Merger & Co-Guarantee Commitment

Extract

[...] 236-3 I of the Commercial Code that inIn the event of the absorption of a company that has subscribed a guarantee commitment, the absorbing company is bound to execute this commitment in the terms of the latter ». The Banque populaire nord de Paris, the absorbed company, concluded a guarantee commitment prior to the merger; in 2002. On the day of the merger, in November 2004, this guarantee commitment contract was transmitted to the absorbing company, the Banque populaire rives de Paris. [...]

[...] The Court recalls the provisions of the article, according to whichthe merger leads to the dissolution without liquidation of the companies that disappear and the universal transmission of their assets to the beneficiary companies, in the state in which they are at the date of the definitive realization of the operation ». Therefore, according to the first part of the Court of Cassation's solution, the Popular Bank of Paris, by absorbing the Paris North Popular Bank on November 8 and receives the assets of the dissolved company on that date. This solution seems coherent. By choosing to absorb the company, it is logical that the Popular Bank of Paris undertakes to take over the assets and liabilities of the disappeared company. [...]

[...] The latter is therefore bound to execute it, according to the terms negotiated by the absorbed company. Thus, by absorbing the Banque populaire du nord de Paris company, the Banque populaire rives de Paris company has committed, as a guarantor, to guarantee to the guarantor what the debtor may owe him, at the end of the payment of the guarantee to the creditor. This is an application of article 2318 al resulting from the 2021 reform, according to which in the event of the dissolution of a moral person by a merger, thenall the obligations arising from the guarantee are transmitted ». [...]

[...] On the one hand, based on the former article 2305 of the Civil Code, now 2308, it argues that the guarantor has a recourse against the co-guarantor only after having paid the creditor. The Banque populaire rives de Paris criticizes the Court of Appeal for having concluded that the debt was born on the day of the conclusion of the contract December 2002, and on the day when the guarantor paid the supplier November 2006. On the other hand, the absorbing bank takes the fact that the debt was born on 7 November 2006 to justify that it cannot be condemned to pay the guarantor. [...]

[...] In fact, it is particularly on this point that the Court of Cassation had to rule. By absorbing the Banque populaire nord de Paris in 2004, the Banque populaire rives de Paris argues that the payment of the debt of the defaulting company of 2006 is not opposable to it, because it was born subsequent to the date of the merger. A ruling by the commercial chamber of the Court of Cassation dated 9 February 2022 answers the question of the birth of the surety obligation. [...]