Assignment of commercial lease in judicial reorganisation: the landlord can no longer oppose it

You are the owner of a commercial property in Bollène and have just learned that your tenant, in judicial reorganisation, has assigned its lease to a third party without asking for your consent. Outrageous? Not necessarily. The French Supreme Court ruled as early as 1994: within the framework of a reorganisation plan, the court may order the assignment of the lease, and the clause requiring your written consent becomes void. Explanations.

The facts: an everyday story

Imagine the company Provence jardins, tenant of a commercial property in Bollène belonging to SCI du Domaine agricole de Pigranel. In financial difficulty, it is placed in judicial reorganisation. The court approves a disposal plan providing for the sale of the business, including the leasehold interest. But the lease contains a standard clause: any assignment is subject to the landlord's written consent. The SCI refuses to give its consent, considering that the assignee is not sufficiently solvent. However, the court has already validated the plan. Provence jardins assigns the business anyway, and the SCI sues to have the assignment annulled and to obtain the eviction of the new tenant.

The beginning of the case is favourable to the SCI: the Court of Appeal of Aix-en-Provence rules in its favour, annulling the assignment for lack of the owner's consent. But the French Supreme Court, in its decision of 6 December 1994, overturns this ruling. It recalls that Article 86 of the Law of 25 January 1985 (now Article L. 642-7 of the Commercial Code) allows the court to determine the contracts necessary for the continuation of the business, and that the judgment approving the plan automatically entails the assignment of those contracts. In other words, the landlord's consent clause is deprived of effect.

The court's reasoning — dissected

The judges of the French Supreme Court follow a simple but powerful reasoning. They rely on Article 86 of the Law of 25 January 1985 (now Article L. 642-7 of the Commercial Code). This text provides that the court approving a reorganisation plan may order the assignment of certain contracts, including commercial leases, if they are necessary for the continuation of the business. Moreover, the judgment approving the plan automatically entails the assignment of these contracts, without any further formalities being required.

The lease clause making the assignment subject to the landlord's written consent is therefore incompatible with this legal mechanism. Indeed, if the court has already judged that the assignment is necessary, the owner cannot oppose it by invoking a contractual clause. This is an application of the principle that the law prevails over the contract in matters of judicial reorganisation. The magistrates specify that the court's decision is binding on everyone, including the landlord.

This solution is not a surprise for specialists: it confirms previous case law, but clarifies its scope. The French Supreme Court dismisses the SCI's argument that the landlord must be able to control the identity of the assignee. It considers that the court, in approving the plan, has already carried out this control in the interest of continuing the business.

What this changes for you — concretely

For landlords: you can no longer oppose an assignment of lease ordered within the framework of a judicial reorganisation plan. Even if your contract requires your written consent, this clause is ineffective. If you try to have the assignment annulled, you will lose your case and have to bear the costs. Example: in Apt, a landlord refused his consent for a commercial lease assigned under a plan, considering that the assignee did not have enough equity. He was dismissed and had to pay €5,000 in damages for abusive proceedings.

For tenants in reorganisation: you can assign your lease without the landlord's consent if the court so orders in the plan. But beware: the assignment must be provided for in the judgment approving the plan. If you attempt an amicable assignment without a court decision, the consent clause remains valid.

For assignees: you are protected. Once the plan is approved, you enter the premises without risk of being evicted by the landlord. You simply need to comply with the conditions of the plan (payment of rent, etc.).

Four tips to avoid this type of dispute

• Landlords: draft pre-emption or consent clauses, but know that they are ineffective in case of judicial reorganisation. It is better to check the financial solidity of the assignee before opposing, as an abusive refusal can cost you dearly.
• Tenants: if you are in reorganisation, ask the court to include the assignment of the lease in the plan. This will save you from negotiating with a reluctant landlord.
• Potential buyers: before signing a lease, check the tenant's financial situation. A disposal plan can offer you an opportunity, but also risks if the business is fragile.
• In case of dispute, consult a lawyer specialised in property and business law. Procedural deadlines are short (often 2 months to challenge a plan). In Bollène as in Apt, an initial consultation of €45 can save you months of proceedings.

Further reading: related case law and developments

This decision is part of a line of cases favourable to the rescue of businesses. An earlier French Supreme Court decision (Com., 10 July 1990, No. 88-18.341) had already held that the landlord cannot oppose the assignment of the lease when it is necessary for the assignment of the business in the context of collective proceedings. The 1994 case law confirms and broadens this solution.

Since then, the legislator has codified these principles in the Commercial Code (Articles L. 642-7 et seq.). Courts continue to apply this rule strictly. For example, a recent decision of the Court of Appeal of Toulouse (2021) recalled that even a clause for automatic termination in the event of unauthorised assignment is unenforceable if the assignment is ordered by the court. The trend is therefore clear: the protection of the landlord's interests comes after the safeguarding of employment and economic activity.

What you absolutely must remember

• In judicial reorganisation, the court may order the assignment of the lease without the landlord's consent.
• The landlord's consent clause becomes inapplicable.
• The landlord cannot oppose the assignee chosen by the court.
• If you are a landlord and you refuse abusively, you risk damages.
• If you are a tenant in difficulty, include the assignment of the lease in your reorganisation plan.

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 →