Can a bank creditor, lender of a personal debt, resume legal proceedings against the debtor after the latter has been the subject of a judgment of judicial liquidation, and after this judicial liquidation has been closed for insufficient payment? ‘active? Can the debtor oppose the declaration of exemption from seizure of his principal residence?
It is appropriate to look at a case law which was rendered in October 2020 and which addresses the particular fate of the creditor to whom the declaration of exemption from seizure of a building is unenforceable insofar as it, notwithstanding the opening of the collective procedure, enjoys a right of pursuit on this building.
However, is it subject to the principle of public order of stopping individual proceedings or the principles of the prohibition of receiving payment of debts prior to the opening judgment?
What are the facts?
A bank had granted a loan to Madame P, individual entrepreneur, on January 3, 2016.
The latter had published a declaration of exemption from seizure of its main residence on May 3, 1010, and had unfortunately been placed in liquidation, subsequently, and by judgment dated October 7, 2014.
The procedure was also closed on November 3, 2015.
Everything suggests, moreover, that the creditor had declared his claim within the collective proceedings.
However, after closing for insufficient assets, the bank had, with the authorization of the execution judge, registered on November 9, 2015 a provisional mortgage on the building.
The following November 16, 2015, the bank then assigned Mrs P to the payment of her debt.
The declaration of exemption from seizure
The latter opposed the inadmissibility of the request and requested that the mortgage be lifted on the grounds that its declaration of exemption from seizure had been published well before the judgment of judicial liquidation.
In fact, the declaration of exemption from seizure of Madame P had been published on May 3, 2010.
However, the judgment opening the judicial liquidation procedure was handed down on October 7, 2014, more than 4 years later.
Consequently, the declaration of exemption from seizure was consequently opposed to the judicial liquidation of Mrs P so that her principal residence did not constitute an element of assets carried out within the said collective proceedings.
The right of recovery from the creditor’s proceedings
However, was this declaration of exemption from seizure enforceable against the registered creditor who decides to resume his post-closing proceedings?
However, to understand it well, and this is what the bank maintained, the declaration of exemption from seizure was unenforceable against it since, not only, the rights of the bank loan were born before the said declaration of exemption from seizure, but much more still, the building covered by the declaration had to be considered as an asset outside of collective proceedings.
Therefore, for the bank, to the extent that the liquidation and realization of the assets had not allowed its debt to be discharged, it could regain the exercise of an individual right of action against the bank. personal residence of the debtor, on condition that the debt can be attached to the person of the creditor and that it does not form part of the professional liability of the debtor.
Ms. P did not agree with this analysis.
Indeed, she argued that she had taken care to organize the protection of her personal patrimony and she was careful to recall that the immovable belonging to her had been the subject of a declaration of exemption from seizure published long before the opening of the collective proceedings of judicial liquidation, so that said the bank as the debt is not prior to the publication of the declaration.
Moreover, Mrs P argued that the demand for payment made by the bank was inadmissible for having been introduced after the pronouncement of the compulsory liquidation without the creditor justifying that it was in one of the cases provided for in article L643. -11-1 of the French Commercial Code, making it recover the individual exercise of its action.
Article L643-11-1 of the French Commercial Code should be used as necessary, which it specifies:
I.- The judgment closing judicial liquidation for insufficient assets does not make creditors recover the individual exercise of their actions against the debtor. There is an exception to this rule:
1 For actions relating to property acquired under a succession opened during the judicial liquidation procedure;
2 When the claim has its origin in an offense for which the guilt of the debtor has been established or when it relates to rights attached to the person of the creditor;
3 When the debt originates from fraudulent maneuvers committed to the detriment of the social protection organizations mentioned in article L. 114-12 of the social security code. The fraudulent origin of the debt is established either by a court decision or by a sanction pronounced by a social security organization under the conditions provided for in Articles L. 114-17 and L. 114-17-1 of the same code.
II.- The coobliges and the persons having granted a personal security or having assigned or given a good in guarantee can sue the debtor if they have paid the place of this one.
III.- Creditors recover their right of individual action in the following cases:
1 The personal bankruptcy of the debtor has been declared;
2 The debtor was found guilty of bankruptcy;
3 The debtor, in respect of any of his assets, or a legal person of which he has been the manager, has been submitted to a previous judicial liquidation procedure closed for insufficient assets less than five years before the opening of that to which it is submitted as well as the debtor who, during the five years preceding that date, benefited from the provisions of Article L. 645-11;
4 The proceedings were opened as territorial proceedings within the meaning of paragraph 2 of article 3 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings or within the meaning of paragraph 2 of the Article 3 of Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings.
IV.- In addition, in the event of fraud with regard to one or more creditors, the court authorizes the resumption of individual actions of any creditor against the debtor. The court rules at the close of the procedure after having heard or duly appealed the debtor, the liquidator and the controllers. It can rule after this, at the request of any interested party, under the same conditions.
V.- Creditors who recover their right of individual action and whose debts have been accepted cannot exercise this right without having obtained an enforcement document or, when they already have such a title, without having made it known that they meet the conditions set out in this article. The president of the tribunal, seized for this purpose, rules by order.
Creditors who recover the individual exercise of their actions and whose debts have not been verified can implement it under the conditions of common law.
VI.- When the closing of judicial liquidation for insufficient assets is pronounced the outcome of an open procedure due to the activity of a debtor individual entrepreneur limited liability to which a heritage is affected, the court, in the event of fraud with regard to one or more creditors, authorizes individual actions by any creditor against the property included in the unaffected patrimony of this entrepreneur. It rules under the conditions provided for in IV. Creditors exercise the rights conferred on them by these provisions under the conditions provided for in V.
VII.- When the closing of judicial liquidation for insufficient assets is pronounced the outcome of a procedure opened because of the activity of a debtor, a natural person, to whom an estate had not been affected, the court may impose uniform deadlines for the payment of the debts mentioned in I of article L. 641-13 with the exception of those of financial administrations, social security organizations, institutions managing the unemployment insurance scheme provided for by articles L. 5422-1 and following of the Labor Code and the institutions governed by Book IX of the Social Security Code. These periods cannot exceed two years..
Reading this article is instructive.
Understandably, for Mrs. P, the bank could not avoid the effects of the closing judgment on the grounds that her request did not fall within the only exceptions set out in the above-mentioned article authorizing the resumption of an individual lawsuit.
Mrs P also recalled that the bank had taken care to declare its claim as a liability in the collective proceedings, that this claim had been entered as a liability, so that the creditor had to comply with the rules of public order, in particular of termination of individual prosecutions.
The bank’s action also contravened the effects of purging the liabilities attached to the closing judgment for insufficient assets.
Mrs P contested the right for the creditor to whom the declaration of exemption from seizure is unenforceable to act during the proceedings in that it is directly linked to the scope of the proceedings, all the more so since the property which is the subject of the proceedings no longer exists. was not included in the collective proceedings and had to remain protected even after the closure of the liquidation.
This is understandable because it still amounts to exposing the debtor to endless lawsuits, favoring some creditors to the detriment of others.
Especially when this privileged creditor is once again the bank!
Unfortunately, once again the High Court chooses to privilege the bank creditor.
Indeed, the Court of Cassation does not follow the Court of Appeal of Aix en Provence and considers that the creditor, whose declaration of exemption from seizure of the main residence is unenforceable, can exercise his right of individual action on the building. , regardless of his rights in the collective procedure of the owner of this building.
Therefore, understand it well, nothing would prevent the bank, as long as its claim is not time-barred, from registering a provisional mortgage on this property under the conditions of common law.
However, the Court of Cassation recalls that if the creditor may be able to exercise the right he holds over the building by obtaining an enforcement document noting the existence and the merits of the debt both in principle and in its amount, mandatory prerequisite the action for the purposes of realization of the debtor’s assets.
This may seem reassuring despite everything, because it means that it is up to the creditor to justify an executory title, the creditor not being able to find a right of individual action without it.
It is therefore up to the debtor to contest the debt both in principle and in its amount, knowing that several legal and judicial techniques are perfectly suitable for this exercise.
A good hearer.
Article written by Master Laurent LATAPIE
Lawyer, Doctor of Law