Bankruptcy Law

Unlike receivers, liquidators are subject to the rules governing the organization of the profession set out in Articles L. 812-1 et seq. of the Commercial Code. In the opening judgment, in accordance with Article L. 641-1 of the Commercial Code, II(2) the court appoints, as liquidator, a registered legal representative or an individual who can demonstrate particular experience or classification with regard to the nature of the case, and who meets certain eligibility conditions . The Court of Cassation has provided that an associate liquidator working within a company of legal representatives may not practice on an individual basis, but must necessarily do so in the name of the company .

When liquidation is declared during the observation period of a safeguard or receivership procedure, the court appoints the legal representative as liquidator . In this case, Article L. 641-1 allows the court to appoint a judicial commissioner, as well as a natural person who can demonstrate particular experience or qualifications, and who meets the eligibility criteria set out in Article L. 812-3 of the Commercial Code. At the request of the public prosecutor, the debtor or the pursuing creditor, or ex officio, the liquidator may appoint several liquidators .

The court may replace the liquidator, either on its own initiative or at the proposal of the bankruptcy judge or at the request of the public prosecutor . The court registrar's automatic entry of the ordinance replacing the liquidator in the Trade and Companies Register makes the change of liquidator enforceable against third parties who intend to serve a document on the liquidator . A legal representative appointed to replace a colleague previously appointed may not claim to receive the fixed fee or the 30% increase in emoluments, as these fees are provided for exclusively in the event of the joint appointment of two liquidators for the same mission .

Judgments or ordinances relating to the appointment or replacement of the liquidator may only be appealed by the public prosecutor . Consequently, the liquidator's appeal against his appointment is inadmissible . The liquidator has no legitimate interest authorizing him to oppose his appointment on the grounds of the public interest of the profession, whose future is threatened by proposed reforms . Nor does the liquidator have a remedy in cassation against a decision to replace him or her, except in the event of violation of a fundamental principle of procedure or excess of power . Liquidators have no vested right to be appointed by a court, so that the damage caused by the absence of a mandate, where the State is liable, must be measured in terms of the opportunity lost, and cannot be equal to the advantage that would have been gained had the opportunity been taken .

The liquidator administers the company  and exercises the debtor's rights and actions concerning its assets throughout the court-supervised liquidation . In the event of dual appointment, each of the two co-liquidators has full power to exercise the rights and actions of the company in liquidation . Pursuant to Article L. 641-4, the liquidator carries out the mission assigned to the legal representative by Article L. 622-20 of the Commercial Code, which provides that “[t]he legal representative appointed by the court has sole authority to act on behalf of and in the public interest of the creditors” . In this capacity, the liquidator can, in particular, act to extend the procedure . The liquidator's monopoly renders inadmissible any action by a partner or creditor on behalf of the creditors , or in the interest of the latter . On the other hand, the liquidator can only legally act in the interest of all creditors, and not in the personal interest of one creditor or a group of creditors . Individual creditors may, however, sue for compensation if the reparation they are entitled to as part of the collective loss is insufficient, and if they have suffered losses that are distinct from those of other creditors .

The liquidator must verify liabilities through the claims declarations he collects . Articles L. 641-4 and L. 641-5 of the Commercial Code stipulate that the liquidator must carry out liquidation operations at the same time as verifying claims, whether the procedure is initiated directly or by conversion of a safeguard or receivership procedure. The bankruptcy judge may authorize the liquidator to pay prior claims, to withdraw the pledge or thing legitimately retained, or to exercise the purchase option on a leasing contract .

The liquidator may be entrusted with other tasks, such as initiating or continuing actions that fall within the remit of the legal representative , in particular proceedings pending before the labor courts on the date of the opening judgment . The court-appointed liquidator is called upon to act in all legal proceedings, actions and enforcement procedures pending on the date of the opening of the insolvency procedure . When he instructs a lawyer to represent him in court, he is not entrusting a third party with some of the tasks involved in the execution of his mandate, which are his personal responsibility . Furthermore, the liquidator alone has the power to demand performance of contracts in progress  and to acquiesce in a claim for revendication or restitution of property . Under the conditions laid down in Article L. 631-17, the liquidator may proceed with redundancies and, where appropriate, prepare a disposal plan .

Finally, it is the responsibility of the last liquidator in office, when presenting his closing report and requesting the adoption of the remuneration due in respect of the court-supervised liquidation, to summarize all the sales and realizations of assets, collections and recoveries of debts, carried out by each of the liquidators who may have succeeded each other in the exercise of the mandate, which constitute the basis of the emoluments due .

Cass. com., 27 November 2012, LawLex202200010543JBJ (LJ).

Cass. com., 15 February 2005, LawLex202200010497JBJ (LJ) ; 11 May 1999, LawLex202100005014JBJ (RJ).

Cass. 1ère civ., 26 September 2007, LawLex202200000326JBJ (LJ).

Cass. 2e civ., 8 January 1997, LawLex202200010496JBJ (LJ), holding that a writ of summons issued to only one of the joint liquidators is sufficient to bind the appeal proceedings since, in the absence of any provision to the contrary in this decision, each of the two joint liquidators has full power to exercise the rights and actions of the company in liquidation.

The “ legal representative ” of law 2005-845 of 26 July 2005 on the safeguarding of companies replaces the former “ creditors' representative ” of law 85-98 of 25 January 1985 on the receivership and liquidation of companies.

C. com., art. L. 621-2, applicable to the court-supervised liquidation by reference to art. L. 641-1.

Cass. com., 3 June 1997, LawLex202100005441JBJ (LJ).

Cass. com., 9 July 1996, LawLex202100005447JBJ (LJ).

Cass. com., 16 March 1993, LawLex202100002962JBJ (LJ) ; 9 November 2004, LawLex202100005446JBJ (LJ).

Cass. com., 14 December 1999, LawLex202100005464JBJ (LJ).

C. com., art. L. 622-24, applicable to the court-supervised liquidation by reference to art. L. 641-3.

C. com., art. L. 625-3, applicable to the court-supervised liquidation by reference to art. L. 641-14.

C. com., art. L. 622-22 and L. 622-23, applicable to the receivership procedure by reference to art. L. 641-4.

Cass. com., 30 June 2021, LawLex202100005899JBJ (LJ).

Cass. com. avis., 7 July 2021, LawLex202100006540JBJ (LJ).

Cass. com., 11 March 2020, LawLex202200000325JBJ (LJ).

Cass. com. avis, 7 July 2021, LawLex202100006540JBJ (LJ).

CA Rennes, 21 November 2001, LawLex202100001902JBJ (LJ).

679. Powers and missions