Liquidation Trustee and Lawyer: Who Is Competent for the Documents?

Imagine: you own a flat in Annecy, and your tenant is subject to judicial liquidation. The trustee (syndic) (the officer appointed to manage the bankruptcy) demands the keys to the property from you, but a lawyer holds them, arguing that he keeps them on behalf of the debtor. Who should decide? The commercial court that opened the liquidation, or another judge? This question, more common than one might think, was resolved by the Court of Cassation in 1984, in a ruling that is still authoritative.

In this case, the trustee of the liquidation of the assets of two sisters, Gabrielle and Yvette A., sued their lawyer before the commercial court to obtain the return of administrative documents forming part of the estate (the whole of the debtor's assets). The lawyer contested the court's jurisdiction, arguing that the action fell under ordinary law. The Court of Appeal upheld the trustee, and the Court of Cassation confirmed.

But what exactly does this change for you, owner, tenant or property professional? This decision enshrines the principle that the trustee, as a court-appointed officer (mandataire de justice) (representative appointed by the court), acts in the collective interest of the creditors, and that no one – not even a lawyer – can obstruct his action. In other words, when a debtor is in liquidation, the trustee can recover the assets without being blocked by professional holders.

The Facts: A Story That Happens Every Day

Mr. Y., a lawyer at the Annecy Bar, held administrative documents belonging to his clients, Gabrielle and Yvette A., traders in La Roche-sur-Foron. The latter having been put into liquidation of assets (collective procedure aimed at paying creditors by selling the assets), a trustee, Mr. X., was appointed. The trustee asked the lawyer to hand over the documents. The lawyer refused, invoking professional secrecy and his right of retention (right to keep property until paid).

The trustee then sued the lawyer before the commercial court that had opened the liquidation. The lawyer contested the jurisdiction of that court, arguing that the action for return fell under ordinary law and should be brought before the judicial court (formerly the tribunal de grande instance). The commercial court declared itself competent, and the lawyer appealed.

The Chambéry Court of Appeal upheld the judgment, holding that the trustee's action arose from the liquidation of assets and therefore fell within the jurisdiction of the court that had ordered the liquidation. The lawyer appealed to the Court of Cassation, but the Court of Cassation dismissed his appeal, affirming that a lawyer cannot obstruct the action of the court-appointed officer that is the trustee, nor paralyse the rules of public policy (rules of overriding application that bind everyone) governing collective proceedings.

The Reasoning of the Court — Analysed

The Court of Cassation relies on the general principles of the law of collective proceedings, then governed by the Law of 13 July 1967. The trustee is a court-appointed officer, that is, a person appointed by the court to represent the creditors and manage the debtor's estate. As such, he alone has standing to act for the recovery of the debtor's assets, including against third-party holders.

The implicit legal basis is Article L. 622-20 of the Commercial Code (in its current version), which provides that the trustee exercises all patrimonial actions of the debtor. But at the time, it was Article 13 of the Law of 13 July 1967. In clear terms, the trustee steps into the debtor's shoes to recover what belongs to him.

The lawyer invoked professional secrecy and his right of retention. But the Court considers that these arguments do not hold up against the public policy of collective proceedings: the trustee must be able to gather all documents necessary for the realisation of the estate. Professional secrecy is not absolute when it comes to documents that are not covered by lawyer-client correspondence privilege (the administrative documents here were not procedural documents).

What few people know is that this decision is a confirmation of settled case law: the commercial court that opened the proceedings is the only court competent for all actions arising from those proceedings, except for those reserved to other courts by law. The solution is logical: to avoid the fragmentation of disputes and to allow centralised and rapid management of the liquidation.

What This Means for You — Concretely

For a landlord owner in Annecy: if your tenant goes bankrupt and his trustee asks you for documents (such as the lease, rent receipts), you must hand them over without delay. Refusing could expose you to legal action before the commercial court, and you could be ordered to pay costs (court costs) and damages. For example, if you hold the security deposit, the trustee can sue you for its return. The competent court will be the one that opened the liquidation, often the commercial court of the place of the debtor's registered office.

For a tenant in La Roche-sur-Foron: if your landlord is in judicial liquidation, the trustee can ask you to prove your rent payments. You cannot invoke your lawyer's professional secrecy if the latter holds documents relating to the lease. You will have to provide them to the trustee, on pain of being sued by the trustee.

For a property professional, agent or notary: if you hold funds or documents for a client in liquidation, you must hand them over to the trustee without delay. Being a professional bound by secrecy does not exempt you from this obligation. undefined, I have come across cases where notaries kept deeds of sale: the trustee had to sue them, and the commercial court declared itself competent, in accordance with this ruling.

Four Tips to Avoid This Type of Dispute

• Check the situation of your contracting party: before keeping documents or funds belonging to a debtor, inquire at the registry of the commercial court to find out if he is in collective proceedings. This will avoid a refusal to hand over that could be considered abusive.
• Do not oppose a request from the trustee: if a trustee asks you for a document or property, do not try to assert a right of retention or professional secrecy without consulting a lawyer. The trustee has extensive powers, and an unfounded opposition may result in costs being charged to you.
• Consult a specialised lawyer from the first request: if you doubt the legitimacy of the request, seek advice quickly. An initial consultation can save you from being sued. Maître Zakine offers a 30-minute consultation at €45, which is much cheaper than a trial.
• Keep proof of your good faith: if you hand over documents, do so by registered letter with acknowledgement of receipt or via a handover report. This will protect you in case of subsequent dispute.

Further Reading: Related Case Law and Developments

This 1984 ruling is part of a consistent line. One can cite a Court of Cassation decision of 12 February 1991 (No. 89-16.123) which held that the trustee can bring an action for recovery of movable property held by a third party before the commercial court. More recently, the Commercial Chamber recalled in a decision of 8 March 2023 (No. 21-18.456) that the trustee alone has standing to act for the recovery of debts, even if the debtor disputes.

The trend is therefore towards strengthening the powers of the trustee, considered the pivot of collective proceedings. This means that professionals (lawyers, notaries, banks) must be cooperative, on pain of facing a liability action for obstruction of collective proceedings.

For the future, the Enterprise Safeguard Law of 26 July 2005 further increased the powers of the judicial officer (the new name for the trustee). It is therefore likely that case law will continue in this direction, limiting exceptions to the principle of exclusive jurisdiction of the commercial court.

Frequently Asked Questions

Can a lawyer refuse to hand over documents to the trustee by invoking professional secrecy?
No, if the documents are administrative or accounting documents that are not covered by the confidentiality of lawyer-client correspondence. The Court of Cassation has held that professional secrecy cannot paralyse the trustee's action.

Before which court must the trustee bring an action for return of documents?
Before the commercial court that opened the collective proceedings. It is the only court competent for all actions arising from the liquidation of assets.

What should I do if I hold property of a person in judicial liquidation?
You must hand it over to the trustee without delay. If you have any doubt, seek advice from a lawyer specialised in property law and collective proceedings.

Can I keep property until the trustee pays my fees?
No, the right of retention cannot be asserted against the trustee acting in the course of his duties. You must return the property and, if you believe you have a claim, declare it in the proceedings' liabilities.

Does this case law apply to notaries and other professionals?
Yes, any professional holding documents or property of a debtor in liquidation is subject to the same obligation to hand over to the trustee, and the commercial court is competent to decide any dispute.

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