Background
Sorelo operated a restaurant in the [Etablissement 2] shopping center and was a member of the center’s economic interest group, or GIE. After the restructuring plan adopted for Sorelo in 2016 was terminated, the company entered judicial liquidation on August 26, 2020.
The GIE’s general meeting refused to approve a proposed transfer of Sorelo’s interests to a third party and then refused to buy those interests itself. Invoking Article 18 of its constitutive agreement, the GIE argued that Sorelo had automatically lost its membership because it had ceased operating in the shopping center. Lex MJ, acting as Sorelo’s liquidator, contended that the clause was unenforceable against the insolvency proceeding under Article L. 641-11-1 of the Commercial Code. It sought completion of a capital-reduction transaction purchasing Sorelo’s interests for €24,540 and payment of that amount to the liquidation estate.
The Rennes Court of Appeal granted that relief. The GIE appealed to the Court of Cassation, arguing that its constitutive agreement was not an executory contract, that the withdrawal clause was triggered by cessation of business rather than liquidation, and that Sorelo itself had to join the liquidator’s action.
The Court’s Holding
The Court of Cassation rejected the appeal. Given the GIE’s purpose of establishing, maintaining, and promoting the shopping center, and the rule making every business operator in the center a member upon payment of dues, the court held that Sorelo was bound to the GIE by an executory contract governed by Article L. 641-11-1 of the Commercial Code.
Because Sorelo remained a GIE member when liquidation proceedings opened, the lower court properly declined to apply the provision stripping a member of its rights upon cessation of activity in the shopping center. Article L. 641-11-1 provides that, notwithstanding any statute or contractual term, the opening or pronouncement of judicial liquidation alone cannot cause the indivisibility, termination, or rescission of an executory contract.
The court also held that the liquidator had exclusive authority to bring the buyback claim without joining Sorelo. Article 17 of the GIE agreement made the interests transferable, established an approval process, and required the GIE to buy the interests if it rejected the proposed transferee. The Court of Cassation therefore affirmed the orders requiring the GIE to complete the capital-reduction buyback and pay €24,540 to the liquidator.
Key Takeaways
- A GIE’s constitutive agreement may qualify as an executory contract for French insolvency-law purposes, even though it also creates an autonomous legal entity.
- A clause removing membership rights when a business ceases operations cannot be applied where the member remained in the GIE when judicial liquidation opened and Article L. 641-11-1 protects the continuing contract.
- A court-appointed liquidator may act alone to enforce a contractual obligation to purchase the debtor’s transferable GIE interests when the claim falls within the liquidator’s exclusive authority over the estate.
Why It Matters
The decision confirms that French insolvency protections for executory contracts can reach organizational agreements governing membership in an economic interest group. Courts will look to the agreement’s operation and the parties’ continuing relationship rather than treating its entity-creating character as categorically excluding it from Article L. 641-11-1.
For GIEs and other membership-based commercial organizations, a cessation-of-activity clause may not eliminate an insolvent member’s economic rights after liquidation opens. Where the governing agreement requires a buyback following refusal of a proposed transferee, the liquidator can enforce that obligation for the benefit of the estate.