14 Sep 2016
Requested conditions for appointing a provisional administrator to replace the managing director under French law
As constantly recalled by the French Supreme court, a Commerce court may only appoint a provisional administrator where there is ″an imminent threat to the company″ and where current circumstances make it ″impossible for the company to operate″. (Supreme court, Commercial chamber, decision of 21 February 2012, appeal Nr 11-18608 / Supreme court, Commercial chamber, decision of 18 May 2010, appeal Nr 09-14838).
This rule was recently restated in a decision rendered by the French Supreme court on 29 September 2015 (appeal Nr14-11491), confirming that "appointing a provisional administrator for a company is an extraordinary measure requesting prior evidence that current circumstances make impossible for the company to operate as usual and pose imminent threat to the company".
In the above case, the minority shareholder of a French SARL company claimed that the Managing Director was jeopardizing corporate interest because he had set up a competitor firm which was using the same phone line, and was liable for unusual financial flows between the two entities.
In view of the specifics of the case, the Supreme court deemed that these facts were no evidence that the requested conditions to appoint a provisional administrator were met.
Nasser Merabet
Attorney at law
avocat@merabet.fr