Concomitant Compulsory Liquidation

This decision provides important insight into your property law. Here is what it means for you.

The situation

Compulsory liquidation ordered concurrently with the termination of the judicial reorganisation plan, following a finding that the debtor has ceased making payments during that plan, pursuant to the provisions of Article L. 626-27 I, paragraph 2, of the French Commercial Code, as amended by the Law of 26 July 2005 on safeguard proceedings, which are applicable to judicial reorganisation proceedings pending as of 1 January 2006, is governed by the provisions of that law. The Court of Appeal that orders, in such circumstances, the compulsory liquidation of a company correctly rules out the application to the partners of Article L. 624-1 of the French Commercial Code in its version prior to the Law of 26 July 2005 on safeguard proceedings and rightly holds that the compulsory liquidation of the company does not produce its effects with respect to the partners, even if they are indefinitely and jointly and severally liable for the company's debts.

What the law says

This decision confirms the fundamental principles of property law.

Key takeaways

• Strictly comply with statutory time limits for appeals
• Keep all supporting documents (title deeds, instruments, correspondence)
• Be proactive: preventive advice is always less costly than litigation

For an analysis of your situation: 30-minute consultation at €45 with Maître Zakine.