Judicial reorganisation and commercial lease notice: watch out for the time limit to challenge

Imagine: you are the owner of commercial premises in Pamiers. You give notice to your tenant, a trader, without offering renewal or eviction compensation. The tenant, placed in judicial reorganisation, waits two years before challenging this notice. You think you are safe? Not so sure. This is exactly the scenario that came before the Court of Cassation in 2015. But what did it decide? And above all, what does it change for you, owner or tenant?

The question is simple: does the judgment opening a collective procedure (judicial reorganisation or liquidation) interrupt the two-month time limit to challenge a commercial lease notice? Many traders and their advisors believed so. But the answer is no. The Court of Cassation, in a judgment of 8 October 2015 (n° 14-18.881), overturned a court of appeal decision that had ruled otherwise. In short, a tenant who does not challenge within the time limit loses all right to eviction compensation.

This decision is crucial for commercial leases. It reminds that collective procedures do not suspend time limits for bringing legal action, unless the action is already initiated. A point that every landlord and tenant trader must know to avoid losing their rights.

The facts: a story like many others

Mr Dupont (pseudonym) is the owner in Pamiers of commercial premises leased to a clothing sales company. In March 2010, he gives notice to his tenant, effective 1 October 2010, without offering renewal or eviction compensation. He considers the rent too low and wants to recover his premises.

The tenant, facing financial difficulties, is placed in judicial reorganisation on 15 June 2010. Then in judicial liquidation in 2012. The liquidator, supposed to represent the company, does not react immediately. It is only on 23 January 2013, more than two years after the notice, that the liquidator challenges this notice by submissions before the Commercial Court of Toulouse. He claims eviction compensation, arguing that the notice was abusive.

The Court of Appeal of Toulouse, in a judgment of 1 April 2014, rules in favour of the liquidator. It considers that the action to challenge the notice was interrupted by the judgment of judicial reorganisation, and that the time limit started running again after the appointment of the administrator. Result: the liquidator would have acted in time. The owner, the SCI owner, appeals to the Court of Cassation.

The reasoning of the court — dissected

The Court of Cassation quashes the court of appeal's decision. Its reasoning rests on two points. First, Article 370 of the Code of Civil Procedure (which governs the interruption of proceedings in case of collective procedures) provides that the judgment opening the procedure only interrupts an ongoing proceeding. In other words, if no action was initiated before the judgment opening, there is nothing to interrupt.

Second, Article L. 145-60 of the Commercial Code (which sets the two-month time limit to challenge a notice) is not suspended by the collective procedure. This time limit is a preclusive time limit, meaning it cannot be interrupted or suspended, unless otherwise provided. However, the law provides no such exception for collective procedures.

In our case, the notice was given on 1 October 2010. The tenant therefore had until 1 December 2010 to challenge. He only did so on 23 January 2013, well after the time limit. The judicial reorganisation (June 2010) did not interrupt this time limit because no proceeding was pending at that time. The court of appeal therefore violated the texts.

What few people know is that the Court of Cassation is very strict on this point. It considers that time limits for bringing legal action are a matter of public policy and that collective procedures should not allow circumvention of the rules. However, note: if the tenant had already sued the owner before the judgment opening, the proceeding would have been interrupted and the time limit would have started running again after the resumption of proceedings. But that was not the case here.

What this means for you — concretely

For landlords, this decision is a protection. If you give notice to a tenant in difficulty, you need not fear that he will wait years to challenge on the pretext of a collective procedure. The two-month time limit runs, period. Once this time limit has passed, the tenant can no longer claim eviction compensation, and you recover your premises.

For tenant traders, the message is clear: do not rely on a collective procedure to gain time. If you receive a notice without an offer of renewal, you must react immediately. Contact a lawyer, sue the landlord before the Commercial Court within two months. Otherwise, you lose all right to eviction compensation, even if you are in judicial reorganisation.

Let's take a concrete example in Colomiers: a trader receives a notice on 1 March 2023. He is placed in judicial reorganisation on 15 March. The time limit to challenge expires on 1 May 2023. The administrator must act before that date. If he waits until June 2023, it is too late. undefined, I have encountered cases where liquidators lost compensation of several tens of thousands of euros for neglecting these time limits.

Four tips to avoid this type of dispute

• Landlord: have your notice served by a bailiff and keep proof of the date. The time limit runs from the service of the notice. A bailiff guarantees a certain date. This allows you to prove the tenant's non-compliance with the time limit.
• Tenant: upon receiving a notice, consult a lawyer specialised in commercial leases. You have two months to challenge. Do not let this time limit pass, even if you are in a collective procedure. The administrator must be informed immediately.
• Judicial administrator: quickly identify current leases and check notice dates. As soon as you are appointed, ask the debtor for a list of all leases and notices received. Active monitoring will prevent you from losing rights.
• In case of doubt, take protective action. If you are unsure about the time limit, sue the landlord before the court before the two months expire. Even an imperfect action interrupts the time limit and gives you time to regularise.

Further details: related case law and developments

This decision is in line with a consistent trend of the Court of Cassation. In a judgment of 13 May 2014 (n° 13-15.621), it had already ruled that the two-month time limit to challenge a notice was not suspended by the collective procedure. The novelty here is the reminder about interruption of proceedings: only a lawsuit already initiated can be interrupted, not the time limit to bring an action.

However, the Court has had occasion to specify that if the tenant had filed a claim before the judgment opening, the proceeding is interrupted and the time limit to conclude on the merits can be resumed after the resumption of proceedings (Cass. com., 8 March 2011, n° 10-11.654). But this does not concern the time limit to bring an action itself.

The trend is therefore clear: judges are strict on preclusive time limits. They tolerate no leniency, even in the presence of a collective procedure. For the future, it is unlikely that case law will evolve, unless the legislator intervenes. In the meantime, caution is the mother of safety.

Summary and next steps

FAQ:

1. Can I challenge a notice if my tenant is in judicial reorganisation? Yes, the two-month time limit is not suspended. You must act immediately, even if the administrator has not yet been appointed.

2. What should I do if I have received a notice and I am in judicial liquidation? Contact your liquidator without delay. He must seize the court within two months of the notice, otherwise you lose all right to compensation.

3. Does the two-month time limit run from the date of the notice or its service? It runs from the service by a bailiff. The date of the notice mentioned in the deed is the effective date, not the starting point of the time limit.

4. Can I obtain eviction compensation if I challenge after the two months? No, the time limit is preclusive. Once it has passed, the action is inadmissible. You can no longer claim compensation, even if the notice was abusive.

5. Can the landlord give notice without a reason? Yes, but he must then pay eviction compensation. If he does not, the tenant can challenge the notice within two months and obtain compensation. If he does not challenge, the notice is valid and the tenant must leave without compensation.

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