Set-off of connected claims in insolvency proceedings requires that the reciprocal claims share the same basis, or that they arise from a single contractual whole. The commercial chamber makes the point clearly: a claim for restitution arising from a guarantee agreement entered into with the bank and a claim arising from a personal guarantee (cautionnement) granted for the benefit of a third party are not connected. The guarantor could not therefore complain that the bank had failed to invoke that set-off.
The essentials
- The opening of insolvency proceedings prohibits payment of claims arising before the opening judgment (jugement d'ouverture), save for payment by set-off of connected claims.
- Two reciprocal claims are connected only if they share the same basis or arise from a single contractual whole.
- A bank holding its client's funds in an account opened in its own books does not, by that fact alone, hold a claim connected to the claim it derives from a personal guarantee granted to a third party.
- Discharge of the guarantor for loss of the benefit of subrogation presupposes that the right allegedly lost actually existed, and therefore that set-off was legally possible.
- The fact that several contracts relate to one and the same economic transaction is not sufficient to establish a single contractual whole.
Set-off of connected claims: what the commercial chamber holds
The commercial chamber quashes the discharge of a company executive acting as guarantor, for want of any connection between the reciprocal claims (Com., 6 May 2026, No. 23-23.937). A seller had sold immovable and movable property to a company, the price being payable in three instalments. A bank had stood as joint and several guarantor of the buyer towards the seller. On the same day, the buyer's executive stood as joint and several guarantor of their company towards the bank. The buyer then resold the buildings to finance lessors and part of the price was deposited in a dedicated account opened in its name in the bank's books.
After the buyer was placed in judicial reorganisation (redressement judiciaire) and then in compulsory liquidation (liquidation judiciaire), the bank paid the seller, filed a claim, and then brought proceedings for reimbursement against the executive acting as guarantor. The guarantor relied on Article 2314 of the French Civil Code: in their view, the bank should have invoked set-off between its own claim and the funds standing in the dedicated account. The decision under appeal (CA Paris, 25 October 2023, No. 21/18945) found such a fault and discharged the guarantor.
The commercial chamber quashes that decision in all its provisions (free translation): the two claims at issue did not share the same basis. The company's claim against the bank, in respect of the sum available in the account, arose from the guarantee agreement signed between those two parties. The bank's claim against the company was based on the personal guarantee granted for the benefit of the seller. The case is remitted to the Paris court of appeal, sitting with a different composition.
these claims, which did not arise from a single contractual whole, were not connected
What does this decision change for the bank and for the guarantor?
A set-off that is legally impossible cannot support the discharge of the guarantor. Article 2314 of the French Civil Code discharges the guarantor where subrogation to the creditor's rights can no longer take place through the creditor's own act. The right relied on must still have existed. Where that right consists of a set-off, the guarantor must establish that the creditor could in fact have raised it. Absent any connection, the prohibition on paying claims arising before the opening judgment applies and the creditor who hands the funds over to the liquidator commits no fault.
For the credit institution acting as guarantor, the decision places the emphasis on the source of each claim. Holding the debtor's funds in an account opened in its own books does not confer a right to obtain payment. The restitution debt remains attached to the contract that organised the deposit. If the guarantor's claim arises from another contract, entered into with another counterparty, set-off is not available. The applicable provision, Article L. 622-7 of the French Commercial Code, allows only set-off of connected claims.
Single contractual whole: a narrowed concept
The fact that several contracts belong to the same financial structure does not, in itself, establish a single contractual whole. The court of appeal had noted that the deeds were simultaneous, that a memorandum of agreement (protocole d'accord) existed between the seller and the buyer, that the bank was entitled to debit any account opened in its client's name, and that the guarantees were mutually conditional. It had inferred from this a single contractual whole serving as the general framework for the sale transaction, and then the connection between the claims.
The commercial chamber rejects that analysis by returning to the basis of each reciprocal claim. The test is not the economic unity of the transaction, but whether the claims share the same basis, or belong to a single contractual whole. As the case law stood on 6 May 2026, connection cannot therefore be inferred from a guarantor's mere participation in a structure whose architecture it knows, where it is not a party to all the contracts.
Several points remain open. The quashing occurs without examination of the other grounds, and the Paris court of appeal, sitting with a different composition, will rule again on the claim for payment. The decision under appeal had, moreover, rejected the existence both of a cash pledge and of an account pledge for the bank's benefit, for want of evidence adduced by the guarantor; that part of the analysis was not at the heart of the quashing.
Securing a guarantee: points to watch
An effective guarantee is formalised in a deed; it cannot be inferred from a contractual structure. The decision invites parties to a structured financing to state precisely what each flow of funds secures, and for whose benefit. The dispute under review is telling: two banks in comparable positions met different fates, one having entered into a pledge agreement over the account receiving the funds, the other not, according to the findings of the decision under appeal.
- Identify, for each reciprocal claim, the contract giving rise to it and the parties to that contract.
- Have the account opened in the name of the beneficiary of the guarantee where the intention is to create security over the funds, rather than in the name of the debtor alone.
- Set out the allocation of the funds and the attachment of the security in a single deed, rather than relying on the economic consistency of the structure.
- For the executive acting as guarantor, check that the preferential right whose loss is relied on did indeed exist, and on what basis.
Checks before invoking set-off
Before raising a set-off against insolvency proceedings, the creditor checks the contractual origin of its own claim and that of the reciprocal debt: a common basis, or a single contractual whole, is a condition of connection. A guarantor who criticises the creditor's inaction examines the same question first, since a right that does not exist cannot be lost. Parties to cross financing arrangements document the exact nature of the funds deposited, distinguishing a mere settlement account from security created for the guarantor's benefit. Finally, the decision under review does not bring the dispute to an end: the court to which the case is remitted will rule again on the claim for payment directed against the guarantor.
Frequently Asked Questions
Can a bank take payment from the account of a client placed in compulsory liquidation?
No, not freely. The opening of the proceedings automatically prohibits payment of claims arising before the opening judgment, with the sole exception of payment by set-off of connected claims. In the case decided on 6 May 2026, the commercial chamber held that the claim for restitution of the deposited funds and the claim arising from the personal guarantee granted to the seller did not share the same basis. Set-off was therefore unavailable, and paying the funds to the liquidator was no fault.
Do several contracts forming part of one economic transaction make the claims connected?
No, that economic link alone is not enough. The commercial chamber reasons from the basis of each reciprocal claim: either both claims share the same basis, or they arise from a single contractual whole. The court of appeal had inferred connection from a financial structure involving the simultaneous signing of a memorandum of agreement, cross guarantees and a finance lease. That analysis was quashed, since the bank was not a party to the contracts giving rise to the restitution debt.
Can a guarantor be discharged where the creditor failed to invoke a set-off?
Such discharge presupposes that a right capable of benefiting the guarantor by subrogation was lost through the creditor's own act. Where the right relied on is a set-off, the guarantor must show that the creditor could genuinely have raised it. Absent any connection between the claims, no set-off was possible in the case decided on 6 May 2026, and the discharge granted was quashed. The case is remitted to a court of appeal with a different composition, which will rule again.
Does an executive who guarantees their company commit their personal assets?
Yes. A personal guarantee is a personal undertaking, distinct from the guaranteed company's debt. The company's compulsory liquidation does not extinguish that undertaking: the creditor may in principle claim payment of the covered sums from the executive acting as guarantor, within the limits set by the deed. The executive retains the defences arising from their own guarantee deed and those conferred by statute, whose assessment falls to the lower court judges.
How can funds intended to secure staged payments be made safe?
Security comes from the deed, not from the movement of funds. Sums deposited in an account opened in the debtor's name in principle remain within its assets, even where their allocation to a future payment is announced. To give a guarantor a preferential right, formalised security is in principle required, identifying the secured claim, the assets covered and the beneficiary. A precise written instrument limits later argument about whether the guarantee relied on exists at all.