual accounts by the chartered accountant and the statutory auditor  or the fraudulent manoeuvres of the managers of the debtor companies . Lastly, the absence of personal harm distinct from that of other creditors acting in liability against the debtor in insolvency procedure constitutes a public policy objection that the court may raise of its own motion .

Law 85-98 of 25 January 1985 on the receivership and liquidation of companies.

Cass. com., 4 October 2005, LawLex202100005544JBJ (LJ) ; 7 March 2006, LawLex202100002939JBJ (LJ) ; 21 November 2018, LawLex202100002953JBJ (LJ).

Cass, 1re civ., 3 February 2016, LawLex202100002951JBJ (LJ).

Cass. com., 11 October 1994, LawLex202100002938JBJ (RJ).

Cass. com., 28 June 2016, LawLex202100002941JBJ (LJ).

Cass. com., 21 November 2018, LawLex202100001066JBJ (LJ).

Cass. com., 10 January 2006, LawLex202100005602JBJ (LJ).

Cass. com., 8 September 2021, LawLex202200001925JBJ (LJ). See also, Cass. com., 17 October 2018, LawLex202100002960JBJ (LJ) ; 29 September 2015, cited above ; Cass. 1re civ., 3 February 2016, cited above.

Cass. com., 14 June 2017, LawLex202100001545JBJ (LJ).

Cass. com., 17 October 2018, LawLex202100002960JBJ (LJ) ; 9 December 2008, LawLex200900000139JBJ (LJ).

Cass. com., 11 January 2005, LawLex202100002959JBJ (RJ).

Cass. com., 2 February 2022, LawLex202200001046JBJ (LJ). See already, Cass. com., 9 March 2010, LawLex202200001923JBJ (RJ).

Cass. com., 19 December 2018, LawLex202100002957JBJ (RJ).

Cass. com., 10 December 2013, LawLex202100002954JBJ (LJ).

Cass. com., 12 November 2020, LawLex202100006152JBJ (S).

Cass. com., 14 November 2000, LawLex202200001599JBJ (RJ).

Cass. com., 23 April 2013, LawLex202100005612JBJ (RJ).

Cass. com., 19 December 2018, cited above; 2 February 2022, cited above.

Cass. com., 16 January 2019, LawLex202100002943JBJ (LJ).

Cass. com., 16 October 2007, LawLex202100005603JBJ (LJ).

Cass. com., 2 June 2015, LawLex202100001543JBJ (RJ).

Cass. com, 18 January 2017, LawLex202100002955JBJ (RJ); 27 September 2017, LawLex202100002964JBJ (RJ); 27 November 2019, LawLex202100005616JBJ (LJ); 28 January 2014, LawLex202100005565JBJ (LJ) considering that the loss of value of the shares or units of a partner does not constitute a personal loss distinct from that suffered collectively by all the creditors due to the reduction or disappearance of this patrimony.

Cass. com., 23 November 2004, LawLex202100005614JBJ (LJ).

Cass. com., 29 September 2015, LawLex201500001189JBJ (LJ) ; 21 June 2016, LawLex201600001157JBJ (LJ) ; 5 June 2019, LawLex202100005615JBJ (LJ) ; 22 September 2021, LawLex202100005432JBJ (LJ).

Cass. com., 14 December 1999, LawLex202100005464JBJ (LJ).

Cass. com., 12 July 2017, LawLex202100002958JBJ (LJ).

Bankruptcy Law

463. Common interest criterion

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

463. Common interest criterion

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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