Bankruptcy Law

Originally reserved for legal entities that were commercial in form or purpose, the Law of 13 July 1967  extended the compulsory liquidation procedure to all legal entities governed by private law .
However, the grouping must have legal personality: unregistered associations, de facto companies , joint ventures, joint ownership  and groups of companies are not eligible for insolvency procedures. A …

Concept

Originally reserved for legal entities that were commercial in form or purpose, the Law of 13 July 1967  extended the compulsory liquidation procedure to all legal entities governed by private law .

However, the grouping must have legal personality: unregistered associations, de facto companies , joint ventures, joint ownership  and groups of companies are not eligible for insolvency procedures. A company in formation may nevertheless be the subject of an insolvency procedure if, after its registration, it takes over the commitments entered into at the origin of the difficulties . Similarly, the partners of a de facto company may be subject to an insolvency procedure if they engage in commercial activities .

Since a company's legal personality subsists as long as its corporate rights and obligations have not been liquidated, it may be subject to an insolvency procedure until the liquidation operations have been completed . It also continues to exist if the company is declared null and void , if the shareholders vote to extend the company's term of existence before the term set in the Articles of Association, despite failure to comply with the time-limits set in the articles , or if the company is struck off the register of the Commercial Court for a reason other than the closure of the liquidation . On the other hand, an insolvency procedure may not be instituted against a company whose legal personality has disappeared following its absorption by another company .

Publication in the Trade and Companies Register (RCS) of the deeds attesting to the disappearance of a company's legal personality puts an end to the possibility of opening an insolvency procedure against it . Conversely, the disappearance of a company's legal personality does not preclude the opening of an insolvency procedure as long as they have not been published in the RCS, even if the deeds or events giving rise to the proceedings have been the subject of other legal publication  or if third parties have had personal knowledge of them prior to the completion of this formality .

The grouping must be a legal entity under private law. However, certain legal persons governed by private law are not subject to the provisions relating to insolvency proceedings because special regimes apply to them. This is the case in particular for co-ownership syndicates , banks  and insurance companies .

Private legal entities can take various forms. Commercial companies and non-trading companies such as non-trading property companies (sociétés civiles immobilières - SCIs)  may be subject to insolvency proceedings. Book VI of the Commercial Code also applies to duly registered associations carrying on an economic activity, whether or not they are profit-making, even if they are recognized as being in the public interest , professional trade unions, even if they are not required to keep accounts , and professional orders.

Finally, Title II of Book VI of the Commercial Code applies to all semi-public companies and to nationalized companies, whether or not they perform a public service mission. However, the provisions in question do not apply to legal entities governed by public law, such as the State, regions, counties, municipalities and public administrative or industrial and commercial establishments .

L. 67-563 of 13 July 1967 on judicial settlement, liquidation of assets, personal bankruptcy and bankruptcies, OJ 14 July 1967.

Cass. com., 28 September 2004, LawLex202100003700JBJ (RJ).

See in particular. Cass. com. of 4 January 2000, LawLex202100003688JBJ (LJ), considering that a one-person company cannot be placed in judicial liquidation in the year of its removal from the trade register when this is not subsequent to the publication of the closure of the liquidation operations.

Cass. com., 20 September 2011, LawLex202100003687JBJ (LJ).

Cass. com., 11 September 2012, LawLex202100003702JBJ (LJ).

L. 65-557 of 10 July 1965 fixing the status of co-ownership of built-up properties, OJ 11 July 1965, art. 29-15: “The procedures set out in Book VI of the Commercial Code do not apply to syndicates of co-owners”.

CA Grenoble, 26 April 2012, LawLex202100005908JBJ (S), holding that an SCI that derives income from the building it owns may be the subject of a safeguard procedure as a legal person under private law, even if the property is occupied exclusively by its partners and directors, provided that a plan for discharging bank liabilities would enable it to continue this economic activity. Contra, CA Chambéry, 1 December 2020, LawLex202100005831JBJ (S), holding that an SCI may be subject to an insolvency procedure unless there is nothing at stake for the French economy when they constitute a mere interposition of a legal entity dictated by asset or tax considerations.

Cass. com., 18 June 1995, LawLex202100005828JBJ (S).

Cass. com., 16 March 2010, LawLex202100001905JBJ (LJ).

Cass. com., 30 June 2015, LawLex202100005698JBJ (LJ). See also Cass. com., 23 November 2004, LawLex202100003682JBJ (RJ).

See for an application, v. Cass. soc., 6 November 1991, LawLex202100005829JBJ (RJ).

Cass. com., 21 June 2005, LawLex202100003676JBJ (LJ).

Cass. com., 10 March 1987, LawLex202100003681JBJ (RJ).

Cass. com., 16 December 1975, LawLex202100003679JBJ (LJ).

Cass. com., 26 November 2003, LawLex202100005708JBJ (RJ).

See in particular. Cass. com. of 5 April 1994, LawLex202100005827JBJ (RJ), considering that an EIG may be subject to receivership even if it has been declared null and void.

Cass. com., 30 June 2015, LawLex202100003701JBJ (LJ).

CA Paris, 6 January 2009, LawLex202100003633JBJ (LJ).

Bankruptcy Law

630. Concept

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630. Concept

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