The official liquidator (liquidateur judiciaire) always has an interest in bringing a claim to extend insolvency proceedings on grounds of commingling of assets (confusion des patrimoines). The commercial chamber holds that Article L. 621-2, paragraph 2, of the French Commercial Code confers on the liquidator standing (qualité à agir) to act in the collective interest of creditors, from which follows an interest in having the commingling established. The foreseeable outcome of the extension for those creditors is irrelevant: the targeted company cannot challenge that interest.
Key points
- The official liquidator who applies to extend insolvency proceedings on grounds of commingling of assets necessarily acts in the collective interest of creditors.
- The company targeted by the extension cannot have the application declared inadmissible by arguing that the liquidator has no interest in it.
- Article L. 621-2, paragraph 2, of the French Commercial Code opens the application for extension to the administrator, the official receiver (mandataire judiciaire), the debtor and the public prosecutor, where there is commingling of assets or where the legal entity is fictitious.
- The results expected from the extension for creditors have no bearing on the admissibility of the application.
- The defence of the targeted company is therefore played out on the merits: the absence of commingling of assets, not inadmissibility.
What the commercial chamber held on 25 March 2026
The commercial chamber dismisses the appeal: the liquidator who brings the extension claim necessarily acts in the collective interest of creditors and therefore has an interest in bringing the claim (Com., 25 March 2026, No. 25-11.719). A company selling and hiring out vehicles was placed into compulsory liquidation (liquidation judiciaire). Its liquidator brought proceedings against a property company that owned the premises operated by the debtor and was also a shareholder of it, seeking the extension of the proceedings on account of the commingling of their assets. The targeted company raised a plea of inadmissibility (fin de non-recevoir) based on the liquidator's lack of interest in bringing the claim.
The decision under appeal (CA Montpellier, 14 January 2025, No. 24/02680) had rejected that plea of inadmissibility and then ordered the extension. Before the Cour de cassation (France's highest civil court), the targeted company argued that standing does not dispense with proving an interest in bringing a claim, and criticised the lower court judges for having laid down an irrebuttable presumption. The commercial chamber rejects that reasoning in two stages (free translation):
It follows that the liquidator, on whom that provision confers standing to act in the collective interest of creditors, has an interest in having the commingling of assets established with a view to extending the insolvency proceedings to another person.
The Court then approves the lower court judges for having stated that the liquidator necessarily acts in that collective interest, notwithstanding the results that the extension might have for the creditors. The second ground of appeal did not warrant a specifically reasoned decision.
What consequences for the company targeted by an extension?
A company facing an extension claim will not gain time by challenging the liquidator's interest in bringing the claim: the debate shifts immediately to the commingling of assets. The interest in bringing a claim is the condition that allows a claimant to have its claim examined by a judge. In matters of extension for commingling of assets, the solution of 25 March 2026 neutralises it in the liquidator's favour: the provision that gives standing carries the interest with it.
That solution closes off a frequently raised line of defence. The targeted company argued that the liquidator had failed to realise certain of the debtor's assets, and that the extension would therefore not genuinely serve the creditors. The commercial chamber answers that the foreseeable outcome of the extension does not enter into the assessment of admissibility. Criticisms of the liquidator's handling of the case, or of the economic usefulness of the extension for creditors, do not fall within the plea of inadmissibility.
What the decision confirms and what it leaves open
The decision consolidates the liquidator's access to the extension claim, without saying anything about the substantive conditions of commingling of assets. Article L. 621-2, paragraph 2, of the French Commercial Code sets out an exhaustive list of those entitled to apply for an extension: the administrator, the official receiver, the debtor and the public prosecutor. The commercial chamber infers that the standing conferred by that provision, exercised in the collective interest of creditors, is coupled with an interest in having the commingling of assets established.
The scope stops there. The decision under discussion rules neither on the definition of commingling of assets nor on the evidence it requires. The lower court judges had found, on their assessment, abnormal financial flows between landlord and tenant. That reasoning falls within their unfettered discretion and the decision of 25 March 2026 does not turn it into a rule. The targeted company therefore retains its full defence on the merits.
How to organise a defence against an extension claim?
A useful defence is built on demonstrating the separateness of assets, not on the admissibility of the claim. As the case law stands at 25 March 2026, challenging the liquidator's interest in bringing a claim in an extension action for commingling of assets exposes a party to the dismissal of the plea of inadmissibility. Procedural energy invested on that ground is wasted.
Relationships between companies linked by common shareholding or by common executives call for constant documentation. Leases granted between companies of the same group, their price, their amendments, the allocation of payments and the actual recovery of unpaid rent are all points examined by the lower court judges in the present case. Agreements entered into between a company and a shareholder or an executive are in principle subject to internal authorisation or approval procedures whose absence does not go unnoticed.
The checks to carry out between linked companies
- Check that each financial flow between companies of the same group rests on an identifiable legal obligation and genuine consideration.
- Keep evidence of the actual recovery of claims between linked companies, in particular the formal notices (mises en demeure) sent in the event of non-payment.
- Make sure that agreements entered into between a company and its shareholders or executives have followed the approval procedure applicable to the corporate form concerned.
- Faced with a writ of summons (assignation) seeking extension, concentrate the defence on the absence of commingling of assets, since the liquidator's interest in bringing the claim cannot be disputed.
- Document the consistency between the contractual stipulations, the invoices issued and the accounting records of both companies.
Frequently Asked Questions
Who may apply to extend French insolvency proceedings to another company?
Article L. 621-2, paragraph 2, of the French Commercial Code opens the application for extension to the administrator, the official receiver, the debtor and the public prosecutor. Extension requires commingling of the targeted person's assets with those of the debtor, or that the legal entity is fictitious. In its decision of 25 March 2026, the commercial chamber held that the liquidator, on whom that provision confers standing to act in the collective interest of creditors, has an interest in having the commingling established.
Can an extension claim be defeated by criticising how the liquidator has handled the case?
No, such criticism does not make the claim inadmissible. In the case decided on 25 March 2026, the targeted company argued that the liquidator had failed to realise certain assets and therefore had no interest in bringing the claim. The commercial chamber rejected that argument: a liquidator bringing an extension claim necessarily acts in the collective interest of creditors, whatever the foreseeable results of the extension may be for them.
Is extension of insolvency proceedings automatic once the claim is held admissible?
No. Admissibility and the merits are two distinct questions. The decision of 25 March 2026 settles only the first: the liquidator has an interest in bringing the claim. The court must then examine whether commingling of assets, or the fictitious character of the legal entity, is established. In that case, the commercial court had in fact declared the claim admissible while rejecting the extension on the merits, before the court of appeal ordered the extension.
What are the effects of extending a compulsory liquidation to a targeted company?
Extension places the targeted company under the same insolvency proceedings as the original debtor, with a single procedure and a common pool of assets subject to the same officeholders. Its assets then serve to pay all creditors, including those of the original debtor. That consequence explains why this litigation matters so much for companies within a group, in particular those holding the operating property of a trading subsidiary.
How can a group of companies limit the risk of commingling of assets?
Prevention rests on the genuine autonomy of each company. Every financial flow between related entities should rest on a written agreement, real consideration and invoicing consistent with the accounting records. Claims between group companies are recovered like those of third parties, formal notices included. Agreements with a shareholder or an executive follow the authorisation or approval procedure laid down for the corporate form. Separate accounts and bodies that genuinely deliberate complete the picture.