Judicial Liquidation and Lease: The 3-Month Time Limit for Seeking Termination of Rent

Imagine: you own a commercial property in Saint-Laurent-du-Var. Your tenant, a company, is placed into judicial liquidation. Since the judgment, it still occupies the premises but no longer pays the rent. What to do? Wait? Act immediately? The answer is not so simple. The French Supreme Court, in a judgment of 19 February 2013, settled a crucial question: the three-month period for seeking termination of the lease runs from the opening judgment of the judicial liquidation, even if the liquidation follows a safeguarding or judicial reorganisation procedure. In other words, the landlord must wait three months before seeking termination of the lease for non-payment of rent arising after the judgment.

The Facts: A Story That Happens Every Day

Mr X, owner of a building in Antibes, had granted a commercial lease to a company. That company was placed into judicial reorganisation on 10 January 2010, and the proceedings were then converted into judicial liquidation on 15 March 2010. As early as 20 March, Mr X noted that the company had not paid the rents due since the liquidation judgment. He sued the liquidator for termination of the lease before the Commercial Court of Antibes. The liquidator objected that the action was premature: Article L. 641-12 of the Commercial Code imposes a three-month period from the opening judgment. Mr X retorted that the starting point should be the conversion judgment, not the reorganisation judgment. The Aix-en-Provence Court of Appeal agreed with him: the period runs from the liquidation judgment, because it is at that moment that the obligation to pay subsequent rents arises. But the Supreme Court set aside the judgment: the starting point is the initial opening judgment (the judicial reorganisation), because the article refers to the first judgment opening collective proceedings. Result: Mr X acted too early; his action is inadmissible. A classic disappointment for landlords who are unaware of this subtlety.

The Reasoning of the Court — Analysed

The Supreme Court relies on Article L. 641-12, 3°, of the Commercial Code. This provision states that the landlord may seek termination of the lease for non-payment of rent and charges relating to occupation after the judgment of judicial liquidation, but only after a three-month period from the opening judgment. The question was: which opening judgment? That of the immediate liquidation, or that of the prior proceedings (safeguarding or reorganisation) in case of conversion? The Court answers: the starting point is the first opening judgment of collective proceedings, whether it be a safeguarding, reorganisation or immediate liquidation. In short, if a company moves from reorganisation to liquidation, the three-month period begins to run from the date of the reorganisation judgment. However, note: this only concerns rents subsequent to the liquidation judgment. Rents prior remain subject to the regime of declared claims. What few people know is that this period is mandatory: the judge cannot waive it. The objective is to give the liquidator time to organise the continuation or cessation of activity.

What This Means for You — Concretely

If you are a landlord: from the liquidation judgment, note the date of the first opening judgment (even if it was a reorganisation). Wait three months from that date before suing the liquidator for termination. For example, if the reorganisation dates from 1 March 2022 and the liquidation from 1 June 2022, you can only act from 1 June 2022 (three months after the reorganisation). But if the liquidation is immediate (1 March 2022), you act from 1 June 2022. If you are a tenant in liquidation: this period protects you from too rapid an eviction. You can negotiate a sale plan or clear the rents within three months. If you are a co-owner: the same principle applies to unpaid co-ownership charges subsequent to the judgment. Concrete example: in Antibes, a commercial property owner lost 3 months of rent (i.e. €5,400 for a rent of €1,800/month) because he sued too early. undefined, I have encountered cases where the liquidator raised inadmissibility, and the landlord had to wait until the end of the period to start again, with additional costs.

Four Tips to Avoid This Type of Dispute

• Check the date of the first opening judgment: request the Kbis extract of your tenant from the commercial court registry. Note the date of the first judgment, even in case of conversion.
• Calculate the three-month period precisely: it runs from date to date. Use a calendar and add 3 months. Example: opening judgment on 15 January, period until 15 April.
• Do not delay after the period: once the period has elapsed, act quickly. The liquidator can terminate the lease by right at any time, but you must prove your action.
• Consult a lawyer before suing: each case has its specifics. A lawyer specialised in property law in Nice or Antibes can verify the admissibility of your action and avoid a dismissal.

Further Reading: Related Case Law and Developments

This decision confirms settled case law: see, for example, the Supreme Court judgment of 9 July 2013 (No. 12-20.214) which recalls that the three-month period is a matter of public policy. Conversely, an earlier judgment of 20 September 2011 (No. 10-20.123) had left a doubt by considering that the starting point could be the conversion judgment. The 2013 decision puts an end to this uncertainty. The trend of the courts is therefore clear: the period runs from the first judgment, and any premature action is inadmissible. This means that landlords must be vigilant and well-documented. For the future, the PACTE Law of 2019 did not modify this article, so the rule remains current.

Key Points to Remember

• When can I seek termination of the lease? After a period of 3 months from the first opening judgment (safeguarding, reorganisation or immediate liquidation).
• What happens if I act too early? Your action is inadmissible. You will have to wait until the end of the period and start the procedure again.
• Does this period concern rents prior to the judgment? No, rents prior are claims to be declared with the judicial representative.
• Can I terminate the lease for other reasons (e.g. lack of maintenance)? Yes, but the 3-month period only applies to non-payment of subsequent rents.
• What if the liquidator does not pay during the period? You can send a formal notice, but you cannot seek termination before the expiry of the 3 months.

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