In the event of a merger-takeover transaction in the course of proceedings, the intervention of the acquiring company makes it possible to set aside the plea of non-receivability based on the disappearance of the acquired company’s right to bring an action, but it does not exempt the other party from presenting its claims against the acquiring company.
Background to the facts
In this case, Transports approvisionnements généraux (TAG) entered into a vehicle rental contract with Via Location in 2014. Following unpaid invoices, Via Location took TAG to court. However, in 2022, Via Location was absorbed by Fraikin France, becoming the absorbing company. This merger raised questions about the admissibility of the claims. (Commercial Chamber of the Court of Cassation, 18 September 2024, Appeal No. 23-13.453)
The legal issue
Does the absorption of a company during legal proceedings have an impact on the admissibility of claims initially made against the absorbed company?
The Court of Cassation’s response
The Court pointed out that in the event of a merger, the absorbing company automatically succeeds the absorbed company. However, the opposing party’s claims must be redirected to the acquiring company.
For example , in the case of a ‘ merger-takeover’ in the course of proceedings, the intervention of the acquiring company makes it possible to set aside the objection based on the disappearance of the acquired company’s right to bring an action, but does not exempt the other party from presenting its claims against the acquiring company ‘.
In this case, TAG should therefore have brought its claims against Fraikin France and not against the original company, which has now been dissolved.
This decision therefore highlights the importance of updating claims in the event of a merger during the course of proceedings. Admittedly, all claims and debts are automatically transferred to the absorbing company, but this does not exempt a party to a dispute from filing claims against the absorbing company.
It is therefore important to be careful in this situation and to ensure that claims are updated against the acquiring company.
By Olivier Vibert, Lawyer, Paris
Kbestan Partner
French Law . BLOG 