Deadline for reclaiming goods in collective proceedings: do not lose your property through time-bar

A supplier delivers equipment worth several tens of thousands of euros to a customer which, two months later, is placed in court-supervised reorganisation (redressement judiciaire). The contract contained a properly drafted retention of title clause. The supplier legitimately believes it can recover its unpaid goods. However, having failed to act within the three-month period, it discovers that it can no longer claim anything: the goods are deemed to belong to the debtor and will be sold for the benefit of the proceedings. This guide is aimed at suppliers and equipment lessors who sell or lease subject to retention of title. It sets out the three-month claim period, on pain of time-bar (forclusion), its exact starting point and the checklist for the application to claim or recover the goods.

The retention of title clause, a security that is not self-sufficient

What the clause protects

A retention of title clause suspends the transfer of ownership of the goods sold until the price has been paid in full. Article 2367 of the French Civil Code defines it: ownership of a thing may be retained as security by means of a retention of title clause which suspends the transfer effect of a contract until full payment of the obligation constituting its counterpart. In practical terms, as long as the customer has not paid, the seller remains the legal owner, even if the goods are physically located on the buyer's premises.

This security comes into its own when the buyer defaults. The unpaid seller is not a mere unsecured creditor (créancier chirographaire) lost among the creditors as a whole (masse): it is the owner of goods which it can, in principle, recover. That right must still be recognised in the forms and within the time limits imposed by the law on collective insolvency proceedings (procédures collectives), failing which it is lost for good. The effectiveness of the retention of title clause in the face of collective proceedings against the customer is examined in our article devoted to this security.

The conditions of validity enforceable against the proceedings

To be enforceable against the collective proceedings, the clause must satisfy strict formal conditions. Article L. 624-16, paragraph 2, of the French Commercial Code requires that the clause have been agreed between the parties in writing no later than at the time of delivery. Article 2368 of the French Civil Code confirms that retention of title must be agreed in writing.

Suppliers should be vigilant on three points.

• The clause must exist in writing and have been accepted before or, at the latest, at delivery. A clause appearing only on an invoice issued after delivery is fragile: the invoice often arrives after the goods have been handed over.
• Acceptance must be established. A clause reproduced in the general terms of sale on the back of the purchase order, in a signed framework agreement or in correspondence exchanged is stronger than a simple printed mention.
• The clause does not need to be signed purchase order by purchase order if a framework agreement or an ongoing business relationship establishes its acceptance, but the burden of proof lies on the claimant.

A seller who neglects the drafting and traceability of its clause will find itself, on the day of the collective proceedings, without any legal basis on which to claim. The quality of the security is determined well before the customer's default.

The three-month period: a strict deadline on pain of time-bar

The starting point: publication in the BODACC

Article L. 624-9 of the French Commercial Code lays down the central rule:

A claim for the recovery of movable property may only be brought within three months following publication of the judgment opening the proceedings.

The starting point is neither the date of the judgment opening the proceedings, nor the date on which the supplier learns of the existence of the proceedings, nor the date of its proof of debt (déclaration de créance). It is the date of publication of the opening judgment in the BODACC (French official gazette of civil and commercial announcements). This publication starts a single period, identical for all claimants.

This point is decisive. A supplier which learns late of the opening of the proceedings, for example because it did not receive any personal notice, does not benefit from any postponement of the starting point for the purposes of the claim. The period runs from publication, whether or not the supplier has consulted it. Monitoring the BODACC, in particular for customers showing signs of financial weakness, is therefore a matter of sound management of trade receivables. The tools for monitoring a debtor's financial health are presented in our article on creditor monitoring in the face of collective proceedings.

A qualification exists where a contract in progress has not yet been terminated: the claim period may be suspended until termination or expiry of the contract where the administrator continues the contract. But this scenario must never serve as a pretext for inaction: the sound reflex remains to act within three months of publication.

What "time-bar" means in practice

A time-bar is not a mere irregularity that can be remedied. It is the extinction of the right to act. Once the three-month period has expired, the owner can no longer claim its goods. Article L. 624-9 is unambiguous as to the consequence: failing a claim within the period, the goods are deemed to form part of the debtor's estate and may be sold for the benefit of the proceedings.

The difference from the proof of debt deserves emphasis, because suppliers often confuse the two steps. Filing a proof of debt against the liabilities of the estate (within the two-month period of Article L. 622-24, or four months for creditors domiciled outside metropolitan France) allows a creditor to take part in any distributions. That filing never amounts to a claim for recovery of goods. A supplier may have filed its proof of debt perfectly correctly and nonetheless lose its goods for failing to claim within three months. The two actions are independent, with distinct periods and starting points, and both must be brought. On the periods and pitfalls of filing a proof of debt in collective proceedings, see our article specifically devoted to them.

Claim or recovery: two routes not to be confused

The French Commercial Code distinguishes two situations depending on whether the supplier's or lessor's ownership right has already been made public.

Goods exempt from the claim requirement

Article L. 624-10 of the French Commercial Code exempts from the claim requirement an owner whose contract relating to the goods has been publicised. That owner does not have to have its ownership right recognised: it is already enforceable against third parties by virtue of the publicity. It may directly request the return of the goods.

This exemption typically concerns the equipment lessor or the lessor under a finance lease when the equipment leasing contract (crédit-bail mobilier) has been published in accordance with the applicable formalities. For these professionals, the regime is more favourable: they escape the strict three-month claim deadline and bring an application for recovery. The application for recovery is governed by Article L. 624-10-1, which provides for an amicable procedure and then, in the event of disagreement, referral to the supervising judge (juge-commissaire).

A prudent equipment lessor therefore systematically publishes its contracts where the law allows. This formality, often neglected, radically changes its position on the day of the proceedings: it moves it from the status of a claimant constrained by a short deadline to that of an exempt owner.

Claiming goods sold subject to retention of title

Conversely, a supplier which has simply sold under a retention of title clause, without any particular publicity, is not exempt. Its ownership right is not known to third parties. It must have it recognised by a claim action, subject to the three-month period of Article L. 624-9. Article L. 624-16 specifically governs this claim for goods sold with retention of title.

This is the most frequent situation, and the riskiest, for industrial suppliers and wholesalers. Without publicity, everything depends on reactivity: identifying the opening of the proceedings, checking that the goods are still on the debtor's premises and bringing the claim within three months.

The substantive conditions of the claim

Meeting the deadline is not enough. The substantive conditions must also be met for the claim to succeed.

Goods in kind and identifiable

First principle: the goods must be found in kind on the day of the opening judgment. The claim concerns the thing itself, not its value. If the equipment has been consumed, destroyed or resold, a claim for the goods as such becomes impossible, subject to the carry-over mechanisms examined below.

Second principle: the goods must be identifiable. The claimant must be able to show that the goods on the debtor's premises are indeed those it delivered subject to retention of title. Hence the importance of marking, serial numbers, references and traceability between the delivery notes and the goods physically found.

Take the example of a supplier of electronic components which regularly delivers the same model of part to a manufacturer placed in compulsory liquidation (liquidation judiciaire). If the cartons in stock bear its references and correspond to identified unpaid deliveries, the claim is plausible. If the parts are mixed with those of other suppliers without any possible distinction, proof of identity becomes an obstacle.

Fungible goods, processed goods, resale and claim to the price

The law provides several relaxations for fungible goods and processed goods.

For fungible goods, a claim remains possible where goods of the same nature and quality are in the debtor's hands. A supplier of interchangeable raw materials may claim a quantity equivalent to that which it delivered unpaid, within the limit of the existing stock.

Where the goods have been incorporated into others or processed, the claim may come up against loss of identity. If the goods delivered have been integrated into a finished product to the point of being neither identifiable nor separable without damage, the right to claim generally lapses as regards the processed goods.

Where the goods were resold by the debtor before the judgment, Article L. 624-18 of the French Commercial Code allows the claim to be carried over to the price. The supplier may then claim the price, or the part of the price of the goods, which had not yet been paid by the sub-purchaser on the day of the opening judgment. This mechanism assumes that the claim for the price is identifiable and not yet settled: if the sub-purchaser has already paid the debtor, the claim to the price fails.

These subtleties show that a claim is not automatic. It requires a concrete analysis of the condition of the goods, their traceability and any processing or resale.

The procedure: checklist for the application to claim and to recover goods

The procedure takes place in two stages, governed by Article R. 624-13 of the French Commercial Code: an amicable request and then, failing agreement, referral to the supervising judge. Each of these stages is subject to a time limit.

Step 1: the amicable request by registered letter

The claim begins with an amicable request to claim sent by registered letter with acknowledgement of receipt. The addressee is the court-appointed administrator (administrateur judiciaire) if one has been appointed or, failing that, the debtor, with a copy to the creditors' representative (mandataire judiciaire). In compulsory liquidation, the request is addressed to the liquidator.

This request must be sent within three months of publication of the opening judgment. It is this first step that stops the time-bar. A supplier which sends its registered letter on the last possible day has acted in time, provided it keeps proof of dispatch.

The addressee then has one month to acquiesce, that is, to agree to the return of the goods. If it acquiesces, the goods are returned and the matter ends there. In practice, the administrator or liquidator acquiesces where the clause is valid, the goods are identifiable and present, and there is no serious dispute.

Step 2: referral to the supervising judge

Failing acquiescence within one month, or in the event of an express refusal, the claimant must refer the matter to the supervising judge. This referral must be made within one month from the expiry of the response period, also on pain of time-bar. The supervising judge rules on the ownership right and on the return of the goods.

This second time-bar is a frequent trap. A supplier may have perfectly observed the three-month period for the amicable request, then let the one-month period for referral to the supervising judge pass, and lose its right nonetheless. Vigilance must be maintained throughout the procedural chain, not only at the first step.

Documentary checklist

To maximise the chances of success, the application must rest on a complete file. The following items should be gathered as soon as the proceedings are opened.

• Proof of publication of the opening judgment in the BODACC and its date, in order to verify the starting point of the period.
• The contract, the general terms of sale or the framework agreement containing the retention of title clause, with proof of its acceptance before or, at the latest, at delivery.
• The purchase orders, delivery notes and unpaid invoices corresponding to the goods claimed.
• The items identifying the goods: references, serial numbers, marking, making it possible to link the deliveries to the goods present at the debtor's premises.
• The customer account statement showing that the price has not been paid in full, which is the very condition of retention of title.
• A copy of the proof of debt filed against the liabilities of the estate, to be made in parallel within its own period.
• The registered letter containing the amicable request to claim and its acknowledgement of receipt, then, where applicable, the application to the supervising judge.

A file built in advance and kept up to date for at-risk customers makes it possible to react within a few days rather than reconstructing the evidence in an emergency.

The errors that cost the goods

Several recurring errors lead suppliers to lose goods that they could have recovered.

The first is confusion between the proof of debt and the claim. Filing a proof of debt never preserves the ownership right. The two steps are independent and cumulative.

The second is waiting for contact from the administrator or the creditors' representative. No body of the proceedings is under any obligation to invite the supplier to claim. The initiative rests entirely on the owner, who must monitor the BODACC.

The third is misidentifying the starting point. Counting the period from the date of the judgment, from receipt of a letter or from the proof of debt, rather than from publication in the BODACC, loses precious weeks.

The fourth is forgetting the second time-bar, that of referral to the supervising judge within the month following the absence of acquiescence.

The fifth, further upstream, is a clause that is poorly drafted or whose acceptance before delivery cannot be proved. The strength of the security is built at the contractual stage, not at the time of default.

Conclusion

The retention of title clause is a powerful security, but it does not operate on its own. In collective proceedings, it has value only if the supplier acts within the three-month period, on pain of time-bar, provided for by Article L. 624-9 of the French Commercial Code, clearly distinguishing the claim for goods that have not been published from the recovery of goods whose contract has been published. The supplier under a simple retention of title clause is in the most demanding position: everything depends on its ability to detect the opening of the proceedings and to make the amicable request, then the referral to the supervising judge, within the successive time limits.

The position is clear: a claim cannot be improvised. Two reflexes are required. Upstream, securing the drafting and traceability of the clause, and publishing lease or finance lease contracts whenever the law allows, in order to benefit from the exemption from the claim requirement. Downstream, putting in place monitoring of collective proceedings for at-risk customers and a claim file ready for use. Before any difficulty arises, have your general terms of sale and your internal procedure for monitoring the opening of proceedings audited: it is this preparation that makes the difference between recovering one's equipment and seeing it sold for the benefit of the creditors as a whole.

Frequently asked questions

What is the time limit for claiming goods in collective proceedings?

The period is three months following publication of the opening judgment in the BODACC, pursuant to Article L. 624-9 of the French Commercial Code. This period is imposed on pain of time-bar: once it expires, the goods are deemed to belong to the debtor and can no longer be claimed. The starting point is the date of publication, not that of the judgment nor that on which the supplier learns of the proceedings.

Does a proof of debt amount to a claim for the goods?

No. These are two entirely distinct steps. The proof of debt, to be filed within the two-month period of Article L. 622-24 (four months for a creditor domiciled outside metropolitan France), allows the creditor to take part in distributions. The claim, to be made within three months of publication, allows the goods to be recovered. Both must be brought, failing which the supplier may be admitted as a creditor while losing its goods.

Is an equipment lessor subject to the three-month period?

It depends on the publicity given to the contract. If the lease or finance lease contract has been publicised, the lessor is exempt from the claim requirement under Article L. 624-10 of the French Commercial Code and brings a simple application for recovery under Article L. 624-10-1. Without publicity, it must claim within three months like any other owner. Publishing the contract is therefore an essential protective reflex.

How does the claim procedure work in practice?

It comprises two stages under Article R. 624-13 of the French Commercial Code. First, an amicable request to claim by registered letter with acknowledgement of receipt addressed to the administrator or, failing that, the debtor, within three months. The addressee has one month to acquiesce. Failing acquiescence, the claimant must refer the matter to the supervising judge within one month, also on pain of time-bar.

What happens if the goods were resold by the debtor before the judgment?

Article L. 624-18 of the French Commercial Code allows the claim to be carried over to the resale price. The supplier may claim the price, or the part of the price, which had not yet been paid by the sub-purchaser on the day of the opening judgment. If the sub-purchaser has already paid the debtor, this claim to the price fails, the debt having disappeared.

Can processed goods or goods mixed with others be claimed?

It depends on identification. Fungible goods may be claimed if goods of the same nature and quality are found at the debtor's premises, within the limit of the existing stock. By contrast, where the goods have been incorporated or processed to the point of losing their individuality and no longer being separable without damage, the right to claim most often lapses. Marking and traceability of deliveries are therefore decisive.

What should be done if the proceedings are discovered after the three-month period has expired?

The situation is difficult, because the period runs from publication in the BODACC, irrespective of the supplier's knowledge of it. The time-bar in principle precludes any late claim. This is why regular monitoring of the BODACC for customers showing signs of financial weakness is indispensable. Where there is doubt as to the starting point or a possible suspension of the period linked to the continuation of a contract in progress, a prompt legal analysis is recommended before giving up.