Bankruptcy Law

Under the terms of Article L. 661-2 of the Commercial Code, decisions concerning the opening of the court-supervised liquidation procedure are subject to third-party objection. Article 583 of the  Code of Civil Procedure stipulates that any person with an interest in the matter is entitled to lodge a third-party objection, provided that he or she was neither a party nor represented in the judgment being challenged.

In fact, the credit insurer of several of the debtor's suppliers, who cannot be assimilated to one of the debtor's creditors, is entitled to lodge a third-party objection against the opening judgment in which he was not represented, and which may constitute one of the events giving rise to the risk of non-payment that he has agreed to bear . A secured creditor is not entitled to lodge a nullity appeal against rulings pronouncing his debtor's insolvency procedure, since it is clear from the third-party proceedings he has lodged against these rulings that he is not a party to the proceedings . Similarly, a partner who is not a party to the judgment declaring his company in receivership, even if he has been summoned to appear before the court, is not entitled to lodge an appeal against the judgment, but may lodge a third-party objection . The right of effective access to the courts implies that the partner of an SCI, who is indefinitely liable for the company's debts in proportion to his share in the share capital, is entitled to lodge a third-party objection against the judgment opening the company's insolvency procedure . A former corporate officer of a company is also entitled to lodge a third-party objection, rather than an appeal, if his or her representative functions have ended as a result of his or her resignation, even if this has not been legally publicized .

Article 583 adds that the creditors and other beneficiaries of a party may lodge a third-party objection to a judgment rendered in fraud of their rights, or if they invoke means of their own . The existence of fraud on creditors' rights, which would justify a franchisor's third-party objection to judgments opening the insolvency proceedings of its franchisees, cannot be based on their supposed desire to leave the franchise network, since the court has no power to review the debtor's motivation . In order to be entitled to lodge a third-party objection against the opening judgment, the creditor must justify an interest that has arisen, is current and distinct from that of the other creditors, and put forward its own means that it alone can assert . A creditor has its own means if the opening judgment directly affects the exercise of its right to pursue the enforcement of its title against the debtor's joint and several guarantor . The lessor, unable to enforce the resolutory clause of the lease as a result of the opening of the insolvency procedure, has an interest distinct from that of the creditors as a whole, which enables him to lodge a third-party objection against the opening judgment . A company which is the lessor of a business is entitled to lodge a third-party objection if the opening judgment affects its rights as lessor, specifying that the business and the employees attached to it will revert to it at the end of the business continuance period . On the other hand, a creditor who has levied garnishments on his debtor's bank accounts, which have been rendered ineffective by the opening of insolvency procedure against the debtor, does not justify an interest distinct from those of other creditors, which would enable him to lodge a third-party objection to the opening judgment . The franchisor's third-party objection against the judgments opening the insolvency proceedings of his franchisees, allegedly based on his own arguments, is inadmissible if he is unable to demonstrate that their provisions cause him a personal prejudice distinct from that of the other creditors .

Article R. 661-2 of the Commercial Code stipulates that the third-party objection must be filed by declaration with the registry of the court that handed down the judgment . The text specifies that, unless otherwise stipulated, it must be lodged within ten days of publication in the Official Bulletin of Civil and Commercial Affairs (Bulletin officiel des affaires civiles et commerciales (BODACC)). Nevertheless, a third-party objection lodged against the opening judgment before this period has elapsed is admissible . It cannot be declared inadmissible for having been lodged out of time if the publication in the BODACC contained a material error concerning the debtor's name  or the date of cessation of payments . On the other hand, a third-party objection lodged more than ten days after publication in the BODACC by the heirs of a deceased debtor, who do not have to be served with the judgment, is inadmissible . In addition, creditors must be considered as acting in a dilatory manner, to delay the outcome of the procedure, when they file a third-party objection to their debtor's opening judgment more than six years after its publication in the BODACC .

Lastly, a ruling on a third-party objection to the opening judgment, or to the judgment extending the procedure, may be appealed to the Court of Cassation  not only by the third-party objector, but also by the debtor or the public prosecutor . The mere fact that the plaintiff is a shareholder of the company which lodged the third-party objection against the opening judgment is not sufficient to entitle it to lodge an appeal in cassation against the judgment upholding the objection .

CA Lyon, 31 May 2006, LawLex202100000942JBJ (S).

Cass. com., 19 November 1996, LawLex202100004484JBJ (LJ).

Cass. com., 7 February 2012, LawLex202100002214JBJ (LJ).

Cass. com., 1 July 2020, LawLex202100004485JBJ (S).

See, for an application, Cass. com, 4 October 2005, LawLex202100004490JBJ (LJ) considering that the third-party objection to a judgment confirming the opening of a judicial liquidation against a debtor must be lodged not by summons, but by declaration to the court registry which handed down the judgment.

Cass. com., 5 January 1999, LawLex202100004388JBJ (RJ).

Cass. com., 17 March 1998, LawLex202100006186JBJ (LJ).

Cass. com., 27 January 2015, LawLex202100004298JBJ (RJ).

Cass. com., 13 November 2001, LawLex202100003670JBJ (RJ).

Cass. com., 9 November 2004, LawLex202100004487JBJ (LJ).

Cass. com., 13 June 2006, LawLex202100004482JBJ (LJ).

Cass. com., 3 October 2018, LawLex202100003654JBJ (RJ).

Cass. com., 9 May 2018, LawLex202100002217JBJ (RJ).

Cass. com., 19 December 2006, LawLex202100001111JBJ (LJ).

Cass. com., 12 May 2015, LawLex202100004481JBJ (LJ).

See for an application, Cass. com., 8 March 2011, LawLex202100002215JBJ (S).

CA Lyon, 3 February  2022, LawLex202200000841JBJ (S).

CA Paris, 25 February 2010, LawLex202100002792JBJ (S).

CA Poitiers, 11 May 2021, LawLex202100006026JBJ (S).

CA Paris, 7 February 2017, LawLex202100005100JBJ (S).

876. Remedies available to third parties