Bankruptcy trustee: can a creditor act without a mandate?

Imagine: you are the owner of a building in Lodève, and your tenant, a shopkeeper, is placed in liquidation. You are a creditor for several months' unpaid rent. The trustee (the professional responsible for managing the bankruptcy) is supposed to recover the debts to distribute them to the creditors. But what if the trustee makes a mistake, for example by allowing your claim to become time-barred? Can you claim damages from him? And on what basis?

This apparently technical question directly affects hundreds of landlord owners, suppliers and craftsmen in the south of France. The answer was given by the Court of Cassation in a judgment of 31 January 1983 (No. 81-15.295): the trustee is not the agent of each creditor, which means that his liability cannot be engaged on the basis of the mandate (Article 1992 of the Civil Code), but only on the basis of tortious fault (Article 1382, now Article 1240). In short, to obtain compensation, the creditor must prove a fault by the trustee, damage and a causal link, without being able to automatically invoke the contractual liability of the agent.

This judgment, although handed down nearly forty years ago, remains an essential reference for all real estate professionals and creditors in insolvency proceedings. It clarifies an essential point: the trustee acts on behalf of the body of creditors, not for each individual creditor. Let's break it down together.

The facts: a story like any other

Mr Garcia, a shopkeeper in the Toulouse region, is placed in judicial settlement (the former name for judicial reorganisation) with Mr Romulus as trustee. A few months later, the judicial settlement is converted into liquidation of assets (the former liquidation). Among Mr Garcia's creditors, Mr Bouttau, a supplier, has declared his claim. But the trustee, Romulus, fails to recover the sums due. Mr Bouttau, dissatisfied, considers that the trustee committed a fault in the exercise of his functions and claims damages from him.

The dispute comes before the Toulouse Court of Appeal, which, by a judgment of 25 May 1981, holds that the trustee's liability must be sought on the basis of Article 1382 of the Civil Code (now Article 1240), i.e. liability for fault, and not on the basis of mandate (Article 1992 of the Civil Code). The trustee appeals to the Court of Cassation: he argues that, as agent of the body of creditors, his liability can only be engaged on the basis of mandate, and not on that of tortious fault.

The Court of Cassation dismisses the appeal. It states that the trustee is not the agent of each creditor in the body. Consequently, the Court of Appeal correctly sought the trustee's liability on the basis of Article 1382. In other words, the trustee has no contractual link with each creditor; his mission is to act in the collective interest of the creditors, but not as an individual agent. This means that if a creditor suffers damage due to a fault of the trustee, he can bring a claim in tort.

The reasoning of the court — broken down

The heart of the reasoning is contained in one sentence: the trustee is not the agent of each creditor in the body. This assertion, simple as it seems, has important legal consequences. The trustee is appointed by the court to represent the collectivity of creditors (the "body"). He acts in the common interest, but he has no individual contractual link with each creditor. Therefore, if a creditor considers that the trustee has committed a fault in the management of the proceedings, he cannot invoke the contractual liability provided for in Article 1992 of the Civil Code (which governs the obligations of the agent towards the principal). The appropriate basis is Article 1382 (former) of the Civil Code, now Article 1240 since the 2016 reform, which provides that "any act of man that causes damage to another obliges the person by whose fault it occurred to repair it."

In other words, the creditor must prove three elements: a fault by the trustee (for example, a failure to declare a claim, an omission in the verification, a culpable delay in the distribution of funds), personal damage (for example, the loss of a chance to recover his claim) and a direct causal link between the fault and the damage. It is not automatic: it is not enough that the trustee did his job badly for all creditors to be compensated. Each creditor must demonstrate that the fault caused him specific harm.

This reasoning was confirmed by the Court of Cassation, which rejected the trustee's argument that the liability of the agent should apply. The High Court thus validates the position of the Toulouse Court of Appeal. However, note: this solution does not mean that the trustee is always liable on a tortious basis. In practice, it is often difficult for a creditor to prove the trustee's fault, because the trustee has a certain margin of appreciation in the management of the proceedings. But the judgment opens the way to a direct action in liability, without going through the body.

What few people know is that this case law was rendered under the law of 13 July 1967 on insolvency proceedings, but it retains all its relevance under the current regime of Book VI of the Commercial Code. Indeed, the judicial representative (new name for the trustee) is not the agent of each creditor; he exercises a mission of collective interest. The 1983 solution therefore remains current.

What this changes for you — concretely

For a landlord owner, this decision means that if your tenant shopkeeper goes bankrupt and the judicial representative commits a fault in the management of your rental claim, you can directly sue him in liability. For example, if the representative omits to declare your claim within the time limits, or if he distributes the funds without taking into account your ranking, you can claim damages on the basis of Article 1240. But be careful: you must prove that this fault caused you a specific prejudice (for example, the loss of a chance to recover €5,000 of unpaid rent).

For a craftsman or a supplier in Agde, who has delivered goods to a defaulting entrepreneur, the reasoning is identical. If the judicial representative does not correctly verify your claim or delays in paying it, you can engage his personal liability. On the other hand, if the damage is suffered by all creditors (for example, a general reduction in assets), the action must be brought by the representative of the body.

For a purchaser of real estate in insolvency proceedings, the situation is different: the purchaser is not a creditor of the body, but a third party. He can also act on the basis of Article 1240 if the trustee commits a fault (for example, by selling a property without clearing mortgages).

undefined, I have come across cases where creditors have succeeded by proving that the representative had allowed their claim to become time-barred through negligence. For example, in Montpellier, a supplier obtained €15,000 in damages after demonstrating that the representative had not followed up with the debtor within the time limits. But be careful: the courts are demanding on the proof of fault. It is therefore crucial to keep all exchanges with the representative and to have any shortcomings noted.

If you are in this situation, you must act quickly: the limitation period for the liability action is five years from the fault (ordinary law period). Do not wait until the insolvency proceedings are closed to act.

Four tips to avoid this type of dispute

• Declare your claim within the legal time limits: in insolvency proceedings, the declaration period is generally two months from the publication of the opening judgment. If you do not declare, you risk being barred. Do not rely on the representative to do it for you.
• Keep a written record of all your exchanges: registered letters, emails, reports. In the event of a dispute, this evidence will be essential to demonstrate the representative's fault.
• Monitor the representative's actions: you can consult the case file at the court registry. If you notice an anomaly (for example, an omission in the verification of your claim), report it immediately to the judge-commissioner.
• Consult a lawyer as soon as you suspect a fault: a professional can assess your chances and advise you on the strategy to adopt. Do not let the limitation period pass.

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Further reading: related case law and developments

The 1983 judgment is part of a consistent line of the Court of Cassation. For example, a judgment of the Commercial Chamber of 21 January 1975 (Bull. civ. IV, No. 18) had already held that the trustee is not the individual agent of the creditors. The 1983 solution therefore only confirms well-established case law. More recently, the Court of Cassation recalled in a judgment of 10 July 2012 (No. 11-17.877) that the judicial representative engages his personal liability when he commits a fault in the execution of his mission, on the basis of Article 1382 (now 1240). The trend is therefore towards greater accountability of representatives, while maintaining the distinction between their collective mission and the individual interests of creditors.

This case law could evolve with the 2016 reform of contract law and liability, which overhauled the regime of extra-contractual liability. But for now, the basis remains the same: Article 1240. What this means for the future is that creditors must be vigilant and not hesitate to act directly against the representative in case of fault, rather than simply claiming their due in the body.

What you absolutely must remember

Practical FAQ

Q: Can I directly sue the trustee if I am a creditor?
R: Yes, but only on the basis of fault (Article 1240). You must prove a fault, damage and a causal link.

Q: What if the representative does not declare my claim?
R: You can put him on notice, then refer the matter to the judge-commissioner. If the representative persists in his error, you can engage his liability for fault.

Q: What is the time limit to act?
R: Five years from the fault (ordinary law limitation period). Do not delay.

Q: Is the trustee always liable on the basis of mandate?
R: No, since the 1983 judgment, liability is tortious. The mandate does not apply between the trustee and each creditor.

Q: Can I obtain damages if I have lost a chance to recover my claim?
R: Yes, this is a compensable loss, provided you demonstrate that the representative's fault caused the loss of a serious and real chance of recovery.

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