Cass. Com., 1st July 2026, no.25-16.192
On 1st July, the French Supreme Court (Cour de cassation) held that the adoption of a sale plan, whether total or partial, precludes the extension of judicial liquidation (liquidation judiciaire) proceedings. A Court of Appeal ruling after the final adoption of a sale plan can therefore no longer extend the judicial liquidation proceedings.
The possibility of extending the insolvency proceedings (procédure collective) of one person, whether legal or natural, to another is a judge-made creation enshrined in Law no. 2005-845 of 26 July 2005, now set out in Articles L. 621-2, para. 2, for safeguard proceedings (procédure de sauvegarde), L. 631-7 para. 1, for judicial reorganisation (redressement judiciaire) and L. 641-1 I para. 1, for judicial liquidation (liquidation judiciaire).
Under the principle of the autonomy of each person, whether legal or natural, the fact that one person is subject to insolvency proceedings does not ipso facto justify subjecting another person to those proceedings, even a company in the same group. By way of exception, however, the position may be different where the legal situation does not reflect the economic reality of the business. This is why case law has allowed the insolvency proceedings of one person to be extended to a third party on the grounds of commingling of assets or the fictitious nature of the legal entity, the latter ground for extension being rarely used[1].
It is thus necessary to establish a commingling of accounts or abnormal financial flows[2] or abnormal financial relations[3]. Insolvency proceedings opened against a debtor may moreover be extended to one or more other persons where their assets are commingled with those of the debtor, without any fault on the part of those persons being required[4]
The extension of proceedings already opened is intended to penalise an abuse of the autonomy of legal personality, since its main effect is to subject several persons to a single insolvency procedure, so that their assets are combined into one, allowing the common liabilities to be paid out of an enlarged common pool of assets, and a single solution to be adopted[5]. It should be noted that the extension judgment does not have retroactive effect to the date of the initial opening judgment[6].
I. The slow judicial development of a time limit
Under the Law of 25 January 1985
Article L. 621-2 of the French Commercial Code is, however, silent as to the time limit for bringing an action for extension. That limit has been set by case law. Thus, under the aforementioned 1985 Law, it was held that extension of the proceedings was no longer possible after the adoption of a reorganisation plan, whether by way of sale or continuation[7], and after the closure of a judicial liquidation[8]
Under the Law of 26 July 2005: the case of a total sale
Under the aforementioned Law of 26 July 2005, the French Supreme Court (Cour de cassation) held, and then confirmed, with regard to a total sale plan adopted in judicial reorganisation (redressement judiciaire) proceedings and followed by a conversion into judicial liquidation (liquidation judiciaire), that “the adoption of a plan for the total sale of the business precludes the extension to a third party, on the grounds of commingling of assets, of the debtor’s insolvency proceedings” [9]
The French Supreme Court thus sets time limits on the scope of the action for extension of insolvency proceedings by means of cut-off dates. The terms of the debate remain the same. In theory, the sale plan does not in itself constitute the closure of the proceedings in which it was adopted, whether judicial reorganisation, as in this case, or judicial liquidation. In these decisions, in the light of the provisions cited by the French Supreme Court (in particular Article L. 631-22 of the French Commercial Code), nothing could constitute a time bar to an action for extension of proceedings, even after the adoption of the sale plan, since the proceedings have not been closed.
To understand the reasoning of the Quai de l’Horloge (the seat of the French Supreme Court), one must therefore fall back on the argument of expediency, a factual approach based on pragmatic considerations, which holds that extending the proceedings could disrupt the smooth running of proceedings that have reached the stage of adopting a sale plan.
Although the “practical difficulties” should never be underestimated, the implementation of the sale plan is not necessarily an obstacle to the extension of proceedings. Assets that would fall within the scope of the proceedings are not necessarily intended to be included in a sale plan, since they may be of no interest to the buyer, and their realisation outside the plan may generate resources that can usefully be applied to paying creditors. Nevertheless, the French Supreme Court’s reiteration of its position that the adoption of a total sale plan has a cut-off effect[10] on an application for extension of proceedings should be regarded as expressing a rule, admittedly judge-made, which settles the state of the law on the issue.
II. A question left open for a time: quid of a partial sale?
The question remained whether, in the case of a partial sale plan, which is possible both in reorganisation (Article L. 631-13 of the French Commercial Code) and in judicial liquidation (Article L. 642-1 of the French Commercial Code), the French Supreme Court would maintain its position given that the fate of the debtor’s assets as a whole is not entirely settled. In the same vein, it was held that a judgment adopting a plan for the partial sale of a debtor’s assets precludes the extension to a third party, on the grounds of commingling of assets, of that debtor’s insolvency proceedings[11].
In this judgment, the Commercial Chamber of the French Supreme Court took a position on whether an extension of insolvency proceedings may be sought on the grounds of commingling of assets where a partial sale plan has already been adopted, in this case in judicial reorganisation proceedings, pursuant to Article L. 631-22 of the French Commercial Code. In other words, the Court had to decide whether, in such a situation, it is still possible to seek the extension of the insolvency proceedings to a third party.
Once again, this solution reflects essentially pragmatic considerations. It is desirable for the extension decision to be made as soon as possible after the opening of the initial insolvency proceedings. After the adoption of a sale plan, even a partial one, it would be difficult to manage coherently the residual assets not included in the plan, the new assets resulting from the extension and all the combined liabilities, bearing in mind that the plan, which is not called into question by the extension decision, has reduced the common pool of assets from which all the combined liabilities must be discharged. It is therefore because the assets and liabilities of the various entities concerned would have been particularly complex to assess and settle in the event of an extension after the adoption of a plan that the French Supreme Court ruled out the very possibility of such an extension in that situation.
III. The failure on appeal of an action for extension brought before the adoption of the plan
The judgment of 1 July 2026[12] follows this line and further develops the Supreme Court’s case law on time limits. Once a sale plan has been definitively adopted, the insolvency proceedings enter a “quasi-irreversible” phase of realisation. It then becomes impossible to alter their scope by extending them to another legal entity, even if such an extension had been ordered at first instance before the plan became final. The French Supreme Court assesses the admissibility of the extension as at the date on which the appellate court rules[13].
In this case, a company in judicial liquidation was authorised to continue trading with a view to a sale plan. Then, on a summons issued by the liquidator, that judicial liquidation was extended to another company on the grounds of commingling of assets. In the meantime, however, a sale plan was adopted in favour of a buyer. The Court of Appeal hearing the dispute then set aside the extension judgment and declared the liquidator’s action for extension inadmissible.
The liquidator’s ground of appeal, arguing that extension should remain available since the court had ordered it before the final adoption of the plan, was rejected by the French Supreme Court. In its view, it follows from Articles L. 621-2 and L. 642-1 of the French Commercial Code that the adoption of a sale plan, whether total or partial, precludes the extension of judicial liquidation proceedings. Having found that, on the date on which it ruled, the sale plan of the first company in judicial liquidation had been adopted by an irrevocable judgment of 31 March 2023, the Court of Appeal correctly concluded that the judicial liquidation proceedings of that company could no longer be extended to the other company and, consequently, set aside the extension judgment that had been delivered on 29 March 2023.
Accordingly, a Court of Appeal ruling after the final adoption of a sale plan can no longer allow the extension of judicial liquidation proceedings. A sale plan that becomes final during the appeal proceedings therefore rules out the earlier action for extension. The reopening of the hearing at an expedited hearing under Article 905 of the French Code of Civil Procedure has no effect, since it does not entail the revocation of the order closing the pre-trial phase.
Note for practitioners
A maiori ad minus[14], the greater includes the lesser. Now that it is settled that the adopted sale plan fixes the assets and defeats the action for extension, a fortiori a summons, even one served before the adoption of the sale plan, will necessarily meet the same fate.
[1] Annual Report of the French Supreme Court (Cour de cassation), 2018
[2] Cass. com., 4 July 2000, no. 98-12.117
[3] Cass. com., 13 March 2007, no. 05-15.833 ; Cass. com., 16 June 2009, no. 08-15.883
[4] Cass. com., 26 March 2025, no. 24-10.254
[5] Cass, Com., 17 November 1992, no. 90-22.130, Bull. 1992, IV, no. 357; Cass, Com., 22 October 1996, no. 94-20.760; Cass, Com., 17 February 1998, no. 97-13.098, Bull. 1998, IV, no. 75
[6] Cass, Com., 28 September 2004, no. 02-12.552, Bull. 2004, IV, no. 170
[7] Cass, Com., 22 October 1996, no. 95-13.024, Bull. 1996, IV, no.256; Cass, Com., 4 January 2000, no.97-11.712, Bull. 2000, IV, no.3; Cass, Com., 28 November 2000, no.97-12.265; Cass, Com., 18 January 2005, no.03-18.264; Cass, Com., 16 October 2012, no. 11-23.086, Bull. 2012, IV, no. 185
[8] Cass, Com., 11 July 1995, no. 93-15.525, Bull. 1995, IV, no. 208.
[9] Com., 5 April 2016, no.14-19.869, Bull. 2016, IV, no. 59; Com., 27 September 2017, no.16-16.670, published in the Bulletin
[10] C. Saint-Alary-Houin, Droit des entreprises en difficulté: LGDJ, 10th ed., no. 452
[11] Cass, Com., 5 December 2018, no.17-25.664
[12] Cass, Com., 1 July 2026, no.25-16.192
[13] Chronique de jurisprudence de droit des entreprises en difficulté, Gazette du Palais, Tuesday 1st September 2026, no. 26
[14] Alexandre Ferracci. Argumenter a fortiori en droit. Revue de la Recherche Juridique, Droit prospectif, 2019, 43 (173, pp.1003-1038.
