Salary guarantee: the Court of Cassation rules in favor of the legal representatives

2023-07-07 15:25:27

Posted Jul 7, 2023 at 3:22 p.m.Updated Jul 7, 2023 at 5:25 p.m.

In the event of receivership or judicial liquidation, should the AGS, the employers’ guarantee association which pays the salaries of the defaulting companies, pay the judicial representative what he is asking for without flinching? To this question, source of many disputes between the two parties, the commercial chamber of the Court of Cassation has just answered this Friday in a judgment that the economic world will not fail to peel.

For senior magistrates, the answer is clear: the AGS must pay on simple presentation of a statement of wage claims. “Such a solution makes it possible to meet the objective of rapid payment of salaries in these procedures”, they argue. Proof of the importance of this judgment, the commercial chamber rarely communicates.

Backup Exception

The case took root with the receivership, pronounced on November 20, 2020 by the Commercial Court of Niort, of the Audis establishments. A disposal plan was approved on April 16, 2021 for 190,000 euros, a sum deposited pending the regularization of the disposal. Once the collective proceedings converted into liquidation, the agent seized the Bordeaux AGS with a request for an advance of nearly 62,000 euros.

Before paying, the AGS requested justification that the funds available did not cover salaries. The liquidator having disputed that this was the case, only 4,360 euros were paid to him. The latter then summoned the Guarantee Association before the Commercial Court of Niort, which ordered it to pay the balance. Judgment confirmed by the Court of Appeal of Poitiers, and which ended up landing at the Court of Cassation.

At the heart of the litigation, there is an article of the Labor Code, 3253-20 for specialists, subject to opposing interpretations since its last version resulting from the 2005 business safeguard law. This article says, firstly, that if the salaries cannot be paid from the available funds before a certain period, the agent sends the invoice to the AGS on presentation of the statements. Secondly, that in the event of a safeguard procedure, the request must be justified, the AGS then being able to contest the insufficiency of the funds before the judge-commissioner.

For the Court of Cassation, which judges in law, the law makes a distinction between receivership or judicial liquidation, and safeguard. Clearly between a situation of cessation of payments and a situation where there is still money in the cash even if a restructuring is necessary. “When a company is in cessation of payments, the guarantee institution is required to pay the requested advances on the sole presentation of a statement of wage claims drawn up by the judicial representative”, she believes.

Fixed case law

As the case was judged not to be safeguardable, the AGS was not empowered to carry out an a priori control. His appeal was therefore dismissed. This judgment of principle now sets the case law, other similar cases being pending.

In the background of the litigation, there is the desire of the AGS – normal given its role as a social shock absorber and the sums involved – to ensure the proper use of employer contributions. To iron out the situation, it will no doubt be necessary to clarify the notion of insufficiency of funds.

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