Background
On June 26, 2017, SARL Grand Bourry entered into a financial lease agreement with Realease capital to lease software supplied by Groupe tenor. The tenant alleged the supplier breached its contractual obligations and, invoking these breaches, stopped paying rent beginning in October 2018. After the lease was terminated in April 2019, Franfinance location (which had acquired the lease contract) sued Grand Bourry for unpaid rent. Grand Bourry counterclaimed to force Groupe tenor’s intervention, seeking rescission of the underlying sale agreement between Groupe tenor and Realease capital, which would render the lease contract void by consequence.
On July 27, 2023, during the pendency of these disputes, Groupe tenor was placed in judicial receivership. When the appellate court of Versailles rendered its decision on October 22, 2024, it fixed Realease capital’s restitution claim (arising from the court’s decision to rescind the contract) in the receivership’s liabilities at €90,417.60. Groupe tenor, through its judicial representative and plan commissioner, appealed to the Court of Cassation, arguing that the appellate court lacked authority to directly fix this claim without following the proper creditor verification procedure before the judge-commissioner.
The Court’s Holding
The Court of Cassation partially upheld the appeal on procedural grounds. Interpreting articles L. 622-17, L. 622-21, and L. 624-2 of the French Commercial Code, the court established that when a contract concluded before opening of collective proceedings is rescinded after opening for breach of an obligation other than payment of money, the resulting restitution claim cannot automatically enjoy preferential treatment reserved for claims “arising for the purposes of the proceedings, the observation period, or in exchange for services provided to the debtor during that period.” Even though the amount of such a claim may be objectively determinable, its admission to the receivership’s liabilities falls exclusively within the competence of the judge-commissioner.
The Court found that the appellate court had overstepped its authority by directly fixing the restitution claim at €90,417.60 in the receivership liabilities. Although the court did not dispute the claim’s validity or amount, it annulled the appellate decision insofar as it fixed the claim directly. In an exercise of its power to decide without remand, the Court of Cassation confirmed the claim amount of €90,417.60 but left its formal admission to the receivership to be determined by the judge-commissioner according to proper procedure. Realease capital must declare its claim to the receivership within two months of this judgment.
Key Takeaways
- Restitution claims arising from contract rescission after opening of insolvency proceedings are not automatically entitled to preferential creditor status under French law.
- Only the judge-commissioner overseeing the collective proceedings has authority to admit claims to the receivership’s liabilities; appellate courts cannot bypass this requirement by directly fixing claim amounts.
- Procedural regularity in collective proceedings is protected even when a claim’s amount is objectively calculable and undisputed.
- The Court of Cassation may confirm a claim’s amount without remand while correcting the appellate court’s procedural error in admitting it.
Why It Matters
This decision reinforces the structural separation of powers in French insolvency law. By holding that appellate courts cannot directly admit claims to collective proceeding liabilities—even when the amount is clear—the Court protects the integrity of the claims verification process. The judge-commissioner’s role as the neutral arbiter of creditor claims is preserved, ensuring uniform and orderly treatment of all creditors rather than allowing appellate courts to make provisional admissions that might later be upset. This rule applies regardless of whether a claim’s quantum is genuinely in dispute.
For practitioners, the decision clarifies that even a fully quantified restitution claim arising from a judgment must follow the statutory claims verification procedure rather than being fixed through appellate order. This protects debtors in receivership from unanticipated liability spikes and ensures creditors follow the proper channels, which may affect timing and priority in distributions from the receivership.