Judicial Liquidation: Can You Withdraw an Offer to Purchase a Business Asset?

Imagine: you are a shopkeeper in Nice, and you spot an ideal business asset for sale in the context of a judicial liquidation. You make an offer, subject to the commercial lease actually existing. Weeks pass, the liquidator is slow to confirm the existence of the lease. Finally, you decide to withdraw. But the liquidator sues you, claiming your offer was firm. What does the law say? Can you really withdraw when the suspensive condition has not been fulfilled?

This is precisely the question put to the Court of Cassation in this 1993 case. The court ruled: yes, the offer can be withdrawn if the suspensive condition (here, the certainty of the commercial lease) is not fulfilled at the time the supervising judge authorises the transfer. A decision that reassures potential purchasers, but imposes increased vigilance regarding deadlines.

This decision, handed down over thirty years ago, remains a reference for anyone considering acquiring a business asset in judicial liquidation, whether in Beausoleil or elsewhere. Analysis.

The Facts: A Story That Happens Every Day

Mr. X, a shopkeeper in Beausoleil, made an offer to purchase a business asset from the judicial liquidator of a company in liquidation. His offer was subject to a suspensive condition: the certain existence of a commercial lease. Indeed, without a lease, the asset loses much of its value. The liquidator forwarded the offer to the supervising judge, who had to authorise the transfer. But in the meantime, Mr. X learned that the lease had not yet been finalised. He therefore informed the liquidator that he was withdrawing.

The liquidator then applied to the court to have it declared that the offer was firm and that the sale must proceed. According to him, the suspensive condition was fulfilled as soon as the lease existed in fact, even if the documents had not yet been signed. Mr. X, for his part, argued that the offer had lapsed because the condition had not been fulfilled on the date of the supervising judge's decision.

The case was brought before the Court of Appeal, then before the Court of Cassation. The judges had to decide a delicate question: at what point must the suspensive condition be fulfilled? And above all, can the offer be withdrawn if the condition is not satisfied by the date the judge rules?

The Court's Reasoning — Analysed

The Court of Cassation upheld the Court of Appeal's decision: Mr. X's withdrawal was valid. Its reasoning is based on Article 155 of the Law of 25 January 1985 (now codified in Article L. 642-2 of the Commercial Code), which sets out the procedures for transferring assets in judicial liquidation. According to this article, the acquisition offer must be made to the liquidator, and the transfer is authorised by the supervising judge. The Court held that the suspensive condition (certainty of the lease) was not established on the date the supervising judge ruled. Consequently, the offer had not become firm, and Mr. X could legitimately withdraw.

The Court dismissed the liquidator's argument that the transfer was conditional upon notification of acceptance of the offer. It held that this ground was erroneous, but that it did not change the substance: the failure to fulfil the suspensive condition was sufficient to justify the withdrawal. The judges thus recalled an essential principle of contract law: an offer subject to a suspensive condition only binds the offeror if the condition is fulfilled. If it is not fulfilled, the offer lapses.

This decision is in line with consistent case law: courts protect purchasers against premature or imprecise offers. It also shows that the supervising judge plays a key role in verifying conditions before authorising the transfer.

What This Means for You — in Practice

For the potential purchaser: you can make an offer subject to a suspensive condition, for example "subject to obtaining a loan" or "subject to the existence of a commercial lease". If the condition is not fulfilled before the supervising judge's decision, you can withdraw without penalty. However, you must prove that the condition was not fulfilled. Keep written records of your steps.

For the liquidator: this decision requires you to verify suspensive conditions promptly. If you delay confirming the existence of the lease, the purchaser can withdraw. In Nice, a liquidator lost a sale of €200,000 for failing to provide the lease documents before the hearing.

For the seller (company in liquidation): you must ensure the liquidator acts diligently. A serious purchaser may slip away if conditions are not fulfilled on time.

For the owner of the premises: if you are the landlord, your refusal to renew or your silence can block the sale. Make sure to respond quickly to the liquidator's requests.

Four Tips to Avoid This Type of Dispute

• Draft a precise purchase offer: clearly state the suspensive condition, its object (e.g., "existence of the commercial lease") and the deadline for fulfilment. Avoid vague wording like "subject to the landlord's agreement".
• Demand a written confirmation from the liquidator: ask for written confirmation that the condition is fulfilled. If the liquidator does not respond, send a formal notice by registered letter with acknowledgement of receipt.
• Anticipate the timeline: the condition must be fulfilled before the supervising judge's hearing. If you think the deadlines are too short, negotiate an extension or withdraw your offer in time.
• Keep all evidence: email exchanges, letters, bailiff's reports. In the event of a dispute, they are your only weapons to prove that the condition was not fulfilled.

Further Reading: Related Case Law and Developments

This 1993 decision was confirmed by a Court of Cassation ruling of 16 March 1999 (appeal no. 96-20.620) in a similar case: a purchaser withdrew after discovering that the lease was precarious. The judges upheld the withdrawal, considering that the suspensive condition was not fulfilled. However, a ruling of 12 December 2006 (no. 05-18.432) qualified this position: if the purchaser voluntarily waives the condition, he can no longer withdraw.

The trend is therefore clear: courts favour protecting the purchaser, but they require obvious good faith. If you try to withdraw on a spurious ground, you risk damages. The recent reform of contract law (Ordinance of 10 February 2016) reinforced the transparency of offers but did not change the principle established in 1993.

In Practice: What to Do

FAQ – 5 Essential Questions

• Can I withdraw after the supervising judge's acceptance? No, once the transfer is authorised, the offer becomes firm. Withdrawal is only possible before.
• What if the liquidator is slow to confirm the condition? Send a formal notice with an 8-day deadline. After that, you can withdraw citing the failure of the condition.
• Do I have to prove that the condition is not fulfilled? Yes, it is up to you to show that the condition was not fulfilled by the date of the hearing. For example, a written refusal from the landlord.
• What is the deadline for withdrawal? Up to the supervising judge's decision. After that, it is too late.
• Can I make an offer without a suspensive condition? Yes, but then you cannot withdraw. You will be bound as soon as the liquidator accepts.

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