Payment on due date of post-commencement claims (subsequent to the opening of insolvency proceedings), arising in exchange for a service provided to the debtor in performance of the contract pursued by the bodies of the proceedings.
Paris Court of Appeal, Division 5, Chamber 9, 13 January 2022, no. 21/12583
Paris Court of Appeal, Division 5, Chamber 9, 8 September 2022, no. 20/13726
The Paris Court of Appeal recently issued two important decisions in favour of the eco-organisation ECO-MOBILIER, which wanted to obtain the immediate payment of post-commencement debts arising after opening judgements of rehabilitation proceedings on the one hand and judicial liquidation on the other.
In these cases, the judicial administrators of two adherents of ECO-MOBILIER had expressed their intention to continue the contract for membership of the collective system set up by this eco-organisation, after the judgement opening insolvency proceedings against them.
The performance of this contract generated receivables for the benefit of ECO-MOBILIER.
After having unsuccessfully give formal notice to the bodies involved in the proceedings (judicial liquidators in this case) to pay their invoices issued in return for services rendered after the opening judgment, ECO-MOBILIER had requested, before the judge in summary proceedings, the payment of their receivables in application of Articles L.622-17 I. and L. 641-13 I. of the French Commercial Code, its services having enabled the continuation of the activity of the adherents concerned.
The bodies of the proceedings argued in defence that these claims were governed by the rules for payment of creditors set out in III of Article L. 622-17 and II of Article L. 641-13 of the French Commercial Code and that, consequently payment could only be made if funds remained after paying-off creditors from higher ranks (the AGS (French National wage insurance body), in particular to name but a few).
In this case, in view of the debtors’ liabilities, ECO-MOBILIER would not have received any payment.
The legal question brought to the attention of the Court of Appeal therefore concerned the interpretation and articulation of the payment on due date of post-commencement claims provided in paragraphs I of Articles L. 622-17 and L. 641-13 of the French Commercial Code and the order of priority of the secured creditors established by paragraphs II and III of these same articles.
The Paris Court of Appeal upheld ECO-MOBILIER’s claims by ordering the bodies involved in the insolvency proceedings to pay its debts on their due date, recalling the principle according to which the payment rule on the due date provided for in I of Articles L. 622-17 and L. 641-13 of the French Commercial Code, is general and is not subordinated to the existence of sufficient funds to ensure the payment of other creditors with a better rank in the order of priority established by paragraphs II and III of these texts.
The Court thus confirms the case law of the French Court of Cassation, which deserved to be reminded by topical decisions.
Kalliopé (Nicolas Contis, partner, Manon Robert and Camille Imbert, associates) assisted ECO-MOBILIER in these procedures.
Contact: Kalliopé · Nicolas Contis · Partner · email@example.com · +33 (0)6 63 92 17 15