Bankruptcy Law

In accordance with Article L. 632-1, I, 6° of the Commercial Code, all contractual mortgages, all legal mortgages, as well as the legal mortgages of spouses and all mortgages or privileges placed on the debtor's assets for debts previously contracted, are null and void if they have taken effect since the date of cessation of payments.
A mortgage granted on the debtor's property for debts previousl …

Provision of security to guaranty prior debts

In accordance with Article L. 632-1, I, 6° of the Commercial Code, all contractual mortgages, all legal mortgages, as well as the legal mortgages of spouses and all mortgages or privileges placed on the debtor's assets for debts previously contracted, are null and void if they have taken effect since the date of cessation of payments.

A mortgage granted on the debtor's property for debts previously contracted during the suspect period is null and void ipso jure , even if a promise to grant a mortgage had been made before that period . The nullity of the mortgage extends not only to the debtor, but also to the spouse in good standing . In addition, mortgage registrations made after the date of cessation of payments are null and void , as is payment, received in preference to the price of the encumbered property, under a mortgage that is itself null and void ipso jure .

On the other hand, the Court of Cassation does not penalize deeds entered into during the suspect period that are intended to modify a security previously granted, provided that the modification does not further encumber the debtor's assets. In fact, a deed of transfer of a mortgage on an asset entered into during the suspect period, with a view to guaranteeing repayment of the balance of a loan, is not null and void where the security validly registered is not superior, either in its nature or in its scope, to the securities for which it is substituted . The same applies to the amendment of a mortgage agreement during the suspect period, in order to secure payment of the debit balance of a current account prior to the opening judgment, where it does not confer on its beneficiary a mortgage that is superior in nature and in scope .

In addition, the assignment of a claim granted by a debtor after the date of cessation of payments cannot be construed as the creation of a right of pledge over his property, even when it is intended to guarantee payment of the balance of a current account and does not stipulate any price, since it entails the transfer of ownership of the assigned claim .

The Ordinance of 15 September 2021  broadened the scope of the nullity of security interests granted during the suspect period. From now on, any contractual security interest or contractual right of retention granted over the debtor's assets or rights for debts previously contracted will be null and void if they have been granted since the date of cessation of payments, unless they replace an earlier security interest of at least an equivalent nature and basis, and with the exception of the Dailly assignment, made in enforcement of a framework agreement entered into prior to the date of cessation of payments . The legal mortgage attached to judgments of condemnation constituted on the debtor's assets for debts previously contracted, entered into after the date of cessation of payments, is also subject to the nullities of the suspect period .

Cass. com. 6 December 1994, LawLex202200002804JBJ (RJ); 5 April 2016, LawLex202100003723JBJ (RJ), considering that in order to establish the nullity of a mortgage, constituted as security for a loan granted and executed prior to its constitution, it is sufficient that the claim predates the constitution of the mortgage and not the cessation of payments by the debtor.

Cass. com. 12 November 1997, LawLex202100001994JBJ (LJ); 13 April 1999, LawLex202200008737JBJ (LJ), holding that a judicial mortgage created on a debtor's property during the suspect period to guarantee a debt previously contracted is null and void.

Cass. com., 2 April 1996, LawLex202100003724JBJ (RJ).

Cass. com., 11 April 1995, LawLex202200002805JBJ (RJ) ; 4 January 2000, LawLex202200006905JBJ (LJ).

Cass. com., 10 July 2019, LawLex202100001991JBJ (LJ).

Cass. com., 20 January 1998, LawLex202100001993JBJ (RJ).

Cass. com., 27 September 2016, LawLex202100001992JBJ (LJ).

Cass. com., 28 May 1996, LawLex202100003720JBJ (LJ).

Ordinance 2021-1193 of 15 September 2021 amending Book VI of the Commercial Code.

Bankruptcy Law

474. Provision of security to guaranty prior debts

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474. Provision of security to guaranty prior debts

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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