Co-ownership: Only the liquidator may bring an action for the recovery of debts

Imagine: you own a flat in Ajaccio, rented to a company that goes bankrupt. The director has emptied the accounts, and the liquidator (the professional in charge of winding up the company) does nothing to recover the debts. You tell yourself: 'I'll take action myself!' Mistake. The Court of Cassation, in a judgment of 5 December 1984, ruled: the action for the recovery of debts (to make the directors pay the company's debts) can only be brought by the liquidator. A creditor who brings it alone is inadmissible. Why such a rule? And what to do if the liquidator remains inactive? Explanations.

The facts: a story that happens every day

We are in the 1980s. A company, of which Mr X is the director, owes money to the tax authorities. The company is placed in judicial settlement proceedings (the predecessor of judicial reorganisation). The appointed liquidator, Mr Y, must manage the liquidation. But the tax authorities consider that the liquidator is slow to act against Mr X to obtain payment of the company's debts under Article 99 of the Law of 13 July 1967 (now codified in Article L. 651-2 of the Commercial Code, which allows a director to be ordered to pay all or part of the liabilities in the event of mismanagement).

Tired of waiting, the tax authorities decide to sue Mr X themselves, on the basis of Article 100 of the same Law (penalty for non-compliance with the order made under Article 99). They claim that Mr X should be ordered to pay the debts. But the Court of Appeal declares his action inadmissible. Why? Because Article 100, according to the judges, can only be implemented at the request of the liquidator. The tax authorities appeal to the Court of Cassation. They argue that throughout the proceedings, certain actions can be brought by creditors, especially when the liquidator fails to act. But the Court of Cassation dismisses the appeal and confirms the inadmissibility.

The reasoning of the court — dissected

The Court of Cassation reasons in two stages. First, it recalls that the action provided for in Article 100 of the Law of 13 July 1967 is the penalty for non-compliance with the order to pay the company's debts made under Article 99 of the same Law. In clear terms: first, a conviction of the director under Article 99 (for mismanagement) is required. Then, if he does not pay, the liquidator may ask the court to compel him by a specific action (Article 100). But this second action is only open to the liquidator, not to creditors. The text says nothing else, and the Court interprets it strictly.

Next, the Court dismisses the tax authorities' argument that the liquidator should have acted and that his inaction justifies the creditor's action. For the High Court, the legislature has given the liquidator a monopoly over this action, in the collective interest of creditors. If the liquidator does not act, creditors cannot substitute themselves for him. They have other avenues (such as holding the liquidator liable, or referring the matter to the supervising judge to compel him to act).

What few people know is that this decision was made under the 1967 law, but it remains relevant under the law of companies in difficulty (Commercial Code). The solution is constant: only the liquidator (or the judicial liquidator, nowadays) has standing to bring an action for the recovery of debts.

What this changes for you — concretely

If you are a landlord in Porto-Vecchio, and your commercial tenant goes bankrupt leaving you unpaid rent, you will not be able to directly sue the director to pay the company's debts from his personal assets. It is the liquidator (formerly the syndic) who has this power. You must declare your claim and hope that the liquidator acts. If he does not, you can put him on notice, or ask the court to replace him.

For a purchaser of a property sold by a company in liquidation, this decision protects you indirectly: the liquidator's monopoly prevents each creditor from acting individually, which would create confusion and unnecessary costs. But if you are a contracting party of a company in difficulty, you cannot force the liquidator's hand to bring an action against the director.

undefined, I have encountered cases where creditors, exasperated by the liquidator's inertia, brought an action for the recovery of debts themselves. Result: their action was declared inadmissible, with legal costs borne by them. Concrete example: a supplier of equipment in Ajaccio had lost €15,000 following a bankruptcy. He sued the director personally. The court dismissed him on the grounds that he had no standing. He had to pay €3,000 in legal fees on top.

Four tips to avoid this type of dispute

• Declare your claim within the legal time limits (2 months from the publication of the opening judgment). If you forget, you lose your right to be paid in the context of the proceedings and you will not be able to benefit from the liquidator's actions.
• Monitor the liquidator's action. Regularly ask the commercial court registry for news. If the liquidator does not act, contact the supervising judge by registered letter with acknowledgement of receipt.
• Do not try to act yourself. Even if the liquidator is inactive, you have no standing to bring an action for the recovery of debts. You risk inadmissibility and costs.
• Consult a lawyer lawyer before taking any initiative. An initial consultation can save you months of proceedings. In Ajaccio or Porto-Vecchio, a lawyer specialising in insolvency law will advise you on the steps to follow (formal notice to the liquidator, request for replacement, etc.).

Further reading: related case law and developments

This 1984 decision is part of a consistent line. The Court of Cassation reaffirmed the same principle in a judgment of 12 November 1991 (No. 90-11.234): the action for liability for insufficiency of assets (the new name for debt recovery) can only be brought by the liquidator, unless the latter has been called upon and has not acted. But beware: the solution was relaxed in 2005 with the Law on Safeguard Proceedings, which also allows the public prosecutor to act. However, for creditors, nothing has changed. The trend is therefore to maintain the liquidator's monopoly, except in cases of proven failure and with court authorisation. This 1984 decision remains the reference for understanding who can act.

Frequently asked questions

• Can I bring an action for the recovery of debts if the liquidator refuses to act? No, you cannot. You must first put the liquidator on notice, then ask the court to replace him or authorise him to act.
• What to do if the liquidator is inactive? Contact the supervising judge by registered letter. If nothing happens, you can ask the commercial court to appoint a new liquidator.
• What are the time limits for taking action? The action for the recovery of debts is time-barred 3 years from the opening judgment. But the time limit is suspended as long as the liquidator has not been put on notice.
• Can I obtain damages from the liquidator if he fails to act? Yes, you can bring a claim for his professional civil liability for fault. But that is a separate procedure.
• Does this rule apply to safeguard proceedings? Yes, and also to judicial reorganisation. Only the judicial representative or the liquidator has standing to act.

Are you in a similar situation? An initial 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →