1. Conditions for regularizing the mandatory conciliation clause
2. Status as a party to an approved settlement
3. Offsetting between a current account and a securities account
4. Collective proceedings: sanction for excessive duration
5. Summons to open insolvency proceedings: status as a creditor
6. Procedures for extending collective proceedings
1. Conditions for regularizing the mandatory conciliation clause
Mix. December 12, 2014 (No. 13-19.684) PBRI:
In this case, a contract binding the parties in dispute included a conciliation clause prior to bringing the matter before the court. The question was whether the conciliation procedure, made mandatory in the event of a dispute by a clause in the contract, could be implemented, if it had not been implemented prior to the legal proceedings, during those proceedings, to rectify the resulting inadmissibility.
The Court of Cassation ruled against the claim on the grounds that " the situation giving rise to the inadmissibility based on the failure to implement a contractual clause establishing a mandatory procedure prior to bringing the matter before a judge, which facilitates a resolution of the dispute through recourse to a third party, cannot be remedied by implementing the clause during the proceedings ."
2. Status as a party to an approved settlement agreement
1st Civil Chamber, January 8, 2015 (No. 13-27.377) F-PB:
In this case, a settlement agreement concluded between several companies had been approved by the president of a regional court. The director of one of these companies having acted as guarantor, one of the parties initiated enforcement proceedings against him. The guarantor then decided to bring an action before the enforcement judge seeking the annulment of these proceedings.
The judges were asked to determine whether the guarantor was a party to the settlement agreement.
The Court of Appeal ruled against the enforcement measures and overturned them. According to the court, only the companies were targeted as parties to the approved settlement agreement. Furthermore, the guarantee, even though included in the agreement, did not confer upon the guarantor the status of a party to the settlement, which had been given the force of law. Consequently, the guarantee required obtaining an enforceable judgment against the guarantor to allow enforcement proceedings.
The Court of Cassation upheld this reasoning and dismissed the appeal against the Court of Appeal's decision.
3. Offsetting between a current account and a securities account.
Com. 16 December 2014 (No. 13-17.046) F-PB:
A company was placed under receivership and then into liquidation. A bank's claim for the debit balance of the current account was admitted. The bank then filed a lawsuit seeking authorization to offset this balance against the balance of a securities account in the debtor's name.
The Court of Cassation held that the lack of fungibility between the terms of a current account agreement and the terms of a securities account agreement precludes the consolidation of these two accounts.
4. Insolvency proceedings: sanction for excessive duration
. December 16, 2014 (No. 13-19.402) FP-PBRI:
A debtor was placed under judicial administration and then liquidation of assets on July 23, 1976, and October 26, 1979. He subsequently filed a petition with the court on March 24, 2011, requesting the closure of the proceedings on the grounds that their duration exceeded the reasonable time limit within the meaning of Article 6 § 1 of the Convention for the Protection of Human Rights and Fundamental Freedoms and constituted a violation of his right to property protected by Article 1 of Protocol No. 1 to said Convention.
The Court of Appeal sanctioned the excessive length of the liquidation proceedings by ordering their closure.
Pursuant to Article L. 643-9 of the French Commercial Code, as amended by the Law of 26 July 2005 on the Safeguarding of Businesses, and Article 6 § 1 of the Convention for the Protection of Human Rights and Fundamental Freedoms and Article 1 of Protocol No. 1 to that Convention, the Court of Cassation quashes the judgment of the Court of Appeal.
In support of its decision, the Court specifies that when there are realizable assets capable of fully or partially satisfying the creditors, the violation of the debtor's right to be tried within a reasonable time and the resulting violation of their right to manage and dispose of their property is not sanctioned by the closure of the liquidation proceedings but entitles them to the action for damages provided for in Article L. 141-1 of the French Judicial Organization Code, which they may exercise as part of their own rights.
5. Summons to open insolvency proceedings: the status of creditor
. December 2, 2014 (No. 13-20.203) F-PB:
Due to non-payment of a debt, a debtor was ordered in summary proceedings to pay a provisional sum. Subsequently, the Milan court opened primary insolvency proceedings against the debtor. The creditor then filed a request with a French commercial court to open secondary insolvency proceedings.
The question arose as to whether the creditor had standing to request the opening of the insolvency proceedings.
According to the Court of Cassation, because the creditor could not demonstrate a certain, liquid, and due debt owed by the debtor on the date of the summons to initiate these secondary insolvency proceedings, the creditor did not have the status of creditor required by Article L. 640-5, paragraph 2, of the French Commercial Code, nor, consequently, the status referred to in Article 29(b) of Regulation (EC) No 1346/2000 on insolvency proceedings.
6. Procedures for extending insolvency proceedings
. Commercial Chamber, December 16, 2014 (No. 13-24.161) F-PB:
Three companies linked by capital ties each separately declared their insolvency. The court then opened joint insolvency proceedings for the three companies.
The Court of Appeal found that the companies were integrated with regard to their legal ties and activities, and were bound by a cash pooling agreement; that funds were being transferred to the parent company; that the request for conciliation had been made at the group level; that no possibility of a partial sale of business activities appeared; and that the companies had not demonstrated any benefit to them in continuing the proceedings with separate assets.
The Court of Cassation overturned the Court of Appeal's decision. The Court of Cassation held that the elements considered by the Court of Appeal were insufficient to establish the commingling of the companies' assets or the fictitious nature of some of them, which alone could justify the existence, by extension, of a single insolvency proceeding.
