Background
ASA Optique entered judicial reorganization on February 20, 2023, without a court-appointed administrator. On March 14, with the court representative’s assent, ASA Optique asked the supervising judge to terminate its franchise agreement with Alain Afflelou Franchiseur.
Alain Afflelou was not validly summoned to the first hearing. While the request remained pending, it served ASA Optique with a formal demand, received on April 24, to decide whether to continue the agreement. The supervising judge terminated the agreement by an order dated October 26, 2023. The Aix-en-Provence Court of Appeal upheld termination and made it effective from March 14, the date on which ASA Optique had referred the matter to the supervising judge.
The Court’s Holding
The Court of Cassation dismissed Alain Afflelou’s appeal. It held that ASA Optique had already taken a position on whether to continue the franchise agreement when, before receiving Alain Afflelou’s demand, it asked the supervising judge to terminate the agreement with the court representative’s assent. The appellate court therefore properly ruled on that termination request; the later demand did not require the courts to treat the contract as automatically terminated because of an unanswered request to elect whether to continue it.
The Court also held that the supervising judge may make termination retroactive to the date the termination request was referred to that judge. It rejected Alain Afflelou’s argument that judicial termination of an ongoing, successive-performance contract must necessarily take effect only on the date of the decision ordering termination.
Key Takeaways
- In a judicial reorganization without an administrator, a debtor takes a position on continuation of an ongoing contract by applying, with the court representative’s assent, for its termination.
- A counterparty’s later formal demand to elect whether to continue the contract does not displace an earlier pending termination request.
- The supervising judge may make judicial termination retroactive to the date on which the termination request was referred to the judge.
Why It Matters
The decision clarifies how two procedures concerning ongoing contracts interact when no administrator has been appointed. A debtor’s prior application for judicial termination constitutes a decision regarding continuation of the contract, so a counterparty cannot rely on a subsequently issued demand as though no position had been taken.
The ruling also confirms the specific temporal authority at issue: when granting the debtor’s request, the supervising judge may set termination’s effective date as the date of referral rather than necessarily the date of the eventual decision.