Insolvency of the Trustee in Liquidation: Can an Employee Act Directly Against the AGS?

Imagine for a moment: you are an employee of a company in Montauban. Overnight, your employer is placed in judicial liquidation. You are waiting for your unpaid wages and redundancy pay. The trustee (the insolvency practitioner responsible for managing the liquidation) would normally recover the debts from the AGS (Association for the Management of the Employees' Creditors Insurance Scheme) and Pôle emploi (formerly Assedic). But what if the trustee does nothing?

This question was decided by the Court of Cassation in a judgment of 23 March 1982. The answer is simple: yes, the employee can act directly by way of an interim application against the AGS and Assedic to obtain payment, provided that the sum is paid to the trustee, not directly to the employee. A nuance that matters.

In this article, we analyse this decision, which is old but still relevant. You will find clear explanations, practical advice and concrete examples, especially for employees in Tarn-et-Garonne.

The facts: a story that happens every day

Mr X, an employee of a company in Castelsarrasin, sees his employer declared bankrupt. The trustee is appointed to manage the proceedings. But the trustee delays in claiming from the AGS and Assedic the sums due to the employee: unpaid wages, termination indemnities. Mr X becomes impatient.

He then decides to apply to the judge in chambers (the judge who rules urgently) for an order requiring the AGS and Assedic to pay him these sums. The Commercial Court of Montauban? No, the case is brought before the Court of Appeal of Lyon (because the registered office of Assedic is in Lyon). The Court of Appeal delivers a judgment on 23 March 1982: it orders the AGS and Assedic to pay the disputed sums to the trustee, and not directly to Mr X.

The AGS and Assedic appeal to the Court of Cassation. Their argument: the employee has no right to act directly against them. Article L 143-11-5 of the Labour Code (now L. 3253-10) provides that the employee cannot act directly against the AGS; it is the trustee who must do so. Moreover, according to them, the debt was seriously contestable (they disputed the extent of their guarantee). Therefore the judge in chambers could not order the payment of a provisional sum.

The Court of Cassation dismisses their appeal. It holds that the employee may apply to the judge in chambers against the AGS and Assedic, provided that the order is made in favour of the trustee. And that the contestable nature of the debt does not prevent the judge in chambers from granting a provisional sum if the debt is not seriously contestable.

The reasoning of the court — analysed

The core of the judgment lies in two points. First, Article L 143-11-5 of the Labour Code (which excludes the employee's right to act directly against the AGS) does not apply when the employee acts against the AGS to obtain payment into the hands of the trustee. In other words, the employee is not asking for the money to be paid directly to him, but to the trustee, who will then remit it to him. The rule prohibiting direct action only concerns direct payment to the employee. In short, the employee can "force the hand" of the AGS in court, provided that the money passes through the trustee.

Second, the judge in chambers may grant a provisional sum (an advance) even if the AGS disputes the extent of its guarantee. The text says: "if the AGS has the right to contest the extent of its guarantee, it does not follow that the debt is seriously contestable". In other words, the mere fact that the AGS says "I do not guarantee" does not make the debt doubtful. The judge in chambers must examine whether the debt is seriously contestable (i.e. whether there is a serious doubt as to its existence or amount). If the debt is clear, the judge may order the AGS to pay a provisional sum.

This reasoning is in line with settled case law: the judge in chambers may order conservatory measures or measures to restore the status quo, even in the presence of a dispute, provided that the dispute is not serious. This is known as the "interim payment order" (Article 835 of the Code of Civil Procedure).

This decision is neither a revolution nor a reversal. It confirms a pragmatic interpretation: when the trustee is inactive, the employee should not be deprived of any remedy.

What this means for you — practically

If you are an employee of a company in judicial liquidation, you can act if the trustee does not do his job. You must apply to the judge in chambers (the judicial court or commercial court, depending on the case) for an order requiring the AGS to pay your debts to the trustee. Concrete example: in Castelsarrasin, a joinery company closes its doors. The trustee, overwhelmed, does not claim the €8,000 of unpaid wages. You can, by interim application, obtain an order that the AGS pay this sum to the trustee, who will then remit it to you. Allow a few weeks to a few months.

For a landlord (for example of a commercial lease in Montauban), this case is less directly relevant, but it illustrates a principle: if your tenant is in liquidation, you must declare your rent claim to the trustee. If the trustee is inactive, you may also consider an interim application to obtain payment of the rents by the guarantor (if the tenant has a surety) or to have the lease terminated.

However, be careful: this direct action against the AGS is only available in the event of the trustee's failure to act. If the trustee acts, it is up to him to take the steps. And you must prove the failure: for example, a formal notice that remained unanswered.

undefined, I have encountered cases where the trustee, overwhelmed, did not respond to requests. The interim application allowed the situation to be unblocked in a few weeks, whereas the standard procedure would have taken months.

Four tips to avoid this type of dispute

• Declare your claim within the legal time limits. In judicial liquidation, you have a period of two months from the publication of the opening judgment to declare your claim with the insolvency practitioner. Otherwise, you risk losing your rights.
• Send a written reminder to the trustee. A registered letter with acknowledgement of receipt is proof of your approach. If the trustee does not respond within 15 days, you will be able to justify his failure to act.
• Keep all supporting documents. Payslips, employment contract, statement of debts: any document proving the existence and amount of your claim is essential in interim proceedings.
• Consult a lawyer lawyer. The interim procedure has its specificities. A lawyer will help you draft the summons and demonstrate that the claim is not seriously contestable.

Further reading: related case law and developments

This 1982 decision has been confirmed subsequently. For example, the Court of Cassation held in 1995 (judgment No. 93-44.256) that the employee may apply to the judge in chambers against the AGS even if the trustee has already applied to the employment tribunal, provided that the claim is not seriously contestable. The trend is therefore constant: the courts protect the employee in the face of the trustee's inertia.

Since then, the law has evolved. The AGS now intervenes within the framework of the salary guarantee scheme (RGGS). The principle remains the same: the employee cannot act directly against the AGS, but he can do so indirectly by way of interim proceedings. A 2008 reform even strengthened the obligations of the AGS in the event of liquidation.

For the future, it can be expected that the courts will continue to allow this interim action, especially if the trustee is failing. It is an essential safeguard for employees.

In practice: what to do

FAQ:

1. Can I apply to the judge in chambers if the trustee has already applied to the employment tribunal? Yes, if the claim is not seriously contestable. But it is better to coordinate with the trustee to avoid contradictory decisions.
2. What is the time limit for acting? There is no specific time limit, but act quickly: interim proceedings are urgent. As soon as you notice the trustee's failure (for example, a month without a response), you can act.
3. What costs do I have to advance? The costs of a lawyer and bailiff. If you win, the AGS may be ordered to reimburse you (Article 700 of the Code of Civil Procedure).
4. What if the AGS contests my claim? The judge in chambers will check whether the contestation is serious. If not, he will grant a provisional sum. If the contestation is serious, he will refer you to the trial judge (employment tribunal).

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