The landlord's preferential right in the tenant's collective insolvency proceedings: ranking, post-opening claims and saisie-gagerie

A commercial tenant placed in judicial reorganisation (redressement judiciaire) does not stop occupying the premises: it stops paying. For an institutional landlord, the question is not whether it will suffer a loss, but precisely how much, on which line of the liabilities it will be booked, and which steps must be taken within which time limits so as not to worsen that loss mechanically. The reform of the law of security interests brought about by Order No. 2021-1192 of 15 September 2021, which entered into force on 1 January 2022, profoundly altered the terms of the equation by abolishing the special preferential right of the building landlord over movable property. This analysis deals with the landlord's actual ranking in the collective insolvency proceedings (procédure collective) of its tenant: treatment of pre-opening arrears, the regime for post-opening rent under Article L. 622-17 of the French Commercial Code, the residual usefulness of the distraint of the tenant's goods (saisie-gagerie), and the contractual levers that make it possible to rebuild a guarantee that the law no longer provides.

The dividing line: what the opening judgment freezes and what it leaves intact

The opening judgment produces three effects that structure the whole of the landlord's strategy. It stays individual proceedings aimed at payment of a sum of money or at termination of a contract for non-payment (Article L. 622-21 of the French Commercial Code), prohibits the debtor from paying any claim arising before the judgment (Article L. 622-7) and stops the running of interest, except for loans with a term of more than one year (Article L. 622-28). Enforcement proceedings and protective measures in progress are stayed or prohibited. The scope of this freeze and the steps that remain open to the creditor are analysed in our article on the stay of individual proceedings from the opening judgment.

The operational consequence is stark: a payment demand (commandement de payer) referring to the termination clause (clause résolutoire), served three weeks before the opening and whose one-month period under Article L. 145-41 of the French Commercial Code has not expired, will not take effect. The courts require that termination of the lease be definitively established, by a decision that has become final or by the uncontested effect of the clause, before the opening judgment. Failing that, the lease remains a contract in progress subject to Articles L. 622-13 and L. 622-14, and the claim for arrears joins the pre-opening liabilities.

The second dividing line concerns the date on which the rent claim arises. It is not the same as the due date. It is accepted that rent arises as the landlord performs its obligation to make the premises available. For quarterly rent payable in advance, an opening judgment made during the course of a term therefore requires an apportionment pro rata temporis: the portion corresponding to prior enjoyment must be filed in the liabilities, and that corresponding to subsequent enjoyment falls under the regime of Article L. 622-17. This apportionment is not an accounting detail: it determines the ranking of each euro claimed.

Pre-opening arrears: filing the proof of claim as a protective step

The pre-opening rent claim must be filed in the liabilities within two months of publication of the opening judgment in the Official Bulletin of Civil and Commercial Announcements (BODACC), extended to four months for creditors domiciled outside metropolitan France (Articles L. 622-24 of the French Commercial Code and R. 622-24). A landlord holding a registered security interest or a registered contract, a situation that covers in particular a lease of more than twelve years subject to land registration, must be notified personally by the creditors' representative (mandataire judiciaire); time then runs only from that notification.

The proof of claim must cover the amount due on the date of the judgment, but also the sums falling due and their due dates, stating the nature of the preferential right or security interest relied on. The scope to be filed is wider than rent in principal alone:

• rent and ancillary sums that have fallen due and the pre-opening portion of the current term
• service charges, taxes and levies recharged to the tenant under the lease, subject to the interplay with Articles L. 145-40-2 and R. 145-35 of the French Commercial Code
• default interest stopped on the date of the judgment
• the contractual termination indemnity and the penalty clause, bearing in mind that the judge has the power of reduction under Article 1231-5 of the French Civil Code
• reinstatement works due at the end of the lease, as a contingent claim to be valued

Failure to file does not extinguish the claim but renders it unenforceable in the proceedings, which comes to the same thing economically for the landlord. The application for relief from the time-bar (relevé de forclusion) under Article L. 622-26 is confined to a period of six months from publication of the judgment, extended to one year in the cases exhaustively listed, and requires it to be shown that the default is not attributable to the creditor. For an institutional landlord managing a portfolio of several hundred leases, the only safeguard is procedural: systematic BODACC monitoring and an internal filing procedure triggered by an alert, and not by receipt of a letter from the creditors' representative, which in practice may never reach the right department.

Abolition of the building landlord's preferential right: a ranking to be rebuilt

Until 31 December 2021, former Article 2332, 1° of the French Civil Code gave the building landlord a special preferential right over the furniture and fittings in the leased premises. Order No. 2021-1192 of 15 September 2021 reforming the law of security interests narrowed the list of special preferential rights over movables and the building landlord no longer appears in it. The transitional rules, set by Article 37 of the Order, preserve security interests created or arising before 1 January 2022: preferential rights attached to rent claims arising earlier retain their effects, while later claims do not have them.

This abolition changes the shape of the liabilities. Article L. 622-16 of the French Commercial Code, which caps the time base of the preferential right at the rent and indemnities of the last two years preceding the opening judgment where there is a notarial lease or a lease with a certain date, retains its usefulness only for claims still governed by the earlier law. For any arrears built up since 2022, the landlord appears in the liabilities as an unsecured creditor (créancier chirographaire), behind creditors holding special security interests in rem, preferential public creditors and employees.

The finding calls for a simple strategic consequence: the landlord's ranking is no longer statutory, it has become contractual. An institutional landlord who signs a commercial lease today without building a guarantee enforceable in collective insolvency proceedings is in reality accepting an unsecured exposure for the whole term of the lease. Negotiating the security deposit, an independent guarantee or a registered pledge is no longer a matter of extra comfort: it replaces a statutory protection that has been abolished.

Post-opening rent and the regime of Article L. 622-17

Where the lease is continued, the rent corresponding to occupation after the opening judgment falls under the regime of meritorious post-opening claims.

Claims arising lawfully after the opening judgment for the needs of the conduct of the proceedings or of the observation period, or in consideration of a service supplied to the debtor during that period, are paid when due. (Article L. 622-17, I of the French Commercial Code)

Post-opening rent readily satisfies the criterion of consideration for a service supplied: the landlord makes the premises available during the observation period. It must therefore be paid when due, in principle in cash, and the administrator incurs liability by continuing a lease whose rent the administrator knows cannot be paid.

Failing payment when due, the claim benefits from the procedural preferential right. Article L. 622-17, II gives it a rank of payment ahead of all other claims, whether or not they carry preferential rights or security interests, with the exception of the super-priority of wages, of legal costs arising lawfully after the opening judgment for the needs of the conduct of the proceedings, and of the conciliation priority of Article L. 611-11. Paragraph III then organises the order of payment among the post-opening claims themselves, rent being ranked among the other claims according to its rank, that is to say in last position in that internal hierarchy.

Two points of vigilance govern the practical fate of this rent claim in judicial reorganisation.

First, informing the officeholder. Paragraph IV of Article L. 622-17 requires the post-opening claim to be brought to the attention of the administrator or, failing that, the creditors' representative, within one year of the end of the observation period (Article R. 622-15). The sanction is not loss of the claim but loss of the preferential right, that is to say precisely the only advantage sought. This formality is frequently omitted by property management departments, convinced that they have met their obligations by the initial filing of the arrears. The two steps are distinct: they concern neither the same sums nor the same basis.

Second, the apportionment between post-opening rent and occupation indemnity. After termination of the lease, continued occupation of the premises by the debtor or the liquidator generates an occupation indemnity which retains the characterisation of a meritorious post-opening claim for as long as the premises have not actually been returned. The date of handover of the keys or of the report recording vacation is therefore the central item of evidence: it fixes the end of the preferential claim and the starting point of any compensatory claim of a different nature. A dated report of a bailiff (huissier de justice, now commissaire de justice) is worth more than an exchange of emails with the officeholder.

The real ranking in judicial liquidation: a decisive reversal

The move into judicial liquidation changes the order of priority. Article L. 641-13, II of the French Commercial Code takes up the principle of payment by preference of useful post-opening claims, but reserves, in addition to the super-priority of wages and legal costs, claims secured by security interests over immovable property or by special security interests over movables carrying a right of retention. The fate of the lease itself in this phase, and the timetable the landlord must follow, are dealt with in our article on the judicial liquidation of the tenant and Article L. 641-12.

In other words, creditors holding a pledge with dispossession, a right of retention or a security interest over immovable property, who were hard put to outrank post-opening claims in the observation period, move ahead of them in liquidation. For the landlord, the consequence is twofold. Its post-opening rent claim, apparently preferential, is in reality paid after secured creditors whose security interests may absorb the whole of the proceeds of realisation. And the only way to move up in that order is to hold oneself a security interest in rem of that kind.

A limit specific to the observation period must also be taken into account: Article L. 622-7, I provides that the right of retention conferred by 4° of Article 2286 of the French Civil Code, that is to say the fictitious right of retention attached to a pledge without dispossession, is unenforceable during the observation period and the performance of the plan. A pledge without dispossession granted by the tenant over its operating equipment will therefore take full effect only in liquidation. This time lag must be anticipated: the security interest is useful, but it does not protect at the same stages of the proceedings.

Distraint of the tenant's goods (saisie-gagerie): a narrow window for action, before the opening judgment

The saisie-gagerie allows the landlord to make unavailable the furniture and fittings in the leased premises as security for unpaid rent. It is subject to the rules on protective measures in the French Code of Civil Enforcement Procedures, with a feature that is decisive for the landlord: Article L. 511-2 dispenses with the prior authorisation of the enforcement judge (juge de l'exécution) a creditor who relies on unpaid rent where it arises from a written contract for the letting of property. The landlord can therefore have a protective measure carried out without prior court debate, on production of the lease and the statement of account alone.

Three constraints limit its scope.

The first is one of timing. Article L. 622-21, II stays or prohibits any enforcement procedure and any protective measure from the opening judgment. A saisie-gagerie lawfully carried out before the opening is not destroyed, but its conversion into an enforcement measure runs squarely into the stay of proceedings. The measure must therefore be started during the phase of deterioration, when the first defaults appear, and not when the opening of proceedings becomes foreseeable.

The second is the hardening period (période suspecte). Article L. 632-1 of the French Commercial Code makes void by operation of law certain acts carried out since the date of insolvency (cessation des paiements), among them security interests created over the debtor's assets for previously contracted debts. Article L. 632-2 allows the court to annul payments and acts for consideration carried out during that period where those who dealt with the debtor knew of the state of insolvency. A landlord who obtains an additional guarantee at the last minute from a tenant whose position it knows risks seeing it called into question.

The third is the disappearance of the preferential right. Stripped of its preferential basis for claims arising since 1 January 2022, the saisie-gagerie no longer confers any preference on the sale price of the goods seized. It nevertheless retains three concrete uses: it immobilises operating assets and creates immediate negotiating leverage, it prevents a night-time removal of the equipment that would leave the landlord with no security at all, and it provides a dated and adversarial inventory of the goods in the premises, an item often decisive in later discussions with the liquidator on the fate of fixtures and fittings.

The guarantee levers that withstand the proceedings

The tenant's collective insolvency proceedings do not neutralise guarantees held against third parties. It is on this ground that the institutional landlord rebuilds its ranking.

The security deposit and set-off of connected debts

The prohibition on paying pre-opening claims laid down by Article L. 622-7 expressly reserves payment by set-off of connected claims. The sums held as security deposit and the rent claim arising from the same lease have that connection. Appropriation is therefore possible, provided that the claim has been filed and the formalities for invoking set-off are observed. A security deposit sized at a single quarter's rent offers, by contrast, only symbolic protection given the real length of proceedings.

The independent on-demand guarantee

A surety (cautionnement) given by an individual benefits from the protective regime of Article L. 622-28, which suspends proceedings against co-obligors and persons who have given a personal security interest until the judgment adopting the plan. An independent guarantee issued by a credit institution falls outside that regime: the guarantor is bound by a distinct obligation, not subject to defences drawn from the underlying contract, and is not an individual. For an institutional landlord, the hierarchy of guarantees to require in negotiation is therefore clear: an on-demand bank guarantee, then a joint and several surety from a solvent parent company, and only lastly a surety from the manager. On the choice and drafting of these guarantees when negotiating the lease, see our analysis of bank sureties and on-demand guarantees in commercial leases.

The assignor's guarantee where the lease has been assigned

Where the lease has been assigned, Article L. 145-16-2 of the French Commercial Code limits to three years from the assignment the guarantee that the assignor may owe in respect of the assignee's rent. Article L. 145-16-1 requires the landlord to inform the guarantor of any default in payment by the tenant within one month of the date on which the sum should have been paid. Compliance with this time limit conditions the effectiveness of recourse against an assignor who has remained solvent and who is, for its part, outside the collective proceedings. Omission of this monthly notification is one of the most frequent reasons for losing a recourse that is perfectly well founded on the merits.

Assignment of the lease in a sale plan

Article L. 642-7 of the French Commercial Code allows the court to order the assignment of the contracts necessary for the continuation of the business, the lease being one of them, the assignee then being bound to perform its obligations. The landlord cannot rely on approval clauses or clauses prohibiting assignment, but it can and must appear at the hearing to put forward its observations on the buyer's financial standing, the use of the premises and the fate of the arrears. The landlord's absence at this stage is paid for with a tenant imposed on it whose solvency it has not discussed.

The landlord's decision timetable

The useful sequence reads as a timetable, each step conditioning the next.

• From the first significant default: formal notice, certified statement of account, then a payment demand referring to the termination clause under Article L. 145-41, and consideration of whether to carry out a saisie-gagerie without prior authorisation of the judge
• Before any opening: obtain a decision recording the termination, since only a definitively established termination removes the lease from the regime for contracts in progress
• Within two months of publication in the BODACC: file the pre-opening claim, including the sums falling due and the security interests relied on
• From the opening judgment: require cash payment of post-opening rent and record in writing with the administrator any default noted
• On expiry of the three-month period following the opening judgment: bring the application for termination for non-payment of rent relating to post-opening occupation, on the basis of Article L. 622-14 or, in liquidation, Article L. 641-12
• Within the year following the end of the observation period: bring the post-opening claim to the attention of the officeholder, on pain of losing the preferential right of Article L. 622-17
• On vacation of the premises: dated bailiff's report, closing of the occupation indemnity and costing of the reinstatement works

Conclusion

The landlord no longer has a statutory ranking. The abolition of the building landlord's preferential right by the Order of 15 September 2021 has turned a creditor historically preferred over the furniture and fittings in the premises into an unsecured creditor for its arrears, and into a post-opening creditor of last internal rank for its occupation rent. The saisie-gagerie survives as an instrument of pressure and physical preservation; it is no longer an instrument of ranking. What protects an institutional landlord today is therefore not the law, but the quality of its contractual guarantees and the rigour of its procedural timetable.

Two recommendations follow. On the existing stock: audit your leases to identify those whose only guarantee is a one-term security deposit and a surety from the manager, and treat them as unsecured positions to be renegotiated at the next renewal or the next assignment, outside the hardening period. On the flow: industrialise the dual filing deadline, two months for arrears and one year after the observation period for post-opening claims, because loss of the preferential right of Article L. 622-17 through a mere formal omission remains the leading cause of the wiping out of an otherwise sound claim.

Frequently asked questions

Does the building landlord's preferential right still exist in 2026? Not for recent claims. Order No. 2021-1192 of 15 September 2021 reforming the law of security interests, which entered into force on 1 January 2022, abolished the building landlord's special preferential right over movables. Under its Article 37, security interests arising before that date remain governed by the earlier law, so that older arrears may still fall under the regime of the preferential right capped by Article L. 622-16 of the French Commercial Code. For any default built up since 2022, the landlord is an unsecured creditor for its arrears.

Must post-opening rent be filed? Not in the form of an ordinary proof of claim, but it must be brought to the attention of the court-appointed administrator or, failing that, the creditors' representative. Article L. 622-17, IV of the French Commercial Code and Article R. 622-15 confine this notification to a period of one year from the end of the observation period. The sanction for delay is not extinction of the claim but loss of the procedural preferential right, which removes its economic value.

Within what time can the landlord apply for termination of the lease for unpaid post-opening rent? Article L. 622-14 of the French Commercial Code prohibits the landlord from applying for termination for non-payment of rent and charges relating to post-opening occupation before the expiry of a period of three months from the opening judgment. If payment is made before that period expires, there is no ground for termination. In judicial liquidation, Article L. 641-12 provides a comparable mechanism.

Does a saisie-gagerie carried out before the opening judgment remain effective? A measure lawfully carried out is not destroyed by the opening judgment, but Article L. 622-21, II stays all enforcement proceedings, so that its conversion into an attachment and sale of goods (saisie-vente) is paralysed. Since the abolition of the landlord's preferential right, it no longer confers any preference on the price of the goods seized. Its usefulness is now protective and evidential: unavailability of operating assets and a dated inventory of the goods in the premises.

Can the landlord set the security deposit against unpaid pre-opening rent? Yes, by way of set-off of connected debts expressly reserved by Article L. 622-7, I of the French Commercial Code, which authorises payment of connected claims by set-off notwithstanding the prohibition on paying pre-opening claims. Connection is established where the security deposit and the rent claim arise from the same lease. Set-off nevertheless assumes that the claim has been duly filed in the liabilities.

What guarantee should be required of a tenant to protect against future collective insolvency proceedings? An independent on-demand guarantee issued by a credit institution offers the best resistance, as the guarantor cannot raise defences drawn from the underlying contract and is not covered by the suspension of proceedings in Article L. 622-28, which is reserved for individuals. A joint and several surety from a parent company comes next, a surety from the manager as an individual offering only protection that is suspended during the observation period. A pledge without dispossession over the operating equipment may complete the arrangement, bearing in mind that its fictitious right of retention is unenforceable during the observation period and the performance of the plan.

Is the assignment of the lease in a sale plan binding on the landlord? Yes. Article L. 642-7 of the French Commercial Code allows the court to order the assignment of the contracts necessary for the continuation of the business, the assignee being bound to perform the obligations of the lease, without approval clauses or clauses prohibiting assignment being able to stand in the way. The landlord does, however, retain the right to be heard at the hearing at which the offers are examined and must put forward its observations there on the buyer's financial soundness and on compliance with the contractual use of the premises.