Attachment for sale in the context of collective proceedings and overindebtedness

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You have obtained a writ of execution against your debtor and are ready to launch a legal action. foreclosure? Please note: the opening of insolvency proceedings or a case of overindebtedness can change everything. These specific legal situations impose strict rules that suspend or prohibit individual enforcement measures. Here's a complete rundown on these situations, which can put a stop to your debt collection.

Collective proceedings: immediate stay of proceedings

Article L. 622-21-II of the French Commercial Code is categorical: the judgement opening a receivership or compulsory liquidation "halts or prohibits all enforcement proceedings by creditors in respect of both furniture and real estate ".

In practical terms, this means that :

• If your seizure and sale has not yet produced its effects through the sale, it must be stopped immediately.
• No new seizure and sale may be carried out after the opening judgment.

The Commercial Chamber of the French Supreme Court (Cour de cassation) issued a firm reminder in a ruling dated 21 September 2010: the seizure and sale procedure must be stopped if, on the date of the opening judgment, the sale has not produced its effects.

A crucial point to note: the unavailability of assets created by seizure does not transfer ownership. Only the auction or out-of-court sale actually transfers ownership of the seized property. Consequently, if the opening judgment is handed down before this stage, the seizure and sale must be discharged.

Consumer over-indebtedness: extended protection

Automatic blocking of prosecutions

Article L. 722-1 of the French Consumer Code states that the admissibility of a case of overindebtedness entails the suspension and prohibition of civil enforcement procedures. This protection is immediate and automatic.

This suspension lasts until :

• Approval of a conventional plan
• Approval of recommended measures
• Personal recovery order
• Up to a maximum of 2 years (art. L. 722-3 of the French Consumer Code)

Practical effects for the creditor

During this period, you may not :

• Or continue a foreclosure in progress
• Or start a new one
• Or proceed with the sale of assets already seized

However, you retain the right to obtain a writ of execution if you do not already have one. The Court of Cassation made this clear in a ruling dated 5 February 2009: benefiting from a personal recovery procedure does not prevent you from taking the necessary steps to obtain a writ of execution.

This strategy can be particularly useful for :

• Avoiding biennial foreclosure on consumer loans
• Have a title in the event of the debtor's return to better fortunes (unless debts are written off)

An important precaution: even in urgent cases, you cannot ignore this suspension. The Commission may refer the matter to the Protection Litigation Judge as soon as the case has been lodged, even before the decision on its admissibility, in order to suspend enforcement proceedings (art. L. 721-4 of the Consumer Code).

The special case of ACAN

Acceptance up to the amount of the net assets (ACAN), which has replaced acceptance with the benefit of an inventory since the law of 23 June 2006, presents a specific mechanism for creditors.

Article 792-1 of the Civil Code states that publication of the ACAN declaration results in a stay of enforcement proceedings against the estate. This prohibition applies for a period of 15 months following publication of the declaration.

The practical consequences are significant:

• If the seizure report has been regularised before publication of the ACAN, the seizing creditor retains the benefit of the seizure.
• If this is not the case, the assets of the estate may not be seized by way of sale.

It should be noted that the cessation of enforcement procedures does not mean the cessation of individual proceedings. You can still take the necessary steps to obtain an enforcement order.

Strategies for creditors

In view of these constraints, a few recommendations are in order:

1. Act quickly as soon as you have obtained the writ of execution, without waiting for collective or over-indebtedness proceedings to be opened.
2. Keep a close eye on your debtor's financial situation to anticipate the possible opening of collective proceedings.
3. Before incurring the costs of enforcement proceedings, check that there are no ongoing collective or over-indebtedness proceedings.
4. In the case of an inheritance, find out whether the heirs have accepted ACAN.

Here's a concrete example: you have obtained a judgment ordering a company to pay outstanding invoices. You learn that the company is experiencing financial difficulties. It is preferable to immediately instruct a bailiff to proceed with a seizure and sale, rather than granting additional time, which could put you in a situation where collective proceedings are opened before any enforcement measures are taken.

For these complex situations, recourse to a specialist lawyer can be decisive. An analysis of the precise chronology of events (summons, seizure, opening of collective proceedings) and knowledge of recent case law can often determine whether your seizure for sale can be maintained or whether it should be lifted.

Sources

• French Commercial Code, Article L. 622-21-II
• Consumer Code, articles L. 722-1, L. 722-3 and L. 721-4
• Civil Code, articles 792 and 792-1
• Court of Cassation, Commercial Division, 21 September 2010, No. 09-15.117
• Court of Cassation, 2nd Civil Division, 5 February 2009, no. 07-21.306
• Court of Cassation, 2nd Civil Division, 20 November 2003, No. 01-17.579
• Circular no. 2007-12 of 29 May 2007, BO min. Justice of 30 August 2007

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