The seizure of movable property often results in the forced sale of the debtor's assets. But what happens to the money collected from the sale? This money is not automatically given to the seizing creditor. A specific procedure governs the distribution of the money.
Reform of distribution procedures
French law has radically changed the rules governing the distribution of sums arising from seizures. The old system of "distribution by contribution" has given way to a simpler, less judicial procedure.
Law no. 91-650 of 9 July 1991 and its implementing decree no. 92-755 of 31 July 1992 overhauled the system. These texts have now been incorporated into the Code of Civil Enforcement Procedures (CPCE), in particular articles R.251-1 et seq.
The general structure of the system is based on a system of diversion: the judge's intervention is no longer systematic but suppletive.
The principle of joint and several creditors
Unlike attachment for payment, which confers an exclusive right on the first distrainor, attachment for sale does not create any privileges for the person who initiated it. Article L.211-2 of the CPCE clearly sets out the principle of concurrence: all creditors compete according to their rank.
Only :
- The distraining creditor
- Opposing creditors before the seized assets are verified
- Creditors who have taken protective measures against the same assets
Other creditors are excluded from the distribution, which simplifies the procedure.
The sales agent: the linchpin of the procedure
Distribution is managed by the "agent in charge of the sale". This expression, used in the Code of Civil Enforcement Procedures, refers in practice to the judicial commissioner (formerly a bailiff) who conducted the sale.
He replaces the judge and clerk of the old system. This change reflects the legislator's desire to speed up proceedings by reducing judicial intervention.
The court commissioner must draw up a draft distribution plan and submit it to the various parties. He plays a central role in managing claims and any disputes that may arise.
Single creditor procedure
When there is only one creditor, the procedure is simplified. The proceeds of the sale are paid to the creditor, up to the amount of the claim, within a maximum of one month after the sale:
- Deposit of the price (out-of-court sale)
- The date of the sale (forced sale)
Article R.251-1 of the CPCE stipulates that any surplus shall be returned to the debtor within the same period. After this period, the sums due bear interest at the legal rate.
An important case law should be noted: the Court of Cassation has ruled that the actual date of remittance of the funds (and not the theoretical period of one month) determines the admissibility of an action for segregation (Civ. 2e, 8 April 2004, no. 02-16.842).
Proceedings with several unsecured creditors
Drawing up the distribution plan
When several creditors are in competition, the agent in charge of the sale must draw up a draft allocation. This document is crucial. It is based on :
- The summons to pay (debt owed by the debtor)
- Objections from other creditors
- Legal costs and accrued interest
This project must be drawn up without prior request from creditors. The old "productions" no longer exist.
Notification and meeting deadlines
The draft is notified by registered letter with acknowledgement of receipt to each creditor in the month following :
- Forced sale
- Deposit of the price (out-of-court sale)
This period may be extended by agreement between the parties or by order of the court.
Article R.251-4 of the CPCE imposes mandatory information in the notification, on pain of nullity:
- The 15-day period for lodging an objection
- Presumption of acceptance in the absence of a reply
The project must be accompanied by a detailed breakdown of recovery costs.
Definitive nature of the project
If there are no objections within 15 days, the draft becomes final. Please note that each creditor is bound by its own time limit. Previous case law, which set a collective time limit running from the last notification, is no longer applicable according to the prevailing interpretation.
The agent then makes the payment without further delay. Sums intended for creditors who have made a precautionary seizure are deposited until a writ of conversion is served.
The fate of preferential creditors
The presence of preferred creditors changes the order of distribution. Under article 2285 of the Civil Code, sums must first be paid to preferred creditors, according to their rank.
Only the surplus is shared between the unsecured creditors, in proportion to their claims ("au marc le franc" distribution).
The classification of liens is technical. It requires in-depth knowledge of security law. This complexity explains why the legislator has entrusted this task to the judicial commissioner rather than to other professionals.
Creditors interested in the distribution have every interest in verifying the validity of the liens invoked and, if necessary, contesting them before the court.
And if a dispute arises?
If a creditor disputes the proposal, a conciliation phase begins. The agent responsible for the distribution summons all interested parties within one month of the first dispute.
If agreement is reached, an official report is drawn up and payment is made. If no agreement is reached, a statement of disagreement is drawn up and the agent refers the case to the enforcement judge.
It is only as a last resort that the judge rules on disputes. His decision may be appealed, but the appeal does not have suspensive effect.
The system for distributing funds after seizure of movable property illustrates the evolution of our law towards less litigious procedures. However, it remains highly technical, particularly when it comes to establishing the order of liens.
Whether you are a creditor or a debtor, the intervention of a legal professional is often necessary. Our firm is at your disposal to assist you in these complex procedures and defend your interests to the best of our ability.
Sources
- Code des procédures civiles d'exécution, articles L.211-2, L.221-5, L.221-6, R.251-1 et seq.
- Law no. 91-650 of 9 July 1991 reforming civil enforcement procedures
- Decree no. 92-755 of 31 July 1992 instituting new rules relating to civil enforcement procedures
- Court of Cassation, 2nd Civil Division, 8 April 2004, No. 02-16.842, published in the Bulletin
- Court of Cassation, 2nd Civil Chamber, 14 January 1987, Bulletin civil II, n°7
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