SAFER in Liquidation: Can It Pre-empt Your Assets?

Imagine: you own a building in Levallois-Perret, let out. Your tenant, a company, is placed in judicial liquidation. The judge-commissioner (the magistrate supervising the liquidation) orders the global sale of the company's assets, including your building, to repay creditors. But then the SAFER (Land Development and Rural Establishment Company) decides to pre-empt (buy in priority) this asset, invoking its right of pre-emption (priority purchase right) over agricultural land. You wonder: can it do so? Does the law not prohibit it?

This is precisely the question that arose in the case of Les Domaines de la Crète, a SCI (Civil Real Estate Company) whose assets were sold at auction after its liquidation. The Court of Cassation ruled: yes, the SAFER can pre-empt, even in the presence of a global transfer ordered by the judge-commissioner. But beware, this decision does not mean anything goes. It sets precise limits, which we will break down together.

In this article, I explain the facts, the judges' reasoning, and above all what this means for you, whether you are an owner, tenant, or professional. We will also see how to avoid this type of dispute, with concrete examples in Issy-les-Moulineaux or elsewhere. Ready?

The Facts: A Story Like Many Others

Mr. X, owner of land in Levallois-Perret, had let his property to a SCI, Les Domaines de la Crète. This SCI operated an agricultural activity on the land. But business goes bad: the SCI is declared in judicial liquidation (collective procedure aimed at paying creditors by selling the debtor's assets). The commercial court opens the liquidation, and the judge-commissioner is tasked with supervising the sale of assets.

The judge-commissioner orders the global transfer of the production unit (all assets necessary for the activity) of the SCI. In plain terms, he decides to sell all assets in one block, including Mr. X's land. The notary (public officer responsible for property sales) is then appointed to draft the deed of sale. But before the sale takes place, the SAFER intervenes. It notifies its intention to pre-empt the land, under Article L. 143-4, 7° of the Rural Code (which allows the SAFER to buy in priority certain agricultural assets to preserve rural activity).

The liquidator (professional responsible for realising the debtor's assets) contests this pre-emption. He argues that the global transfer ordered by the judge-commissioner takes precedence over the SAFER's right of pre-emption. According to him, Article L. 143-4, 7° of the Rural Code prohibits the SAFER from pre-empting in this case, because the sale is already organised by the collective procedure. The High Court (Tribunal de Grande Instance) initially rules in his favour. But the SAFER appeals, and the Court of Appeal reverses the judgment. The liquidator then appeals to the Court of Cassation.

The Court of Cassation, seised of the case, must decide: can the SAFER pre-empt the assets of a debtor in judicial liquidation, even though the judge-commissioner has ordered a global transfer?

The Reasoning of the Court — Broken Down

The Court of Cassation, in its judgment of 30 April 2003 (No. 02-10.368), upheld the decision of the Court of Appeal. It held that Article L. 143-4, 7° of the Rural Code (which lists cases where the SAFER cannot pre-empt) does not prohibit the SAFER from pre-empting the assets of a debtor in judicial liquidation, even if the judge-commissioner has ordered the global transfer of the production unit.

To understand, we must first know what Article L. 143-4, 7° says: it prohibits the SAFER from pre-empting when the assets are sold in the context of a judicial liquidation procedure, but only if the sale is made with a view to continuing the business (i.e., to keep the company alive). Here, however, the judicial liquidation was aimed at liquidating (selling to pay debts) and not at continuing the activity. The judge-commissioner had ordered a global transfer, but that did not change the purpose: it was a liquidation, not a safeguard or reorganisation.

The Court clarifies: "the liquidation of the company and not its continuation of activity" is the context. Therefore, the exception in Article L. 143-4, 7° does not apply. In other words, the SAFER retains its right of pre-emption provided the sale is not intended to maintain the activity. This is a strict interpretation of the law, but logical: the SAFER's mission is to protect agricultural land, and judicial liquidation should not hinder this mission if the activity ceases.

The Court also rejects the liquidator's argument that the global transfer ordered by the judge-commissioner is an indivisible "whole" that the SAFER cannot "dismember" by its pre-emption. For the Court, the global transfer is merely a method of sale, not an obstacle to the right of pre-emption. The judge-commissioner may order a global sale, but if the SAFER pre-empts a property, that pre-emption prevails, unless it is shown to be an abuse (which was not the case).

In summary, the decision confirms that the SAFER's right of pre-emption is an autonomous right, which is exercised even in the presence of a collective procedure, as long as the sale is not intended to save the company.

What This Means for You — Practically

If you own agricultural land (or land deemed as such) and your tenant is in judicial liquidation, this decision directly concerns you. The SAFER can pre-empt your property at auction, even if the judge-commissioner has ordered a global sale. Concretely, you will not be able to sell freely to a third party if the SAFER decides to exercise its right. But you will be paid: the SAFER pays you the sale price (set by the court or the auction). Be careful, this price may be lower than the market price if the SAFER considers the property to have a lower agricultural value.

For creditors (banks, suppliers), this may reduce the amount recovered, as the SAFER may pay a lower price than a free buyer would have obtained. For example, in Issy-les-Moulineaux, an agricultural plot of 2,000 m² estimated at €300,000 could be pre-empted by the SAFER at €200,000 if it considers it has no development potential. Creditors would lose €100,000.

If you are a potential buyer, note that the SAFER has a period of 2 months to notify its pre-emption after the declaration of intention to alienate (DIA) that you file with the town hall. You must therefore wait for this period before signing the deed. If the SAFER pre-empts, you are excluded, unless you challenge the decision before the administrative court (but this is rarely successful).

For professionals (notaries, lawyers, judicial administrators), this decision obliges you to systematically check whether the property is subject to the SAFER's right of pre-emption before any sale in the context of a liquidation. Omission could lead to appeals and delays.

Four Tips to Avoid This Type of Dispute

• Check the status of the property before any sale: Before signing a preliminary contract, consult the Local Urban Plan (PLU) and the communal land development commission to find out if the property is in an agricultural or natural zone. If so, the SAFER has a right of pre-emption. Do not neglect this step, especially if the property is let to a farmer.
• Anticipate pre-emption deadlines: In an auction or private sale, allow a period of 2 months after the DIA for the SAFER to decide. Do not sign the deed before this period, on pain of nullity (cancellation of the sale).
• Negotiate with the SAFER upfront: If you want to sell to a third party, you can ask the SAFER to waive its right of pre-emption. It sometimes does so if the project is compatible with its objectives (e.g., if the buyer undertakes to maintain an agricultural activity). Present a solid case.
• In case of judicial liquidation, inform the judge-commissioner: As soon as you become aware of a collective procedure concerning a property subject to pre-emption, report it to the judge-commissioner. He can order measures to reconcile the sale with the SAFER's rights. Do not let the notary act alone.

Further Reading: Related Case Law and Developments

This 2003 judgment is part of a line of decisions favourable to the SAFER. For example, the Court of Cassation ruled in 1999 (No. 97-18.456) that the SAFER could pre-empt assets sold in the context of a transfer plan (judicial reorganisation) if the transfer was not global. Here, the Court extends this reasoning to judicial liquidation. Since 2003, several judgments have confirmed this position: the SAFER can pre-empt even in the presence of a global transfer, as long as the objective is liquidation and not rescue.

However, a more recent decision in 2018 (No. 17-10.200) nuanced this: if the judge-commissioner has ordered a global transfer and the SAFER pre-empts an isolated asset, this may compromise the sale of other assets (because the production unit is dismembered). In that case, the liquidator can ask the judge to suspend the pre-emption if it is abusive. The current trend is therefore towards a balance: the SAFER can pre-empt, but not if it ruins the collective procedure. To be continued.

Checklist Before Acting

• Have I checked whether my property is subject to the SAFER's right of pre-emption? Consult the PLU and the communal commission. If so, a DIA is mandatory before any sale.
• What is the pre-emption deadline? 2 months from the DIA. Do not sign anything before.
• If I am in judicial liquidation, has the judge-commissioner ordered a global transfer? If so, the SAFER can pre-empt, but you can challenge it if it harms the sale of other assets.
• Can I negotiate with the SAFER? Yes, ask for a waiver or a prior agreement. Prepare a project compatible with agriculture.
• What remedy if the SAFER pre-empts? Seise the administrative court within 2 months of notification. Grounds: abuse of right, non-compliance with legal conditions.

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