Bankruptcy Law

Pursuant to Article L. 642-6 of the Commercial Code, a substantial change in the objectives and methods of the plan can only be decided by the court, at the request of the transferee, which must be presented by means of a petition . The court makes its decision after hearing or duly summoning the liquidator, the receiver where one has been appointed, the auditors, the person(s) appointed by the so …

Substantial modification

Pursuant to Article L. 642-6 of the Commercial Code, a substantial change in the objectives and methods of the plan can only be decided by the court, at the request of the transferee, which must be presented by means of a petition . The court makes its decision after hearing or duly summoning the liquidator, the receiver where one has been appointed, the auditors, the person(s) appointed by the social and economic committee and any other interested party, and after obtaining the opinion of the public prosecutor . 

Court authorization is only required for a change in the undertakings contained in the plan: the transferee may sell the shares of the transferred group without seeking the court's approval, provided that he has not undertaken to keep them and that the transfer has not had the effect of depriving the transferred company of the financing provided for in the plan . Furthermore, only a substantial change in the objectives and means of the plan can lead the court to modify the sale plan. A request for the cancellation of an assigned contract constitutes a substantial change in the means of the plan when the termination, subsequent to its adoption, of a distribution contract concerning complementary products, affects the operating conditions of the assigned economic entity to such an extent that this contract becomes unnecessary for the maintenance of the business . A request by the transferee and its manager for a substantial modification to the transfer plan, with the aim of being granted a substitution option in favor of a third party, may be approved on condition that they both undertake to guarantee the proper enforcement of the plan . On the other hand, a request to extend the duration of the plan , to retroactively exclude certain contracts from the scope of the takeover , or to transfer the employment contracts of employees of the debtor company to one of its subsidiaries  does not constitute a substantial change in the objectives and means of the plan. Furthermore, the modification of the plan by the court cannot have the effect of substantially modifying the rights and obligations of the transferee, so such a request must be rejected . 

In the view of some lower courts, the res judicata effect of the decision which must adopt the sale plan implies that any modification of the plan must be justified by a new factor in relation to those existing at the date of its adoption, and unforeseeable at that date . In application of this requirement, the transferee's request to modify the sale plan, claiming to have discovered the irregular situation of two of the employees taken over, must be rejected since this situation pre-existed the plan . Nor can a request by the transferee to modify the plan by converting the leasing contracts transferred into another contractual form be approved, if it is not based on new elements that have come to light since the transfer plan was adopted . However, as the Court of Cassation has not ruled on this issue, some lower courts have pointed out that Article L. 642-6 of the Commercial Code does not require a new event to have occurred . 

Furthermore, Article L. 642-6(3) provides that the amount of the transfer price as set in the court ruling must adopt the plan may not be modified, so that the transferee may not request a reduction in the transfer price, even if a significant number of contracts included in its takeover offer were not ultimately transferred to it  or if an asset turns out to be non-existent . The transferee cannot circumvent the prohibition on modifying the transfer price, which is intangible and not subject to adjustment , by claiming compensation between the value of the assets taken over and that of items that would have been resold before the transferee took possession. The court commits an abuse of power if it agrees to reduce the sale price of inventories, a component of the overall sale price . On the other hand, it may authorize the transfer of assets not included in the original partial disposal plan, in order to increase its economic efficiency, provided that this modification does not have the effect of altering the price initially set, since it involves the transfer of different elements .

In accordance with Article L. 661-6, IV of the Commercial Code, court rulings modifying the sale plan or rejecting a request to do so may only be appealed by the public prosecutor or the transferee . Neither secured creditors  nor assigned co-contractors  are entitled to lodge an appeal against a court ruling modifying the sale plan, or to lodge a third-party objection against such a ruling. Only the public prosecutor , and not the assignee , may lodge an appeal in cassation, except in the case of abuse of authority . In particular, this remedy is not available to the transferee when the court refuses to grant a request to modify a financial commitment entered into as part of the transfer plan, since this would result in a prohibited modification of the transfer price , or excludes from the scope of the transfer various leasing contracts that had been transferred .

CA Paris, 7 July 2022, LawLex202300004951JBJ (RJ).

CA Douai, 26 October 2017, LawLex202300004926JBJ (RJ).

CA Orléans, 20 February 2014, LawLex202300004927JBJ (RJ).

Cass. com., 15 March 2005, LawLex202300004921JBJ (RJ).

Cass. com., 15 November 2016, LawLex202300003802JBJ (RJ).

Cass. com., 22 May 2013, LawLex202300004929JBJ (RJ).

Cass. com., 26 November 2002, LawLex202300004920JBJ (RJ).

CA Rouen, 27 April 1989, LawLex202300004933JBJ (RJ).

Cass. com., 3 May 2006, LawLex202300002291JBJ (RJ) ; CA Lyon, 14 May 2009, LawLex202300004923JBJ (RJ) ; CA Bourges, 21 July 2011, LawLex202300004954JBJ (RJ).

Cass. com., 8 June 1993, LawLex202100001802JBJ (RJ).

Cass. com., 19 May 2021, LawLex202300004932JBJ (RJ).

Cass. com., 29 April 2003, LawLex202300004924JBJ (RJ).

Cass. com., 6 July 2010, LawLex202300004931JBJ (RJ).

CA Paris, 19 October 2010, LawLex202300004928JBJ (RJ), holding that the substitute assignee may appeal to the Court of Cassation if the court has exceeded its powers by authorizing an amendment to the assignment plan which has the effect of relieving the original assignee of the guarantees and obligations arising from the plan, by transferring all the assigned business assets to a third party.

Cass. com., 3 May 2006, LawLex202300002291JBJ (RJ).

CA Paris, 2 July 2009, LawLex202300004955JBJ (LJ).

CA Paris, 18 May 1989, LawLex202300004919JBJ (RJ).

Cass. com., 23 November 2004, LawLex202200004676JBJ (RJ).

CA Aix-en-Provence, 4 February 2022, LawLex202300004925JBJ (RJ).

Cass. com., 11 April 2018, LawLex202300003801JBJ (RJ) ; CA Toulouse, 27 July 2016, LawLex202300004952JBJ (RJ).

CA Amiens, 18 June 2015, LawLex202300004953JBJ (RJ).

Bankruptcy Law

906. Substantial modification

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906. Substantial modification

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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