Bankruptcy Law

Article L. 643-13 of the Commercial Code authorizes the resumption of the procedure if the court-supervised liquidation has been closed due to insufficient assets, and it appears that assets have not been realized or that actions in the interest of creditors have not been taken during the course of the procedure. Resumption of the procedure can only be decided by the court on the basis of a specia …

Conditions for resumption of the court-supervised liquidation procedure

Article L. 643-13 of the Commercial Code authorizes the resumption of the procedure if the court-supervised liquidation has been closed due to insufficient assets, and it appears that assets have not been realized or that actions in the interest of creditors have not been taken during the course of the procedure. Resumption of the procedure can only be decided by the court on the basis of a specially reasoned decision, and not by the court seized of the case on petition .

The matter may be referred to the court by the previously appointed liquidator , the public prosecutor  or any interested creditor , if the latter can prove that he/she has deposited at the court registry the funds required to cover the costs of the operations . The amount of the deposited costs is reimbursed in priority to any sums recovered following resumption of the procedure. A bank holding a mortgage on an unrealized property in the course of a court-supervised liquidation, which has not been personally notified of the need to declare its claim, is a creditor with an interest in the reopening of the court-supervised liquidation procedure, since no foreclosure applies to it . On the other hand, the holder of an extinguished claim cannot request the reopening of the court-supervised liquidation, since only the status of creditor can be considered as a person interested in the reopening of the procedure .

Whether or not to reopen the court-supervised liquidation procedure is a matter for the court to decide . It may be based on the discovery of the existence of an apartment acquired by the debtor and which would not have been realized during the judicial liquidation , the distribution of the price of assets sold by the liquidator, which constitutes an asset realization transaction within the meaning of L. 643-13 of the Commercial Code, when carried out with a view to distributing the price of the property sold , a patent that has not yet been realized, whether or not the liquidator was aware of its existence , or the debtor's failure to mention a claim to which he has become the holder, while having allowed it to be considered that the available assets were strictly non-existent .

The court may make the reopening of the court-supervised liquidation procedure subject to the condition that the realization of the omitted asset is likely to bring about a certain, even partial, settlement of the claim or claims remaining with the plaintiff creditor . Thus, the court-supervised liquidation procedure closed for lack of assets cannot be reopened on the grounds that a sum of money has entered the debtor's assets, if its amount is not such as to enable an effective distribution between the creditors with regard to the remaining liabilities of the court-supervised liquidation and the procedural costs to be incurred to reopen the insolvency procedure . Nor can the court-supervised liquidation procedure be reopened on the grounds that one of the debtor's insurers has advanced a provision for work to repair defects attributable to the debtor, thereby invoking the existence of an action not taken in favor of the creditors, since the purpose of such action must be to reconstitute the assets of the debtor concerned for the purpose of distributing these omitted assets among the creditors, and not to increase the debtor's liabilities . On the other hand, a debtor who has allowed the labor court to strike his case from the register before resuming it, as soon as his court-supervised liquidation is closed for lack of assets, cannot oppose the reopening of that procedure, since part of the wages he wishes to recover may be seized and must revert to his creditors . Furthermore, any adverse publicity that the court ruling reopening the debtor's court-supervised liquidation procedure might give to his current company cannot be taken into consideration when assessing a request to reopen the proceedings .

Liability claims against the liquidator, after resumption of the proceedings on grounds of insufficient assets, are subject to the prior resumption of the court-supervised liquidation procedure and the appointment of a new liquidator, when they seek reparation for a harm which is not distinct from that suffered by all the creditors in the insolvency procedure and contributes to the reconstitution of their common pledge . On the other hand, the loss, for the future, of the remuneration that a sole trader placed in the court-supervised liquidation could have received, which is unrelated to the protection and reconstitution of the creditors' common pledge, does not fall within the liquidator's monopoly, so that the action for reparation of this harm is not subject to the prior resumption of the procedure . 

Lastly, under Article R. 643-24 of the Commercial Code, the court decides on the resumption of the court-supervised liquidation procedure provided for in Article L. 643-13 after hearing or duly appealing to the debtor. The decision to resumption of the procedure is subject to the notices and publicity stipulated in Articles R. 621-7 and R. 621-8. It is served on the debtor and, where applicable, notified to the applicant creditor. The former manager of a company whose insolvency procedure has been closed for lack of assets, who has not been appointed as an ad hoc representative, has no standing to represent the company in an appeal against the decision refusing to resume the court-supervised liquidation proceedings, even if he was summoned to the hearing before the court, since he lost his position once the debtor company's sale plan had been finalized .

CA Paris, 1 February 2007, LawLex202300006753JBJ (LJ).

The action has only been open to the liquidator since L. 2005-845 of 26 July 2005 on safeguarding companies, with the result that actions for reopening brought by the liquidator were systematically rejected. See Cass. com, 5 April 1994, LawLex202300006768JBJ (LJ); 29 October 2002, LawLex202300006769JBJ (LJ); CA Bordeaux, 14 February 2007, LawLex202300007117JBJ (LJ).

Cass. com., 14 June 2017, LawLex202300006940JBJ (LJ).

Cass. com., 17 September 2002, LawLex202300006765JBJ (LJ).

Cass. com., 2 November 2005, LawLex202300004339JBJ (LJ).

CA Bordeaux, 16 November 2011, LawLex202300006754JBJ (LJ).

CA Rennes, 21 March 2001, LawLex202300007094JBJ (LJ).

CA Colmar, 27 March 2012, LawLex202300006750JBJ (LJ).

Cass. com., 29 March 2023, LawLex202300006412JBJ (LJ); 23 June 2015, LawLex202300006771JBJ (LJ).

Cass. com., 7 November 2018, LawLex202100001606JBJ (LJ).

Cass. com., 28 February 2018, LawLex202300006772JBJ (LJ).

Cass. crim., 27 January 2010, LawLex202300006939JBJ (LJ).

Cass. com. 30 November 2010, LawLex202300006767JBJ (LJ), holding that the liquidator of a creditor, who wishes to obtain the allocation of part of the liquidation surplus, may, on behalf of the creditor, request the reopening of the debtor's court-supervised liquidation.

CA Rennes, 21 March 2001, LawLex202300007094JBJ (LJ), considering that the creditor requesting the reopening of the procedure must deposit with the Deposit and Consignment Office the funds required to cover the costs of the operations.

Cass. com., 29 November 2016, LawLex202300006770JBJ (LJ).

Cass. com., 25 February 2004, LawLex202300004336JBJ (LJ).

Cass. com., 12 November 2008, LawLex202300004337JBJ (LJ).

Cass. com., 9 July 2019, LawLex202300004340JBJ (LJ).

Bankruptcy Law

953. Conditions for resumption of the court-supervised liquidation procedure

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953. Conditions for resumption of the court-supervised liquidation procedure

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