The forced sale of seized assets is an enforcement procedure that transforms a debtor's movable assets into cash to pay off creditors. Far from being a mere formality, it is the culmination of a seizure and sale and often represents a difficult stage, both for the debtor who is dispossessed and for the creditor who is seeking to recover his due debt. Regulated by the strict rules of the Code of Civil Enforcement Procedures, this operation has been thoroughly modernised, in particular with the creation of the profession of judicial commissioner. The complexity of the auction and the financial stakes involved often make it essential to the assistance and services of a specialist lawyer to master its subtleties.
1. Assumptions and triggering of forced sale
Recourse to forced sale by public auction is not systematic. It is mainly used as a subsidiary solution when attempts to resolve the dispute amicably have failed. This link between the amicable and contentious phases is at the heart of the legal system.
The failure of an amicable sale: an almost systematic prerequisite
The law favours a negotiated outcome. This is why forced sales are most often the direct consequence of failure of the amicable saleThis is a preliminary procedure that gives the debtor a chance to sell the seized assets himself, under the supervision of the court commissioner. The debtor has one month from the date of the seizure to find buyers and submit proposals for sale. These are then forwarded to the creditors, who have fifteen days in which to make their decision. The failure of this phase can be due to a number of factors: the absence of a serious proposal from the debtor, the refusal of creditors because the amount is deemed insufficient, or the non-payment of the agreed sum by the buyer. In these situations, the way is open to forced sale.
Other triggers: no proposal or payment default
Forced sales may also be initiated directly in other circumstances. The most common situation is where the debtor remains passive and makes no proposal for an out-of-court sale within the one-month time limit. The debtor's silence or inaction is interpreted as a waiver of this option. Similarly, if a proposal for an amicable sale has been accepted by the creditors but the buyer does not pay the agreed settlement within the set deadline, the amicable sale is deemed not to have been completed. This failure revives the creditor's right to pursue enforcement by public auction, as actual payment is the essential condition, almost a suspensive condition, for transfer of ownership and release of the seized assets.
2. The essential preliminaries to an auction
Before the auction can begin, a series of formalities must be scrupulously observed. These preliminary steps are designed to ensure the transparency of the process, protect the debtor's rights and inform potential buyers.
Advertising the sale
Advertising is an essential condition for the validity of a forced sale. It must be carried out at least eight days before the date set for the auction. The law requires advertising to be posted at the town hall of the municipality in which the debtor resides, at the place of sale itself, and in any other relevant local area. These notices must state the place, date and time of the auction, as well as the nature of the goods to be sold. Additional advertising in the press may be considered, particularly for high-value items, in order to attract a wider public and obtain better proceeds from the sale. The completion of these formalities is certified by the court commissioner, who records the details in a deed that is placed in the file.
Mandatory information for debtors
The debtor must be personally informed of the manner in which the sale is taking place. The court commissioner is required to notify the debtor of the place, date and time of the sale at least eight days before the scheduled date by ordinary letter or any other appropriate means. Although case law has held that failure to comply with this formality, which is not prescribed on pain of nullity, does not systematically result in the cancellation of the sale if the debtor was able to find out about it by other means, compliance with this obligation to inform is a fundamental guarantee of his rights. This allows the debtor to make final arrangements, in particular to try to settle the debt until the last moment to stop the enforcement procedure.
Verification of seized assets: a pivotal event
Just before proceeding with the sale, the auctioneer must carry out a verification of the goods. This act, which takes the form of a verification report supplementing the initial seizure report, has a dual purpose. Firstly, it ensures that the seized goods are still present and have not been damaged. The officer compares the goods present with the inventory drawn up during the seizure operations, noting any missing or damaged items. Secondly, and this is a crucial point, this element of the procedure "locks in" the process. According to art. R. 221-41 of the Code of Civil Enforcement Procedures, no new objections from third-party creditors may be received once the assets have been verified. This act therefore marks the end of the possibility for other creditors to join the seizure and freezes the list of those who will participate in the distribution of the proceeds of the sale.
3. The public auction process
Tendering is a critical stage in the process. global procedure for seizure and sale of movable propertyThis is the public and solemn moment when the property is put up for auction and awarded to the highest bidder. This is the public and solemn moment when the goods are put up for auction and awarded to the highest bidder.
Persons authorised to carry out the sale
The forced sale of movable property is a prerogative reserved for ministerial public officers. Since the 2022 reform, this power has been mainly vested in judicial commissioners, who are the result of the merger of the professions of bailiff and judicial auctioneer. This unification put an end to the former monopoly of auctioneers for judicial sales. Other officers, such as notaries and clerks of the commercial courts, retain this authority by statute, although in practice it is rarely exercised in the context of seizures for sale, unlike in the case of seizures of immovable property, where their role may be more frequent. In principle, the choice of selling officer lies with the seizing creditor, but it is often the court commissioner in charge of enforcement who orchestrates the sale.
Conducting the auction and setting the reserve price
The sale must take place in public, in a place accessible to all and free of charge. Bids are placed verbally or by sign, in ascending order. The auctioneer announces a starting price for each item or lot. If this price does not attract any bids, he may decide to lower it. The item is sold to the highest bidder after "three bids", i.e. after the auctioneer has repeated the last bid three times without a new bid being made. The pronouncement of the word "adjugé" seals the sale and transfers ownership to the successful bidder. Setting the starting price can be a source of dispute. If the debtor considers that it is clearly too low, he can refer the matter to the enforcement judge (JEX). A decision by the French Constitutional Council on 17 November 2023 (number 2023-1068 QPC) affirmed the debtor's right to contest this amount for intangible rights, a principle whose scope logically extends to tangible property.
Payment of the price and cessation of operations
A fundamental rule of the auction is payment in cash. The successful bidder must pay the amount immediately. If he fails to do so, the property is immediately re-sold on "re-bidding". If the new price obtained is lower than the first, the defaulting bidder is required to pay the difference. The sale stops as soon as the total amount of the bids is sufficient to cover the sum claimed by the distrainor and the opposing creditors, in principal, interest at the legal rate and costs. The auctioneer incurs professional liability if he continues the sale beyond what is necessary to pay off the creditors.
4. The role and powers of the Commissaire de Justice: a reformed profession
The creation of the profession of commissaire de justice has reshaped the enforcement landscape in France. This reform has direct implications for the conduct of seizures and sales, and may be a source of problems for the judiciary.incidents and disputes.
New responsibilities resulting from the reform (2022-2026)
Ordinance no. 2016-728 of 2 June 2016, which came into full effect on 1 July 2022 and will see its transitional period come to an end in 2026, merged the professions of bailiff and auctioneer. Judicial auctioneers now have an extended monopoly over all enforcement activities, including the service of documents and the enforcement of court decisions, as well as inventories, appraisals (valuations) and sales by judicial public auction. The aim of this unification is to simplify procedures and improve the efficiency of debt collection. The regulatory texts continue to specify the contours of this profession, particularly in terms of dematerialisation.
Practical challenges and opportunities of diversion
The reform is accompanied by a trend towards "diversion", which aims to entrust more responsibilities to judicial commissioners in order to relieve the courts of their workload. The introduction of a digital register of seizures of remuneration is one example. This increased autonomy presents challenges, particularly when selling complex assets (industrial machinery, works of art) that require special expertise to value them and find specific buyers. The auctioneer must demonstrate great rigour and informed judgement to maximise the proceeds of the sale, while scrupulously respecting the procedural framework to avoid disputes that could invalidate the sale.
5. The deed of sale, transfer of ownership and distribution of funds
The auction concludes with the formalisation of the sale and the organisation of the distribution of the proceeds among the creditors. This post-sale phase is essential for finalising the enforcement measure.
Content and legal effects of the sales agreement
The selling officer draws up a record of sale, which constitutes the official deed of sale, akin to a legal contract of sale. This document must state the precise description of the goods sold, the amount of the hammer price for each item and the declared identity of the successful bidder. The transfer of ownership takes place at the time of the auction, but the physical delivery of the property is subject to full payment of the amount. A major effect of the auction, once the sum has been paid, is the purging of the registrations, resulting in the cancellation of securities which encumbered the property, such as pledges or collateral. The buyer thus obtains a property that is free of any previous debt owed by the seized debtor.
Management and distribution of funds in the event of multiple creditors
The proceeds of the sale are paid into the hands of the court commissioner. If a single creditor is the cause of the seizure, he is paid up to the amount of his claim. If there are several creditors (the distrainor and the opposing creditors), the court commissioner must divide up the funds. The principle is one of competition, whereby unsecured creditors are paid in proportion to the amount of their claim (by the pound), after any preferential creditors have been paid. The insolvency administrator draws up an amicable distribution proposal and sends it to the creditors. If an agreement is reached, the funds are distributed accordingly. In the event of disagreement, particularly over the order of preferential claims, the court commissioner will deposit the sums and refer the matter to the enforcement judge, who will settle the dispute and determine the order in which the funds are to be distributed.
6. The debtor's rights and remedies in the event of over-indebtedness or specific assets
Enforcement law does not ignore the need to protect debtors, especially when they are in a very precarious financial situation. Specific mechanisms make it possible to suspend proceedings or adapt the process to the particular nature of certain assets.
Suspension of proceedings in the event of over-indebtedness
It is essential to note the impact of over-indebtedness on seizure for saleThis is because the admissibility of an application may result in the immediate suspension of any enforcement proceedings in progress. When an individual files an application with the over-indebtedness commission and it is deemed admissible, art. L. 722-2 of the Consumer Code provides for the automatic suspension and prohibition of all enforcement measures, including seizure and sale, for a period of up to two years. The purpose of this measure is to freeze the debtor's situation to allow the commission to find a global solution to the debt. The creditor must then await the outcome of the over-indebtedness procedure before possibly resuming legal action.
The fate of leased assets or dematerialised financial securities
The seizure of certain movable assets, such as pets (subject to a special regime) or dematerialised financial securities, is governed by special rules. Securities (shares, bonds) are not seized physically, but by notifying the third party holding the account (the bank or financial intermediary), which renders the securities unavailable. The forced sale is then carried out by auction, as for tangible assets, but the procedures are adapted to the intangible nature of the assets. In the case of assets held under finance leases, the debtor is only the lessee. The lessor, who is the real owner, may request the return of the assets. The lessor is not required to bring an action for restitution if the contract has been duly advertised. The debtor's insolvency proceedings do not prevent restitution, which takes precedence over the rights of the lessee's other creditors.
Given the technical nature of the tender and the financial stakes involved, recourse to a lawyer with expertise in enforcement procedures is essential to secure your rights, whether you are a creditor or a debtor.
Sources
- Code des procédures civiles d'exécution (Articles L221-1 et seq., R221-33 et seq. R. 221-41 and art. R. 221-31 Civ. proc. exéc.)
- Commercial code
- Order no. 2016-728 of 2 June 2016 reforming the status of judicial commissioner
- Consumer Code (Provisions relating to over-indebtedness, art. L722-2)
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