Bankruptcy Law

The Commercial Code does not expressly stipulate any sanction for the debtor's exceeding his or her powers during a court-supervised procedure. According to the Court of Cassation, legal acts carried out by the debtor in liquidation are not null and void, but only unenforceable against the insolvency procedure, and retain all their effects between the parties , with no exception in favor of third  …

Unenforceability of acts and inadmissibility of remedies

The Commercial Code does not expressly stipulate any sanction for the debtor's exceeding his or her powers during a court-supervised procedure. According to the Court of Cassation, legal acts carried out by the debtor in liquidation are not null and void, but only unenforceable against the insolvency procedure, and retain all their effects between the parties , with no exception in favor of third parties acting in good faith .

Acts carried out by the debtor alone, when it was the liquidator's responsibility to conclude them, such as the sale of a property , the notarized deed reiterating this sale , or the taking out of a loan and the registration of a security interest , are unenforceable. Dividends received by the transferee in respect of shares transferred by the debtor in 

liquidation must also be added back to the assets of the transferor, since such a transfer cannot be set up against the insolvency procedure, whether or not the third party or parties concerned are acting in good faith .

The same applies to debit transactions recorded on the debtor's current account , such as cheque issues and transfers made from the debtor's bank account, whether personal or joint . Consequently, a bank that has transferred funds to a creditor of the debtor on the day of the liquidation judgment must pay the sums in question to the liquidator . This is only the case if the transfer was being processed on the day before the judgment converting the procedure into a court-supervised liquidation, even if it was cashed after this date .

The Court of Cassation considers that remedies exercised by the debtor, with the exception of those available to him by virtue of his proper personal rights, are inadmissible unless they are regularized by the liquidator within the time-limit running from service of the judgment . An appeal lodged by a debtor in court-supervised liquidation alone cannot be regularized by submissions in intervention lodged by the liquidator after expiry of the time-limit for appeal .

By way of exception, an act irregularly performed by a debtor who has been divested of his rights may be null and void if it has an effect on time-limits. Service of a judgment by a debtor who has been divested is null and void, and cannot have the effect of starting the time-limit for appeal against the addressee of the document .

Cass. com. 23 May 1995, LawLex202100001084JBJ (LJ); 28 June 2001, LawLex202100003461JBJ (RJ); Cass. soc. 5 November 2014, LawLex202100002261JBJ (RJ).

Cass. com, 2 April 1996, LawLex202100001075JBJ (LJ), considering that the judgment pronouncing the court-supervised liquidation entails by operation of law, as from its date, divestment for the debtor of the administration and disposal of his assets, without any exception in favor of a third party acting in good faith, such as the bank, which was unaware of the opening of the procedure at the time of the withdrawals ; 19 May 004, LawLex202100003225JBJ (LJ); 12 July 2011, LawLex202100001079JBJ (LJ), holding that the payment made to the notary is not in full discharge of the debtor's liability to the purchaser of a property sold by the debtor, since the liquidator alone is empowered to receive it.

See in particular Cass. com, 13 November 2003, LawLex202100001092JBJ (LJ), holding that an appeal against a decision relating to the award of the auction price of a property by the debtor to a creditor is inadmissible, by virtue of the rule of divestiture.

Cass. com., 10 December 2003, LawLex202100001091JBJ (LJ).

Cass. com., 28 June 1994, LawLex202100001087JBJ (LJ).

Cass. com. 22 May 2012, LawLex202100001080JBJ (LJ), holding that the sale of a property in disregard of the debtor's divestiture is unenforceable against the liquidator, since the rights of each spouse to the joint assets cannot be individualized during the procedure.

Cass. com., 8 September 2015, LawLex202100002118JBJ (LJ).

Cass. com. 22 May 2012, aforementioned; Cass. com, 19 May 2004, LawLex202100001078JBJ (LJ), considering that the realization of an asset, in order to allow the payment of creditors whose rights are recognized, implies neither the ratification by the liquidator of the acquisition made by the debtor in breach of the rule of divestiture, nor that of the loan accompanied by a security having allowed this acquisition, so that the loan and the registration of privilege are inopposable to the procedure and that the entirety of the sale price must benefit the creditors.

Cass. com., 16 September 2014, LawLex202100001083JBJ (LJ).

Cass. com., 19 May 2004, LawLex202100003225JBJ (LJ).

Cass. com., 3 November 2010, LawLex202100001081JBJ (LJ).

Cass. com., 20 October 1992, LawLex202200006826JBJ (LJ).

Cass. com., 30 June 2021, LawLex202200006979JBJ (LJ).

Bankruptcy Law

692. Unenforceability of acts and inadmissibility of remedies

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Les notions juridiques connexes

692. Unenforceability of acts and inadmissibility of remedies

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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