The forced sale of a ship, boat or aircraft following a seizure is a procedure whose progress and complexity are often underestimated. Once the auction has been announced and the price paid, an equally technical phase begins: that of distributing the funds among the various creditors. Far from following the general system, this distribution is governed by exceptional rules set out in the Transport Code, which organise a specific payment order and a procedure orchestrated by the enforcement judge. Given the technical nature of these special systems, the assistance of a lawyer with expertise in complex seizures is often essential to secure the rights of creditors or the debtor.
The legal framework for specific schemes: a departure from ordinary law
In principle, the procedure for distributing funds arising from a seizure of movable property is governed by the Code of Civil Enforcement Procedures. However, transport matters have their own legal status which takes precedence over ordinary law. Before analysing the regimes specific to ships and aircraft, it is essential to understand how they derogate from the ordinary law. general procedures for the distribution of fundswhich organise the distribution of funds in most situations.
Specific provisions of the Transport Code
The seizure and sale of ships, inland waterway vessels and aircraft are governed by special legislation that has now been progressively consolidated. Each category of property has its own procedural regime for the distribution of the sale price:
- For the shipsArticles R. 5114-35 to R. 5114-46 of the Transport Code define the procedure for payment and distribution of funds.
- For the inland waterway vesselsArticles R. 4123-14 to R. 4123-24 of the same code apply, with rules very similar to those for ships, adapted to the public river domain.
- For the aircraftThe rules are set out in articles R. 6123-1 to R. 6123-17, which have been codified more recently, given the legislative work that has been carried out.
These provisions designate the enforcement judge (JEX) as the judicial authority competent to supervise the entire distribution procedure.
Scope of the 'specialia generalibus derogant' principle
In law, the Latin adage specialia generalibus derogant means that special rules derogate from general rules. This principle applies directly to the seizure of ships, boats and aircraft. The provisions of the Transport Code, which were designed as a special rule to meet the specific requirements of the maritime and aviation world (internationality, European Union standards, existence of special securities such as maritime mortgages), take precedence over the system for the seizure and sale of movable property under ordinary law. This distinction is fundamental: ignoring these specific rules exposes creditors, the debtor or even the successful bidder to errors in civil procedure with far-reaching consequences.
Identifying and declaring registered creditors: a crucial stage
The first step in the distribution process is to identify precisely which creditors will be entitled to a share of the sale price. The Transport Code sets out a rigorous procedure to ensure that all creditors holding a published security interest (mortgage, lien) are informed and can assert their rights. The identification of registered creditors is a direct consequence of the initial act of seizure, which often follows an unsuccessful summons to pay, and of vessel seizure procedure which imposes specific publicity formalities to protect the rights of each party.
Application to the enforcement judge for a declaration of claims
If there are several creditors, the pursuing party must refer the matter to the enforcement judge to organise an amicable distribution of the price. In the case of ships and inland waterway vessels, the JEX then serves a request for a statement of claims on the registered creditors and known preferential creditors. These creditors have a period of fifteen days in which to produce, on the basis of their title, a detailed statement of their claim, through their lawyer. Compliance with this deadline is imperative. If a creditor fails to file a statement within the time limit, he forfeits the benefit of his security for the current distribution. They will not lose their claim, but they will lose their priority ranking and will only be able to claim any balance after all other creditors have been paid.
Specificities for the sale of aircraft
The procedure applicable to aircraft has a few special features. The successful bidder (the buyer) is obliged to pay the sale price to the Caisse des dépôts et consignations within three days of the auction, failing which the transaction will be cancelled and the bids repeated. After that, it is up to the creditor to take the initiative: within five days, he or she must file a petition with the JEX asking the latter to summon all the creditors to a hearing. The aim is to reach an amicable agreement on the distribution of the purchase price. This summons is widely publicised (posted in court, published in a legal gazette such as the Journal Officiel and in the BODACC) to ensure that all potential creditors are informed.
Central role of the enforcement judge in the distribution project
The enforcement judge is the keystone of the special judicial distribution procedure. He acts not as a mere arbitrator but as the true architect of the distribution of funds. The central role of the Enforcement Judge in these special regimes finds a parallel, albeit different, in its role in the distribution of the price in a property seizurewhich is the common law for forced asset sales.
Preparation of the draft distribution order
In the case of ships and boats, after receiving the claims declarations, the JEX itself draws up a draft distribution plan. This draft is formalised in an order, which must be served on the debtor and each creditor concerned. The notification must contain mandatory information, failing which it is null and void. In particular, it must state that the parties have a period of fifteen days from receipt of the order in which to lodge a reasoned objection by deed drawn up by a lawyer. It must also state that if there is no objection within this period, the project will be deemed to have been accepted by all parties.
Affixing the executory formula: finalisation of the project
If no objection is raised within the fifteen-day period, the proposed distribution becomes final. The most diligent party (generally the pursuing creditor) may then ask the clerk of the competent court to affix the executory clause to the order. This act gives the proposed distribution the force of a judgment and enables the creditors to be paid.
Dispute and appeal procedures: specific features of appeals
The distribution plan drawn up by the enforcement judge is not final. The Transport Code provides for appeal procedures for parties who feel aggrieved by the proposed distribution. These procedures differ significantly from ordinary law, particularly as regards appeals. The specific features of suspensive appeal in the Transport Code contrast with remedies for seizure of propertywhere the conditions and effects may differ.
Challenging the distribution project
Any party (debtor or creditor) contesting the proposed distribution notified by the JEX must do so within a strict period of fifteen days. The challenge must be substantiated, accompanied by all supporting documents, and filed with the clerk's office of the JEX through a lawyer. If a challenge is lodged, the judge will then summon all the parties to a hearing to discuss the points of disagreement and rule on the case by means of a judgment, following a report of the non-conciliation.
Appeal and its suspensive effect for ships and boats
A remarkable feature of the regimes applicable to inland waterway vessels is the effect of appeals. Article R. 5114-44 of the Transport Code (and its equivalent for each vessel) specifies that an appeal against the judgement establishing the statement of distribution has suspensive effect. In practical terms, this means that the procedure for paying creditors is entirely blocked until the Court of Appeal has handed down its decision. This provision offers important protection, by preventing a distribution of funds that could prove difficult, if not impossible, to overturn if the first instance judgment is ultimately overturned.
Managing disputed tax claims
The situation becomes more complex when a tax claim is contested. Case law has clarified the division of jurisdiction. If the dispute concerns the legality of the administrative collection procedure, the enforcement judge retains jurisdiction. However, if the dispute concerns the very existence of the tax debt or its amount (the tax base), only the administrative court has jurisdiction. In this case, the JEX must stay proceedings on the part of the price corresponding to this debt and refer the parties back to the administrative court so that the independent administrative authority can decide this preliminary question falling within its exclusive jurisdiction. This dual jurisdiction is a feature of public litigation. The debtor company must then initiate a separate administrative procedure.
Collocation order and payment of funds: the hierarchy of creditors
The collocation of claims consists of ranking creditors in order of priority for payment. In the special regimes of transport law, this order is strictly defined and gives pride of place to specific claims, such as maritime or aeronautical liens, which take precedence over more traditional securities such as mortgages. The hierarchy of creditors, with its specific liens and mortgages, is articulated in opposition to the common law on securities which governs most other goods.
The distinction between creditors: liens and mortgages
The order of distribution is as follows:
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Super-privileged creditors : These are mainly the legal costs incurred to achieve the sale, the distribution of the price and the distribution plan.
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Creditors with maritime or aeronautical liens : These liens, which are listed by law, guarantee claims deemed essential to the maritime or air shipment (crew salaries, salvage costs relating to the last voyage, port taxes, etc.). They take precedence over all other securities, including mortgages, even if these have been registered previously.
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Mortgagees : They are paid after the preferential creditors, in the order of their registration.
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Unsecured creditors : These are creditors who have no special security. They are paid only if there is a balance left after all higher-ranking creditors have been paid. In the event of an insufficient balance, they are paid at the marc le franc rate, i.e. in proportion to the amount of their claim.
Payment process by Caisse des dépôts et consignations
Once the statement of distribution has become final and enforceable (either because it has not been contested or because a judgment has become final), a copy of the decision is sent to the Caisse des dépôts et consignations, often through a bailiff. The Caisse then has a period of one month in which to make the payment to each of the creditors and to the debtor for any outstanding balance.
Purge of mortgages and liens after distribution
One of the main objectives of a forced sale is to hand over to the successful bidder a property that is free of all encumbrances. The mechanism for purging security interests, which takes place after the price has been paid in full, guarantees this result. The purge procedure takes on its full meaning when seen in relation to the specific regime for maritime mortgagesThis is the final objective of the transaction for the successful bidder.
Role of the successful bidder and the JEX in the purging of securities
Once the sale price has been paid in full, the successful bidder may apply to the execution judge. The aim is to obtain a decision stating that payment of the price has "purged" the ship, boat or aircraft of all mortgages and liens that encumbered it on the part of the former owner. The JEX then issues an order not only recording this purge, but also ordering the deletion of all the corresponding entries in the relevant registers (register of the ship or aircraft, customs service for the flag).
Consequences of the purge for creditors and the debtor
The purge has a radical effect: it extinguishes all security interests. Registered creditors who have not been paid in full at the time of distribution lose their right to follow on the property. Their claim remains, but it is no longer secured by the ship or aircraft; it becomes a simple unsecured claim against the debtor, which may be a company subject to insolvency proceedings. For the latter, the consequence is also important: it is released from its obligations to the extent of the sums that have been distributed to the creditors. This mechanism, similar to that used in business sale plans, ensures the legal certainty of the transaction and the value of the assets for the buyer, who thus acquires a vehicle free of any previous debt.
The distribution of the sale price of a ship, boat or aircraft is a highly technical procedure, punctuated by strict deadlines and specific rules that depart from ordinary law. The complexity of these derogations and the importance of the financial stakes make it necessary to the assistance of a lawyer with expertise in complex seizures to effectively defend the interests of creditors or debtors. Our firm is at your disposal to analyse your situation and assist you in these procedures.
Sources
- Transport Code, in particular the articles relating to seizure and execution such as article R5114-20, and those on distribution (articles R. 5114-35 et seq., resulting in particular from the decree of October 1967), R. 4123-14 et seq. (for each inland waterway vessel), and R. 6123-1 et seq.
- Code of civil enforcement procedures.
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