Background
On November 26, 2015, Banque Espirito Santo et de la Vénétie, later succeeded by My Money Bank, granted a loan to Amaury, a limited liability company. The loan was intended partly to repay two earlier loans to Amaury and partly to fund a participating loan for CCA Bretagne. CCA Bretagne belonged to the Agripole group, which had been created and was directed by Amaury’s manager, [T] [N]. She died in 2016.
In November 2020, Amaury sued the bank, seeking to have the 2015 loan agreement annulled or, alternatively, declared unenforceable against it, together with relief concerning subsequent acts and amounts paid under the loan. After the Versailles Court of Appeal rejected its claims, Amaury appealed to the Court of Cassation. It argued, among other things, that the loan fell outside its corporate purpose, violated its corporate interest, lacked real consideration or had an unlawful cause, and resulted from actionable misconduct by the bank.
The Court’s Holding
The Court of Cassation dismissed the appeal. It held that the Court of Appeal had permissibly interpreted Amaury’s ambiguously worded articles of association in finding that the loan conformed to its corporate purpose. The Court further held that even a manifest or flagrant disregard of a limited liability company’s corporate interest does not, by itself, invalidate commitments undertaken by its manager toward third parties.
The Court also upheld the findings that the loan had consideration because the borrowed funds were delivered to Amaury and that its objective cause was lawful. Part of the loan refinanced Amaury’s own earlier borrowing, and neither the alleged departure from its corporate purpose nor any provision of the loan made the transaction unlawful or contrary to public policy.
Finally, the Court upheld the rejection of Amaury’s damages claim. The lower court had found that Amaury, acting through its manager, was a sophisticated borrower to whom the bank owed no duty to warn; that Amaury itself requested the loan and represented that the transaction was in its interest and proportionate to its assets and liabilities; and that receipt of the participating-loan funds by CCA Bretagne had not been established. Those findings supported the conclusion that Amaury had proved no tortious fault by the bank.
Key Takeaways
- A manager’s transaction does not become void against a third party merely because it manifestly or flagrantly disregards the corporate interest of a French limited liability company.
- Delivery of loan proceeds to the borrower supplies consideration for the borrower’s repayment obligation, even when the borrower alleges that a wider financing arrangement was economically unfavorable.
- A bank was not liable where the corporate borrower was sophisticated, requested the loan, represented that it benefited from the transaction, and failed to establish the alleged onward transfer underlying its theory of misconduct.
Why It Matters
The decision draws a clear distinction between compliance with a company’s corporate interest and the validity of its manager’s commitments toward third parties. A transaction that may be disadvantageous to the company is not, for that reason alone, void under the rules governing French limited liability companies.
It also underscores the evidentiary burden on a sophisticated corporate borrower seeking to challenge a financing arrangement or impose liability on its bank. Allegations about the economics or ultimate beneficiary of a broader transaction will not suffice without proof of the relevant fund transfers, unlawfulness, or actionable banking misconduct.