Bankruptcy Law

Private treaty sales are viewed with suspicion, as they have in the past given rise to abuses due to their lack of transparency, and to the unnecessary dismemberment of certain companies. They are therefore subject to closer scrutiny by the courts. For this reason, it has been ruled that, in the case of a disposal plan, assets excluded from the scope of the sale may only be sold by private treaty  …

Sale by private contract (de gré à gré)

Private treaty sales are viewed with suspicion, as they have in the past given rise to abuses due to their lack of transparency, and to the unnecessary dismemberment of certain companies. They are therefore subject to closer scrutiny by the courts. For this reason, it has been ruled that, in the case of a disposal plan, assets excluded from the scope of the sale may only be sold by private treaty if there are insufficient funds to pay off creditors . Similarly, a bankruptcy judge may not, in choosing between the private contract purchase offers received, apply the sole criterion of the highest price after having asked the bidders to formulate a new confidential offer, since it is not open to him, unless he exceeds his powers, to proceed with private auctions in his chambers, in sealed envelopes, without any of the guarantees of the auction, resulting in particular from the publicity of the auctions and the possibility of making an overbid .

Authorization to sell a court-supervised liquidation property by private contract requires one or more bids to have been submitted beforehand . Pursuant to Article L. 642-18(3) of the Commercial Code, the bankruptcy judge may authorize the sale by private contract at the price and under the conditions determined by him, if the nature of the property, its location or the offers received are such as to allow an amicable transfer under the best possible conditions. This is the case when the debtor can show that she has received an offer to purchase for a sum significantly higher than the price set in the ordinance ruling on the principle of a sale by judicial auction , or an offer enabling the liquidator to dispose of the funds in order to close, in the short term, an insolvency procedure that has already been in progress for nine years . The bankruptcy judge may also prefer a sale by private treaty when the unconditional buyout offer, which includes a commitment by the buyer to personally clear the site and clean it up, avoids increasing future liabilities . On the other hand, in the absence of an offer for more than two years, a request for a period of grace to sell a property by private treaty must be rejected, since periods of grace have already been granted despite the absence of any serious prospects of proceeding with the sale in this way .

The bankruptcy judge's authorization to sell real estate by private contract under the terms of a specific offer is valid only for the benefit of the person making the offer, even if his or her name does not appear in the ordinance . Furthermore, an ordinance authorizing the transfer of property by private treaty in accordance with the terms and conditions of a specific offer makes it impossible for the offeror to withdraw his consent  and, since provisional enforcement of the ordinance is de jure, it cannot be ordered to be stopped .

However, the lessee of a lease on a building belonging to a debtor in court-supervised liquidation, whose transfer by private contract has been authorized by the bankruptcy judge, has a right of pre-emption which he can exercise against the purchaser to prevent the sale, provided that it constitutes a transfer for valuable consideration . This solution also applies to the right of pre-emption granted to the Administration under Article L. 213-1 of the Urban Planning Code, since the entry into force of the SRU Law of 13 December 2000 , which no longer makes the granting of a right of pre-emption conditional, as in the past , solely on voluntary disposals. It also applies to the lessee of a rural or residential lease, but not to the lessee of a commercial lease, since in this case the transfer constitutes a sale made under the authority of the court, which cannot give rise to the exercise of a right of pre-emption by the lessee . If the lessee of a residential lease does not exercise his right of pre-emption, the liquidator of the lessor, who intends to sell the leased dwelling by private contract and free of occupation, is nevertheless required to give the lessee notice to sell . Furthermore, the bankruptcy judge does not exceed the limits of his powers by ordering the assignment of a construction lease, since the lease confers on the lessee a real property right that can be assigned as an asset, and the assignment of the lessee's rights under such a lease follows, in the event of the lessee's court-supervised liquidation, the rules for the realization of real property assets .

The authorization for the private contract sale of one or more properties sets out the price of each unit and the essential conditions of sale . The price of EUR 370,000 “net seller” set by the bankruptcy judge and offered by the purchaser, without any reference to VAT, must be understood as a price exclusive of VAT to be paid to the court-supervised liquidation, while the costs and charges, whatever their nature, are to be borne by the purchaser . If a right of pre-emption is exercised, there is no need to regularize the sale at a lower price, since this cannot have the effect of modifying the conditions of the amicable sale authorized by the bankruptcy judge, who must have ruled on the fair price in the light of the public policy provisions aimed at paying off creditors .

Lastly, the order of the bankruptcy judge authorizing the sale by private contract is notified to the debtor and to the registered creditors at their elected domicile, whose names are indicated in the ordinance. The auditors are notified by the court registrar . Once the bankruptcy judge has authorized the amicable private sale of an immovable property, the unpaid mortgagee cannot request the judicial allocation of the property so that it remains in payment .

Cass. com., 22 April 1997, LawLex202200010051JBJ (LJ).

CA Orléans, 8 November 2001 LawLex202300005787JBJ (LJ). Rappr. CA Rouen, 15 April 2021, LawLex202300004092JBJ (LJ), holding that the failure to implement a sealed bidding procedure in a private treaty sale of real estate does not render the sale null and void, since such a procedure is not required by law.

Cass. 3e civ., 5 February 2003, LawLex202300005251JBJ (LJ) ; 13 June 2012, LawLex202300005361JBJ (LJ) ; Cass. com., 15 October 2002, LawLex202300005249JBJ (LJ).

L. 2000-1208 of 13 December 2000 on urban solidarity and renewal.

See for the previous regime, Cons. d'Et., 6 October 1995, LawLex202300005362JBJ (LJ).

Cass. com., 23 March 2022, LawLex202200002747JBJ (LJ).

Cass. com., 7 October 2020, LawLex202100006148JBJ (LJ); LawLex202100006147JBJ (LJ).

Cass. com., 16 October 2012, LawLex202300005416JBJ (LJ).

Cass. com., 24 January 2018, LawLex202300002628JBJ (LJ).

Cass. 3e civ., 11 July 2019, LawLex202300005359JBJ (LJ) ; 19 September 2012, LawLex202300005252JBJ(LJ).

Cass. com., 15 May 2019, LawLex202100001220JBJ (LJ).

Cass. com., 19 September 2018, LawLex202100003078JBJ (LJ).

CA Bordeaux, 2 July 2014, LawLex202300005385JBJ (LJ), holding that the property must be disposed of by private treaty, since the sale at the court bar does not give rise to a reasonable expectation, given the state of the real estate market, of an auction price equal to or even higher than that of the bid submitted, so that this disposal appears to be an economically satisfactory solution for both the interests of the liquidation and those of the debtor.

CA Bordeaux, 12 March 2014, LawLex202300005391JBJ (LJ).

CA Versailles, 8 March 2007, LawLex202300006867JBJ (LJ).

CA Grenoble, 29 January 2015, LawLex202300005384JBJ (LJ).

Cass. com., 3 May 2006, LawLex202100001431JBJ (LJ).

Cass. com., 14 November 2019, LawLex202100001219JBJ (LJ).

Cass. com., 1 October 2013, LawLex202100004465JBJ (LJ).

Bankruptcy Law

914. Sale by private contract (de gré à gré)

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

914. Sale by private contract (de gré à gré)

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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