France - Cass. com., 22 January 2013

Com. 22 janvier 2013, n°11-17.968

Judgment available here

Author: Catherine OTTAWAY
Address: Hoche Société d'Avocats, Paris, France

In a decision dated January 22nd 2013 the French Supreme Court stated that an action aimed at banning a Director from managing his company belongs to the main insolvency proceeding and which shall not therefore be initiated within the frame of secondary insolvency proceedings.

On 14 August 2008, a main bankruptcy proceedings was opened against a Belgian Company by the Commercial Court of Liège (Belgium). A few months later, secondary proceedings were opened in France; the French Public Prosecutor requested a prohibition to manage against the Director of the Company, as it is authorized under French Law.

The Court of Appeal of Chalon-sur-Saône (France) granted the Public Prosecutor request, considering that once a winding-up proceedings, even secondary, is initiated against a company located in France, the Public Prosecutor is admissible for initiating any personal legal actions against the Director, such as prohibition on managing or personal bankruptcy.

However, on 22 January 2013, the Cour de Cassation did not follow this analysis and held an unprecedented position.

Indeed, according to the Cour de Cassation, the Courts of the Member State of the territory in which the main insolvency proceedings was opened, shall have jurisdiction to know about all legal actions arising out of the main proceedings. An action aimed at banning a Director from managing his company belongs to the category of actions which arises out of the main insolvency proceedings. That position is of particular interest, insofar as the proposal for a revision of EC Regulation No. 1346/2000 is about to include such a rule.

Besides, the Cour de Cassation recalled that any secondary proceedings shall necessarily be winding-up proceedings and shall be restricted to the assets of the debtor located in the territory in which these proceedings were initiated. Consequently, secondary proceedings cannot cover personal actions directed against the director of a company.

The decision dated January 22nd 2013 is right in line with the letter and spirit of Council Regulation n°1346/2000.
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