Bankruptcy Law

Articles L. 624-3 and L. 624-3-1 of the Commercial Code, applicable to the receivership procedure by reference from Article L. 631-18, distinguish between two types of appeal, depending on the status of the parties to the dispute. The first is open to the creditor, the debtor or the legal representatives, while the second is open to “interested persons”.
1) Appeals by the creditor, debtor or legal …

Appeals against decisions of the bankruptcy judge

Articles L. 624-3 and L. 624-3-1 of the Commercial Code, applicable to the receivership procedure by reference from Article L. 631-18, distinguish between two types of appeal, depending on the status of the parties to the dispute. The first is open to the creditor, the debtor or the legal representatives, while the second is open to “interested persons”.

1) Appeals by the creditor, debtor or legal representatives

In accordance with Article L. 624-3 of the Commercial Code, an appeal against the decisions of the bankruptcy judge relating to the verification and admission of claims is open to the creditor, the debtor or the legal representative. Article L. 631-18 adds that the appeal is also open to the receiver when he is responsible for administering the business. This appeal applies both to the ordinances and to the signature that the bankruptcy judge affixes to the foot of the statement of claims filed by the legal representative, insofar as it confers on this act the character of a judicial decision . The parties have ten days in which to lodge an appeal as from the date they are notified of the contentious decisions , i.e. the date of receipt of the letter notifying them of the decision. This period only runs against a party if the date of notification of the bankruptcy judge's ordinance is certain for that party .

The creditor's right to appeal against a decision to reject or admit only part of his claim is strictly limited. Pursuant to paragraph 2 of Article L. 624-3, a creditor whose claim has been discussed in whole or in part and who has not responded to the legal representative's request for explanations within the thirty-day period provided for in Article L. 622-27  may not appeal against the bankrutpcy judge's decision if the latter confirms the receiver's proposal . A contrario, the creditor regains the right to appeal when the bankruptcy judge has not confirmed the proposal of the legal representative . Furthermore, Article L. 622-27 specifies that the creditor may, despite failing to respond within the thirty-day period, appeal against the order of the bankruptcy judge if the discussion concerns the legality of the declaration of claims. The Court of Cassation has adopted a broad reading of this text and allows an appeal to be lodged even if it concerns both the regularity of the debt declaration and the amount of the claim .

Furthermore, under Article 553 of the Code of Civil Procedure, where the object of the litigation is indivisible, an appeal against one party is only admissible if all the parties are joined in the proceedings. The consequence of this principle, which applies in the insolvency procedures, is that a creditor's appeal against an ordinance rejecting his claim  or admitting it only in part , or against a decision of the bankruptcy judge noting the existence of proceedings in progress , is inadmissible where he has not summoned the debtor, who has a right of his own in relation to the verification of liabilities, but only the legal representative.

Like that of the creditor, the debtor's right to appeal against the bankruptcy judge's admission ordinance is subject to an important precondition. The debtor must have notified the legal representative of his contestation of the claim, at the stage of the verification procedure, in order to put the bankruptcy judge in a position to rule on it. This requirement has given rise to numerous difficulties, with some debtors trying to argue that they had been unable to participate in the claims verification procedure because they had not been invited to do so. Case law has been both conciliatory and severe in the face of this type of claim. On the one hand, it considers that a debtor who lodges an appeal against the statement of claims within ten days of its publication in the BODACC (Official Bulletin of Civil and Commercial Announcements) cannot be forced to prove that he was not summoned by the legal representative for the verification of claims, since such proof is impossible . On the other hand, it considers that a debtor who has not been invited to the claims verification procedure can no longer call into question the statement of claims if he has not lodged an appeal to invoke the lack of adversarial nature of the procedure, within the legal time period, including by challenging the decision of the bankruptcy judge which terminates the mission of the legal representative . Furthermore, once the debtor has been given the opportunity to participate in the verification of the claims, even in the person of an administrative and financial manager who has no power of representation , the debtor may not appeal against the decisions to admit the claims, even if the court registry has mistakenly informed the debtor of the existence of an appeal procedure other than a complaint . Nor is the debtor entitled to lodge an appeal for the annulment of a decision to admit a claim, even if the legal representative has omitted to mention the foreclosure of the declaration of claim .

The debtor company retains the right to lodge its own appeal against the receiver's decision to admit a claim to its liabilities, notwithstanding the possible appointment of a bankruptcy judge to assist with all acts of management . However, under Article 553 of the Code of Civil Procedure, if the insolvency representative lodges an appeal on its own against a decision to admit a claim, it must notify not only the creditor but also the legal representative, failing which its statement of appeal will lapse, by serving its submissions on the legal representative if the latter has not constituted a lawyer . The debtor cannot avoid this obligation by invoking an alleged community of interests with the legal representative . The debtor must comply with the rules of appeal procedure  with regard to each of them, so that, as a party before the bankruptcy judge, the legal representative cannot be summoned to the appeal proceedings by way of an order of compulsory intervention, which is reserved for third parties, but must be summoned by way of a new appeal .

Lastly, an appeal in cassation brought by the debtor against an ordinance of the bankruptcy judge who has given a final ruling on the contestation of a claim is admissible, provided that the value of the claim in principal does not exceed the jurisdiction of the court that opened the procedure .

c) Appeal by the legal representative or the receiver

The legal representative and the receiver, like the creditors and the debtor, have a period of ten days from receipt of the letter notifying them of the disputed decision  to lodge an appeal against the ordinance of the bankruptcy judge .

2) Remedies available to interested parties

Article L. 624-3-1 of the Commercial Code provides a means of appeal for any interested party, excluding those mentioned in Article L. 624-3. In accordance with Article R. 624-8 , a “complaint” against the statement of claims, as referred to in Article L. 624-3-1, must be lodged within one month of its publication in the BODACC.

An interested person, who is required to exercise the remedy provided for in Article L. 624-3-1, and not in Article L. 624-3, is the transferee of all or part of the assets  or the partner of the debtor non-trading company . A creditor may also constitute an “interested person” if he contests the conditions for admission of another creditor's claim rather than his own. However, in such a case, he must invoke a personal interest distinct from that of the other creditors in order to discuss the existence, amount or nature of the claim, and not his interest, in line with the common interest, in seeing the liabilities reduced and his chances of being paid increased . A creditor whose claim is admitted in competition with a tax claim which has priority over the latter, whereas his right is exercised over the auction price of a business that took place prior to the opening judgment, which did not enter the debtor's assets, justifies a personal interest distinct from that of the other creditors in raising a complaint against the statement of claims .

The right of interested parties to lodge a complaint against the statement of claims may be exercised as soon as they are aware of the statement of claims and not necessarily from the date of publication in the BODACC of the notice of its filing at the registry . In addition, persons who are co-obligated, or who have granted a personal guarantee, or who have assigned or transferred an asset as security, when they are sued, cannot be enforced against if they have not been notified  of the admission decision provided for in Article L. 624-2 . In their case, the one-month period for lodging a complaint runs from the date of notification .

Article R. 624-10, applicable to the receivership procedure by virtue of Article R. 631-29, specifies that complaints are lodged by petition delivered or addressed to the registry. They are noted on the statement of claims by the court registrar.

Appeals against decisions of the bankruptcy judge ruling on a complaint may be lodged with the court of appeal. In the event of an appeal, persons who are co-obligated or who have granted a personal guarantee or who have assigned or transferred an asset as security, and who have not been called to the case, may lodge a third-party objection .

Pursuant to Article R. 624-5 , interested third parties may also, within a period of one month from the date of its entry on the statement of claims, lodge a third-party objection against the decision rendered by the court having jurisdiction to rule on the serious disputes raised against a claim, in favor of which the bankruptcy judge has relinquished jurisdiction. On the other hand, third-party proceedings against the judgment confirming the bankruptcy judge's decision to admit a claim are not open to the debtor's guarantor, who may only lodge a complaint against the statement of claims filed with the commercial court registry, as an interested third party, in accordance with the provisions of Article R. 624-8 of the Commercial Code , applicable to the receivership by reference from Article R. 631-29.

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C. com., art. R. 661-3. See for an application, see Cass. com., 10 July 2012, LawLex202100002443JBJ (LJ).

Applicable by reference to art. R. 631-29.

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Applicable on reference from art. L. 631-14.

Applicable by reference to art. L. 631-18.

Cass. com., 6 December 2011, LawLex202100002730JBJ (RJ).

Considering that the thirty-day period is not excessively short and does not disproportionately affect the right of access to a court or to a judicial remedy, or the creditor's property right in the claim under discussion, as guaranteed by the Convention for the Protection of Human Rights and Fundamental Freedoms, V. Cass. com., 3 October 2018, LawLex202100002726JBJ (RJ).

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Bankruptcy Law

506. Appeals against decisions of the bankruptcy judge

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506. Appeals against decisions of the bankruptcy judge

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