You have subscribed to a bond issue on a crowdfunding platform and the issuer has been in default for several months. The platform — acting as representative of the bondholders — wishes to take legal action. But before doing so, the representative must ensure that the action is admissible: has the general meeting of bondholders authorised the representative to act? If so, is the authorisation valid?
Until recently, these questions rarely arose because disputes relating to the repayment of bond loans were relatively rare. Things have changed with the advent in France of crowdfunding, which can take the form of bond issues, particularly for property projects. The sharp rise in interest rates in 2022–2023 and the downturn in the property market have led to numerous defaults, resulting in a growing number of disputes relating to the repayment of these bond issues.
Against this backdrop, the Court of Cassation has just handed down a judgment published in the Bulletin (Com., 6 May 2026, No. 25-12.493). It settles two outstanding issues: the form that authorisation granted to the representative of the body of bondholders may take, and the possibility of regularising an action brought without such prior authorisation. Two pragmatic answers, with significant practical implications for the body of bondholders and its representative.
The representative of the body of bondholders’ exclusive authority: framework and implications
When a company issues bonds, the holders of the same issue are automatically grouped together as a body of bondholders, endowed with legal personality. This mechanism, derived from Articles L. 228-46 et seq. of the Commercial Code, organises the collective defence of bondholders vis-à-vis the issuer.
To take legal action on behalf of these bondholders, only one body is competent: the representative of the body of bondholders, appointed by the bond purchase agreement, the general meeting of bondholders or, failing that, by a court order. Article L. 228-54 of the Commercial Code is unambiguous: the representatives of the body of bondholders, duly authorised by the general meeting of bondholders, are the only ones entitled to bring, on their behalf, any proceedings aimed at defending their common interests.
The representatives of the body of bondholders, duly authorised by the general meeting of bondholders, are solely entitled to bring, on their behalf, actions for the nullity of the company or of acts and resolutions adopted after its incorporation, as well as any other legal proceedings aimed at defending the common interests of the bondholders, and in particular to seek the measure provided for in Article L. 237-14.
Legal proceedings brought against all the bondholders of a single class may be brought only against the representative of that class.
Any legal proceedings brought in contravention of the provisions of this Article shall be declared inadmissible ex officio. — Article L. 228-54 of the Commercial Code
This monopoly is a matter of public policy. An individual bondholder may not, even in their own name, bring an action that concerns the entire class — such as a claim for repayment of the principal of a joint issue, or a liability claim against a defaulting issuer.
In property crowdfunding, the representative of the body of bondholders is generally the platform itself, which assumes this role from the moment the bond purchase agreement is signed. The process appears straightforward in theory: the platform represents the body of bondholders, the body of bondholders authorises the platform to bring proceedings, and the platform sues the defaulting issuer.
The penalty for lack of authorisation
The difficulty arises from the penalty attached to a lack of authorisation. Article L. 228-54 is explicit: any action brought without complying with its conditions must be declared inadmissible as a matter of course.
It is precisely this risk that gives the judgment of 6 May 2026 its full significance: by clearly setting out the conditions for authorisation and the procedures for rectification, the Court of Cassation reduces legal uncertainty for the body of bondholders and their representative.
Written consultation as a valid method of authorisation
The first question put to the Court concerned the form of the authorisation. Article L. 228-54 refers to authorisation by the general meeting of bondholders. Does this mean that a meeting of bondholders is necessarily required?
The defaulting issuer argued that the written consultation organised by the platform was not a general meeting within the meaning of that provision and could not therefore constitute authorisation to act. Such a strict interpretation would have had considerable practical consequences: bringing together dozens of individual bondholders scattered across the country is often impossible, or disproportionate given the sums at stake for each bondholder taken individually.
The Court of Cassation rejected this interpretation. It read the two provisions together. Article L. 228-54 requires the authorisation of the general meeting. Article L. 228-46-1 specifies that decisions by the body of bondholders may be taken either at a general meeting or following a written consultation, including by electronic means, if the bond purchase agreement so provides and in accordance with the time limits and formalities it defines.
These two provisions are not mutually exclusive. The authorisation required by Article L. 228-54 may be granted in accordance with the procedures set out in Article L. 228-46-1 — provided that the bond purchase agreement has expressly provided for this option.
Key point: A written consultation of bondholders — including by electronic means — constitutes authorisation to proceed if the bond purchase agreement so provides and if the required formalities and time limits are complied with. In the absence of such a clause, the general meeting remains the only avenue.
This interpretation had already been adopted by the Paris Court of Appeal in its decision of 3 July 2025 in summary proceedings between the same parties (Paris Court of Appeal, 3 July 2025, No. 24/15661). The Court of Cassation has now definitively upheld this interpretation. For platforms that have included an electronic consultation clause in their standard contracts from the outset, the judgment strengthens their position. For those that have not done so, it is recommended that they update their documentation for future issues.
Authorisation obtained after the summons may regularise the action
The second question was more delicate. What happens when the representative of the body of bondholders serves a writ before obtaining authorisation from the body of bondholders?
In the case before the Court, the platform had served the issuer on 22 December 2023. It was only by means of a consultation report dated 22 February 2024 — that is, two months after the summons — that it obtained formal authorisation. The issuer argued that the action brought without authorisation should be inadmissible, and that this inadmissibility could not be remedied.
The Court of Cassation rejected this argument. The lack of initial authorisation is a substantive irregularity — not an irremediable defect. Since the body of bondholders duly authorised the action during the proceedings, the inadmissibility is remedied.
Key takeaway: A claim brought without prior authorisation is not automatically lost. If authorisation is duly obtained before the judge rules, the inadmissibility is remedied.
What this judgment requires in the drafting and management of bond purchase agreements
For crowdfunding practitioners — legal departments of platforms, issuers’ advisers, bond funds — the lessons from this judgment apply on two levels.
At the stage of drafting the bond purchase agreement, a clause providing for written consultation by electronic means is strongly recommended to simplify consultation with bondholders. Without it, any action must be preceded by a formal general meeting of bondholders. For bond issues involving dozens or hundreds of individual bondholders, the notice of meeting, quorum and time limit may delay the commencement of proceedings.
When managing a default, the ideal sequence remains: formal notice → written consultation of the body of bondholders → authorisation minutes → summons. If the issuer raises an irregularity regarding the authorisation of the body of bondholders, it will nevertheless be possible to rectify this during the proceedings.
The Court of Appeal of Aix-en-Provence, in an interlocutory order of 24 April 2025 (CA Aix-en-Provence, 24 April 2025, No. 24/09725), highlighted an additional constraint: the irregularity can no longer be decided by the pre-trial judge if it has already been ruled on at first instance.
If you are faced with an issuer’s default, or if your company is facing an action for the repayment of bonds, questions of admissibility will determine the entire course of the proceedings. An initial consultation will enable you to quickly assess your position and the requirements for authorising such an action.
Frequently Asked Questions
What is the bondholder body, and who can take legal action on its behalf?
The body of bondholders is a group constituted by operation of law comprising all holders of the same bond issue. It has legal personality. Only a representative appointed by the body of bondholders and duly authorised by it may bring legal proceedings to defend the collective interests of the bondholders. Any action brought by an individual bondholder, or by an unauthorised representative, is inadmissible.
Can a written consultation of bondholders replace a general meeting for the purpose of authorising legal action?
Yes, provided that the bond purchase agreement expressly provides for this and that the requirements regarding time limits and form are met. The Court of Cassation ruled on this in a judgment of 6 May 2026 (No. 25-12.493), applying Articles L. 228-54 and L. 228-46-1 of the Commercial Code. The consultation may be carried out electronically if the contract so provides.
Must the representative of the body of bondholders obtain the bondholders’ authorisation before bringing an action, or can he or she regularise the situation during the proceedings?
Authorisation may be obtained after the action has been brought. The Court of Cassation has ruled that this omission constitutes a substantive irregularity which may be rectified up until the date on which the judge delivers his or her judgment. In practice, it is still advisable to obtain authorisation before serving the writ in order to avoid any delaying tactics on the part of the issuer.
How soon should action be taken following the default of an issuer of bonds issued on a crowdfunding platform?
The limitation period applicable to claims for payment based on a contract is, in principle, five years from the date on which the creditor became aware of, or ought to have become aware of, their claim (Art. 2224 of the Civil Code). However, the procedural stakes are often more immediate: the longer the default continues, the more the issuer’s assets diminish. Initiating proceedings promptly — after compiling a compelling case and obtaining authorisation from the body of bondholders — limits this risk.
Can a defaulting issuer still challenge the admissibility of the action on the grounds that a written consultation does not constitute a general meeting?
No, the judgment of 6 May 2026 of the Court of Cassation definitively ruled out this interpretation: written consultation, as provided for in the bond purchase agreement in accordance with Article L. 228-46-1, constitutes authorisation within the meaning of Article L. 228-54 of the Commercial Code. However, if the bond purchase agreement does not provide for any option for written consultation, this ground may still be raised.