Set-off of connected claims in insolvency proceedings cannot be inferred from the mere reciprocity of two contractual debts. The claims must arise from the performance or non-performance of the same contract, or derive from a single contractual whole. On 25 March 2026, the commercial chamber rejected set-off between the claim of a subrogated guarantor and a claim for damages arising from a separation agreement between shareholders.
Key points
- The opening judgment (jugement d'ouverture) prohibits payment of claims arising before it, save for payment by set-off of connected claims (Article L. 622-7 of the French Commercial Code).
- Two claims are connected where they arise from the performance or non-performance of the same contract, or where they derive from a single contractual whole: these two routes are alternatives.
- The contractual nature and the reciprocity of the two claims are not enough to establish connectedness.
- A creditor's unilateral waiver of the right to sue the debtor does not extinguish the claim (Article 1350 of the French Civil Code): it remains within the liabilities taken into account.
A separation of shareholders and two reciprocal claims
The commercial chamber dismisses the appeal to the Cour de cassation (France's highest civil court): two reciprocal contractual claims are not connected merely because they are contractual (Com., 25 March 2026, No. 25-19.966). Four lawyers practised within a société d'exercice libéral à responsabilité limitée (limited liability professional practice company). Financial and personal difficulties led them to sign a separation agreement with retroactive effect. One of them undertook to acquire, or to procure the acquisition of, the shares of the other three and, in return, to transfer to them the clients attached to them.
Those share transfers were conditional upon obtaining the release of all financial undertakings and guarantees granted by the three shareholders in favour of the company. The manager (gérant) then declared the company's cessation of payments, and the company was placed in judicial reorganisation (redressement judiciaire) and then in compulsory liquidation (liquidation judiciaire). The share transfers were completed by private agreements (actes sous seing privé) after the opening of the judicial reorganisation. One of the outgoing shareholders was themselves placed in personal compulsory liquidation.
The liquidator of that shareholder applied to the bâtonnier (head of the local bar) for rescission (résolution) of the agreement and for damages, alleging that the manager had prematurely declared the cessation of payments, thereby causing the loss of chance (perte de chance) of obtaining release from the undertakings. The bâtonnier ordered rescission and gave judgment against the former manager. An initial decision of the Cour de cassation (Com., 7 December 2022, No. 22-12.772) quashed the decision upholding that ruling only as regards the award of damages.
Before the court of appeal to which the case was remitted (CA Caen, 11 September 2025, No. 23/01407), the former manager sought set-off between the sum they had been ordered to pay and the claims they had filed in the liabilities of their former co-shareholder, having been subrogated to the bank's rights. In the alternative, they waived those claims so that they would be deducted from the liabilities used to assess the damage. The commercial chamber rejects both limbs of that strategy, in the following terms (free translation).
these two claims, which are contractual in nature, did not arise from the performance or non-performance of the same contract, nor do they derive from a single contractual whole, so that the plea of set-off had to be rejected
It follows from Article 1350 of the French Civil Code that a creditor's unilateral waiver of the right to sue the debtor does not extinguish the claim.
What must be shown to set off connected claims?
To obtain set-off in insolvency proceedings, the two claims must be attached to the same contract or to a single contractual whole. Article L. 622-7 of the French Commercial Code prohibits payment of claims arising before the opening judgment, but preserves payment by set-off of connected claims. A creditor who itself owes a sum to the debtor subject to the proceedings can therefore extinguish its debt by set-off only by establishing that connectedness. Failing that, it pays in full what it owes and its own claim follows the fate of the liabilities.
What has to be shown concerns the origin of the claims, not their general characterisation. In the case decided, the subrogated party's claim arose from a promissory note and a guarantee given in favour of the bank before the opening of the shareholder's compulsory liquidation. The opposing claim resulted from damages awarded for non-performance of the separation agreement. Two distinct contractual sources, therefore two claims that are not connected.
The former manager argued that their payment to the bank was precisely performance of the release undertaking stipulated in the agreement. That economic link was not enough to make the two claims a single contractual whole. The second question concerned the basis on which the damage was measured: unilaterally waiving the right to pursue admitted claims does not extinguish them, so that the refusal to deduct them from that basis is legally justified.
Test for connectedness: scope confirmed, questions left open
The decision confirms a demanding test for connectedness and deprives a unilateral waiver of any effect in reducing the liabilities. The test has two alternative limbs: the same contract, or the single contractual whole. Its application falls to the assessment of the lower court judges, whose task is to ascertain the exact origin of each claim. The commercial chamber notes here that the court of appeal did carry out that enquiry and correctly concluded that the claims were not connected.
An area of uncertainty remains on the second point. The decision rules in a configuration in which the liquidator sought the dismissal of all of the opposing claims, including those based on the waiver. The decision does not say what effects a waiver accepted by the debtor's representative would produce. The solution now rests on the absence of extinction of the claim, and not on the court of appeal's reasoning concerning the schedule of claims.
Practical steps to secure a reciprocal claim
Connectedness is prepared when the contracts are drafted, not at the litigation stage. Separation agreements between shareholders often combine several transactions: share transfers, division of the client base, release from banking commitments. If those transactions are documented separately, each may be analysed as a stand-alone contract. The risk becomes real on the day one of the signatories becomes subject to insolvency proceedings and set-off is the only effective means of payment.
- Bring the reciprocal undertakings together in a single instrument, or expressly stipulate their interdependence and indivisibility.
- Make payment of the banking commitments an obligation under the agreement itself, rather than a parallel transaction.
- Anticipate the fate of the recourse claim of the party who pays for a shareholder: it may remain legally distinct from any debt owed to that shareholder.
- Do not rely on a unilateral waiver to neutralise a claim that has already been admitted.
Checks to make before invoking set-off
Before raising set-off against a debtor subject to insolvency proceedings, identify the instrument giving rise to each claim, then check that a single contract carries both. Failing that, look in the stipulations for the features of a single contractual whole: reciprocal conditions, indivisibility, simultaneous undertakings. Then measure the consequence of a refusal of set-off on your actual exposure. Finally, take it as settled that a waiver of the right to sue, decided alone, leaves the claim in place within the liabilities.
Frequently Asked Questions
Can set-off be used to obtain payment when the debtor is in compulsory liquidation?
Yes, but only if the two claims are connected. The opening judgment prohibits payment of claims arising before it, save for payment by set-off of connected claims. According to the decision of 25 March 2026, connectedness requires that the claims arise from the performance or non-performance of the same contract, or that they derive from a single contractual whole. The mere reciprocity of two contractual debts is not enough to establish it.
Can claims arising from two different contracts be set off?
Set-off remains possible if the contracts form a single contractual whole. That condition is assessed in the light of the stipulations and the economics of the transaction. In the case decided on 25 March 2026, a subrogated guarantor's claim, arising from a promissory note and a guarantee given in favour of a bank, and a claim for damages arising from non-performance of a separation agreement were held not to be connected.
Does waiving a claim admitted to the liabilities reduce the debtor's liabilities?
No. A creditor's unilateral waiver of the right to sue the debtor does not extinguish the claim, under Article 1350 of the French Civil Code as applied by the decision of 25 March 2026. The claim therefore continues to appear in the liabilities taken into account, including where those liabilities serve to measure damage. The decision does not settle the effects of a waiver accepted by the debtor's liquidator.
How should reciprocal undertakings be linked in a separation agreement between shareholders?
By making their interdependence explicit. A single instrument, reciprocal condition clauses, a statement that the obligations are indivisible and simultaneous performance all make it easier to show a single contractual transaction. Conversely, undertakings documented separately, signed on distant dates and without cross-references, lend themselves poorly to that characterisation. As a rule, the more mutual dependence appears in the stipulations, the less it has to be reconstructed later before a court.
What can a shareholder recover after paying the bank debt of the company or of a co-shareholder?
A guarantor who pays has, in principle, a right of recourse against the guaranteed debtor. The claim therefore exists, but its value depends on that debtor's solvency. Where the debtor is subject to insolvency proceedings, that recourse follows the fate of the liabilities and is not paid as an ordinary debt. Payment alone does not allow a sum owed to the same debtor to be neutralised by set-off.