Assignment of Commercial Lease: Judge Cannot Force Landlord's Consent

Imagine you are the owner of a commercial property in Saint-Pierre-des-Corps, and you learn that your tenant, in financial difficulty, has been placed into compulsory liquidation. A buyer appears, but you do not know them, and their project worries you. You refuse to consent to them as the new tenant. Yet, the insolvency judge authorises the assignment of the lease without your agreement. What can you do? How far can the judge go to impose a buyer on a reluctant landlord?

This is precisely the question that arose in a recent case decided by the French Supreme Court on 15 January 2025 (No. 23-19.330). A landlord, unhappy with the forced consent to his new tenant, had appealed to the court of appeal. But the lower judges were reminded: their power is not unlimited. In insolvency proceedings, the insolvency judge has special prerogatives, and the court of appeal, when reviewing his order, cannot substitute itself for the landlord to assess whether the refusal is abusive.

This decision clarifies the limits of judicial review in assignments of commercial leases during reorganisation or liquidation. For landlords, this is a victory: your right to consent or refuse a buyer remains protected, even in the context of a disposal plan. For buyers and tenants in difficulty, this is a signal: the landlord's agreement remains a key step that the judge cannot always circumvent.

The facts: a story like many others

Mr X, owner of a commercial property in Joué-lès-Tours, had leased it to a company, SARL « Le Petit Commerce ». Unfortunately, this company was placed into compulsory liquidation. The liquidator then sought to assign the lease to a buyer, the company Tam Tam, in an attempt to save the business and jobs.

The lease contained a standard clause: any assignment required the prior consent of the landlord. Mr X, after examining Tam Tam's file, considered that the buyer did not offer sufficient financial guarantees and refused his consent. However, the insolvency judge, applied to by the liquidator, authorised the assignment without waiting for the landlord's agreement, pursuant to Article L. 642-19 of the French Commercial Code (which allows the judge to authorise the assignment of a lease in insolvency proceedings, even against the landlord's wishes, under certain conditions).

Mr X then appealed this order before the Bordeaux Court of Appeal. He argued that the landlord's refusal was legitimate and not abusive, and that the insolvency judge had exceeded his powers. The court of appeal, in a judgment of 27 June 2023, examined the merits of the refusal and found it to be abusive, thereby confirming the assignment. Mr X, furious, appealed to the Supreme Court.

The central question was therefore: could the court of appeal assess whether the landlord's refusal was abusive, or should it only check whether the insolvency judge had respected the limits of his powers?

The reasoning of the court — dissected

The French Supreme Court, in its judgment of 15 January 2025, quashed the decision of the court of appeal. It recalls that, when hearing an appeal against an order of the insolvency judge authorising the assignment of a lease, the court of appeal "rules within the limits of the powers that this judge derives from Article L. 642-19 of the French Commercial Code". This article gives the insolvency judge the power to authorise the assignment "notwithstanding any contrary clause" (i.e., even if the lease prohibits assignment without consent), but only if the landlord does not justify a legitimate and serious reason for refusal. The concept of "legitimate and serious reason" is a legal notion that the insolvency judge must assess. However, the court of appeal, when reviewing the order, cannot substitute its own assessment of abuse for that of the insolvency judge, on pain of violating the limits of its jurisdiction.

In other words, the court of appeal cannot say: "the landlord's refusal is abusive, therefore the assignment is valid." It must only verify that the insolvency judge has exercised his power within the framework of the law, without exceeding his prerogatives. The question of whether the refusal is abusive or not relates to the merits of the case, not to the review of the procedure.

This decision is a confirmation of previous case law (notably Cass. com., 12 July 2023, No. 21-24.567): the insolvency judge has discretionary power in assessing the reasons for refusal, and this power can only be challenged if the judge has committed an excess of power (for example, if he authorised the assignment without even checking the existence of a legitimate reason). Here, the court of appeal had exceeded its role by itself assessing the abusive nature of the refusal.

The High Court emphasises the distinction between the review of legality (the court of appeal checks that the insolvency judge acted within the limits of his powers) and the review of expediency (assessing whether the refusal is abusive), which does not belong to the court of appeal in this context.

What this changes for you — practically

For landlord owners, this decision is good news. If you refuse a buyer for a reason you consider legitimate (for example, lack of financial guarantees, project incompatible with the purpose of the lease, or simply justified mistrust), the judge cannot impose that buyer on you without your refusal being seriously examined. In short, your right of consent remains an effective barrier, even in insolvency proceedings. But beware: if your refusal is truly abusive (for example, purely vexatious or discriminatory), the insolvency judge may override it. The line is fine.

For tenants in difficulty or their liquidators, this decision serves as a reminder that forced assignment is not automatic. You will need to convince the insolvency judge that the landlord's refusal is unfounded, rather than hoping that the court of appeal will fix things on appeal. Example: in Joué-lès-Tours, a 100 m² property with a rent of €1,200 per month. If the landlord refuses a solvent buyer, the liquidator can apply to the insolvency judge. But if the judge authorises the assignment, the landlord can contest, but only on procedural grounds, not on the merits of the abuse.

For potential buyers, be cautious: even if the insolvency judge authorises the assignment, the landlord may refuse you access to the premises until the procedure is final. You may need to negotiate with them or wait for the outcome of the appeal. In any case, have a specialised lawyer verify that the file presented to the judge is solid.

Four tips to avoid this type of dispute

• Draft a precise consent clause in your lease: instead of a simple prohibition on assignment without consent, specify the legitimate reasons for refusal (solvency, experience, compatible activity). This will give the insolvency judge a framework to assess your refusal.
• Document each refusal: if you refuse a buyer, keep a written record (registered letter, email) stating your reasons. An unmotivated refusal will be more easily considered abusive.
• Anticipate insolvency proceedings: if your tenant is in difficulty, closely monitor the proceedings. When a liquidation is opened, the liquidator will inform you. Do not delay in reacting.
• Consult a lawyer before appealing an order: as this decision shows, avenues of appeal are limited. A specialised lawyer will advise you whether you can challenge on procedural grounds (excess of power) or whether you need to take action on another basis (for example, a claim for damages against the liquidator).

Further reading: related case law and developments

This decision is part of a consistent trend by the French Supreme Court to limit the power of lower courts in insolvency proceedings. Already, in a judgment of 12 July 2023 (No. 21-24.567), the Commercial Chamber held that the court of appeal could not amend an order of the insolvency judge on a ground that the latter had not examined. Here, the Court goes further: even if the insolvency judge examined the ground, the court of appeal cannot reclassify it as abuse.

Similarly, a judgment of 6 December 2023 (No. 22-18.432) recalled that the review by the court of appeal is limited to the legality of the order, not its expediency. The present decision therefore confirms a line of case law protective of the landlord's rights.

Looking ahead, one can expect landlords to use this case law more systematically to contest forced assignments. Liquidators, on their part, will need to ensure that their requests to the insolvency judge are well-reasoned, as an appeal cannot correct an erroneous assessment of abuse.

Summary and next steps

FAQ:

• Can I refuse a buyer without a reason? No, the refusal must be legitimate and serious. An arbitrary refusal can be set aside by the insolvency judge.
• What if the insolvency judge authorises the assignment despite my refusal? You can appeal, but only to challenge the regularity of the order (excess of power), not to reargue the merits of your refusal.
• What is the deadline to act? The appeal must be lodged within 10 days of notification of the insolvency judge's order (Article R. 642-37-1 of the French Commercial Code).
• What are the risks if my refusal is found abusive? You could be ordered to pay damages (for example, for the loss suffered by the buyer or the liquidator).

Checklist for the landlord:

1. Check the consent clause in your lease.
2. If you refuse, draft a motivated letter with objective elements (financial situation, project, etc.).
3. If the insolvency judge authorises the assignment, consult a lawyer within 5 days to prepare a possible appeal.
4. Do not simply say "I do not want to": prove that your refusal is legitimate.

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. Make an appointment →