Lawyer for seizure of shares

Your debtor holds shares in a SCI, SARL or SAS, but his bank accounts are empty. Or conversely, a creditor has had your shares seized and you risk losing your stake in the company. Our firm works on both sides: for the creditor who wants to force payment, for the shareholder who is defending himself, and for the company faced with its obligations as a garnishee.

Seizing your debtor's shares

Your debtor has organised his apparent insolvency. His bank accounts are empty, he does not receive a garnishable salary, and his property is beyond his reach. However, he holds shares in a family real estate company (SCI), a limited liability company (SARL) or a non-trading company (société civile). These shares can be seized. The procedure for seizing partners' rights, governed by the Code of Civil Enforcement Procedures (art. R232-1 et seq.), enables a creditor in possession of a writ of execution to place these shares in the hands of the courts and, ultimately, to sell them in order to be paid out of the price.

The value of this measure often exceeds the value of the shares themselves. As soon as the company is served with the writ of attachment, the shareholder's pecuniary rights become unavailable: no more dividends, no more distributions, no more transfers possible. For a debtor who lives off the company's income, this freeze creates considerable pressure to settle the debt before any sale.

Our firm handles

Identification of the debtor's shareholdings (trade register, Infogreffe, beneficial owners)
Assessment of the appropriateness of the seizure in the light of the likely value of the shares and the company's structure
Coordination with the court commissioner for service of the writ of seizure
Follow-up of procedural formalities (notification to the debtor within the 8-day time limit, compulsory information on pain of nullity)
Negotiating an out-of-court settlement under pressure of unavailability
Conducting the compulsory sale procedure if necessary (specifications, auction)

Article R232-8 of the Code of Civil Enforcement Procedures

«The act of seizure renders the debtor's pecuniary rights unavailable. The debtor may obtain release by depositing with the Caisse des dépôts et consignations a sum sufficient to pay off the creditor. This sum is specifically allocated to the benefit of the seizing creditor.»

Steps involved in seizing shares

Seizure served on the company

Notification to the debtor (8 days)

Unavailability of monetary rights

Amicable sale (1 month)

Award

Challenging or negotiating a seizure of your shares

A court commissioner has served a writ of attachment on the company in which you are a partner. Your pecuniary rights are blocked: dividends, distributions, sales. If you do not react within the deadline, your shares will be put up for auction. But the procedure for seizing shareholders' rights is strictly regulated, and there are defences.

The seizure procedure is meticulously formal. A formal defect - late notification (beyond the 8-day time limit), missing information, failure to serve the document properly - renders the procedure null and void. The debtor has one month from the date of notification to contest the measure before the enforcement judge. They may also choose to sell their shares themselves to a buyer of their choice within the one-month period, which is almost always preferable to a compulsory auction.

Our areas of defence

Verification of the legality of the act of seizure and its notification (formal and substantive invalidity)
Dispute before the enforcement judge (absence of a valid enforcement order, disputed claim, extinction of the debt)
Organisation of an out-of-court sale of shares within the legal one-month period
Release by deposit with the Caisse des dépôts et consignations
Use of approval clauses in the articles of association to check the identity of the potential buyer
Exercise of the right of substitution by the other partners (civil partnerships, art. 1867 C. civ.)

What the seizure means for the company

A company whose shares are seized is a garnishee. It has immediate legal obligations: to declare to the court commissioner the existence of any pledges or prior seizures, and to make the seized shareholder's pecuniary rights unavailable. If the proceedings go as far as a forced sale, the company must disclose its articles of association and any documents needed to assess the value of the shares.

In the case of SCIs, the stakes are particularly high. Article 1868 of the Civil Code allows the shareholders, within one month of being notified of the compulsory sale, to decide either to dissolve the company or to buy back the shares on the terms set out in the Articles of Association. After the auction, any shareholder may still stand in for the purchaser within five clear days (art. 1867 Civil Code). If the price is in dispute, an expert is appointed by the president of the court on the basis of article 1843-4 of the Civil Code. These company law mechanisms, which are often unknown to the parties, can profoundly alter the outcome of the proceedings.

In SARLs, approval of sales to third parties is subject to majority rules. In the event of refusal to approve the successful bidder, the partners must acquire the shares or have them acquired within a specified period. Our firm advises companies on the strategy to adopt when faced with a seizure of one of their shareholders' shares, by combining the constraints of enforcement law with the protective mechanisms of company law.

Frequently asked questions

Which shares can be seized?

All company shares and unlisted securities may be seized: shares in SCIs, SARLs, SNCs, professional non-trading companies and SASs. Only industrial shares, because they are inalienable, are exempt from seizure. Shares in listed companies are subject to a separate procedure, via the authorised intermediary.

How long does a seizure of shares last?

The seizure itself is immediate: the unavailability of the pecuniary rights takes effect as soon as the company is served with the deed. The debtor then has one month to organise an amicable sale. If this fails, preparations for the forced sale (specifications, advertising, auction) generally take a further two to four months, more if the approval clauses or the valuation of the shares are disputed.

Do approval clauses prevent seizure?

No. Approval clauses do not prohibit the seizure of shares. They come into play at the forced sale stage: the successful bidder may be refused entry to the company. In this case, the partners or the company must buy back the shares. Approval protects the company against intrusion by a third party, but does not deprive the creditor of his right of seizure.

Do you intervene urgently to secure the seizure of company shares?

Yes, even before a writ of execution has been obtained, the creditor can apply to the enforcement judge for authorisation to seize the debtor's shares. This provisional measure freezes pecuniary rights pending judgment. Our firm intervenes to obtain this authorisation or to contest it.

How are seized shares valued in the event of a buyback?

If the winning bidder is not approved and the shareholders exercise their right to buy back the shares, the price is in principle set by mutual agreement. In the event of disagreement, article 1843-4 of the Civil Code provides for the appointment of an expert by the president of the court. The expert determines the value of the shares using appropriate valuation methods. This stage can lengthen the procedure by several months.