## Facts

- A French operating subsidiary (SAS Metaleurop Nord) was 99% owned by its parent (SA Metaleurop).
- The subsidiary entered judicial reorganization on January 28, 2003, and was converted to judicial liquidation on March 10, 2003.
- The subsidiary’s liquidators sought to extend the subsidiary’s insolvency proceedings to the parent, alleging either (i) a fictitious subsidiary or (ii) a confusion of assets between the two entities.
- The trial court denied extension.
- The appellate court ordered an expert appraisal concerning the subsidiary’s dependence on the parent; after the expert report, it found a “confusion of patrimonies” and extended the insolvency proceedings to the parent.
- The parent, through an ad hoc representative, sought review; the challenge ultimately targeted only the appellate court’s decision extending the proceedings to the parent.

## Issues

1. Whether treasury and currency management agreements, personnel exchanges, and parent-company advances to a subsidiary are sufficient to establish “confusion of patrimonies” warranting extension of the subsidiary’s insolvency proceedings to the parent.
2. Whether the appellate court supplied an adequate legal basis for concluding that the parent’s and subsidiary’s assets were confused.

## Decision

- The high court partially reversed.
- It held that the appellate court’s stated grounds—cash and currency management arrangements, personnel exchanges, and advances of funds—were insufficient, in a corporate group context, to establish a confusion of patrimonies.
- The appellate court therefore lacked an adequate legal basis for extending the subsidiary’s insolvency proceedings to the parent.
- The matter was remanded for reconsideration under the proper standard.

## Legal Principles

- Extension of insolvency proceedings from one company to another is exceptional and requires strict proof of statutory grounds such as a fictitious entity or genuine asset commingling (“confusion of patrimonies”).
- In a corporate group, treasury/currency management agreements, shared personnel, and parent funding—without more—do not prove that the entities’ assets and liabilities are indistinguishable.
- “Abnormal financial relations” within a group are not, by themselves, equivalent to legally cognizable confusion of patrimonies; courts must identify concrete indicia of commingling that prevent attribution of assets and debts to one entity or the other.

## Conclusion

The court limited extensions of insolvency proceedings to cases supported by concrete proof of true asset commingling, rejecting the idea that common intra-group financial and operational arrangements alone justify treating a parent and subsidiary as a single insolvency estate.


Facques v. Theetten, No. 05-10.094 (Cass. com. Apr. 19, 2005)