Registration after Registration

One of the key issues repeated throughout this tale was that the concept of a TIB under French law (where an appointed practitioner collects and distributes assets for and on behalf of a debtor's creditors and not on behalf of the debtor) does not and has not ever existed.

In the pre-Brexit halcyon days, this was irrelevant as it was only necessary to demonstrate appointment to obtain automatic recognition and proceed as if acting under English law. There was no requirement for the French Court and / or any other agencies to understand the legal basis of a TIB.

Although this hurdle was eventually overcome in relation to the French Civil Court (following 9 hearings and several detailed explanatory notes outlining the standing, rights and powers of a TIB), it was then necessary to repeat the process with the French Criminal Court (as detailed in Chapter 2) and now with the French Land Registry and notaries in respect of the property assets located in France.

For context, to sell the French properties, it was necessary for the French criminal court judgment to be published at the Land Registry for the Trustees (as the sellers of the properties) to be registered as owners at the Land Registry. This would then enable a notary to establish root of title for at least 30 years to progress a sale. We were advised by our AG LLP Paris colleagues that, to their knowledge, the registration of a TIB as owner of a French property specifically under an exequatur judgment had not taken place since before the RIR came into force and no advisor had been qualified for long enough to recall what took place pre-RIR.

On initial investigation, it was unsurprising to be advised by the French Land Registry that it was not at all familiar with the publication of a criminal judgment, especially involving trustees which they reiterated was not a concept recognised in French law. So far, so déjà vu. Following the now familiar winding road of the post-Brexit world, the French Land Registry further advised our Paris colleagues that for the criminal judgment to be published, it would be necessary to first register the criminal judgment with the French tax authorities.

Although registration can usually take place at any tax office in France, given the particularity of this registration, the tax authorities advised that the criminal judgment could only be registered in a specific tax office, being the tax department in which the judgment was made. This process involved instructing a local property expert to liaise with the appropriate tax authorities.

Although this procedure added a further month to the TIBs quest for registration as owners of the French properties, the tax authority was satisfied with the various judgments presented to it and as this was the only significant prerequisite to the publication of the criminal judgment, the Land Registry followed suit.

Onwards…and onwards..

This story, of course, did not end with registration. Once the Land Registry was on board, it was necessary to persuade a notary of the TIB's interest in the French properties. Pursuant to the French property sale process, notaries have a monopoly concerning the transfer of ownership of property titles. Both the seller and buyer must instruct a notary who will draft and agree the promise to sell, prepare the deed of sale, arrange completion and manage the transfer of funds, taking their fees from the sale proceeds. Thankfully, due to the previous battles with the French Court process and the support of our French colleagues, we had a catalogue of detailed notes to rely on outlining the legal position of a TIB under English law and subsequently in France (with the backing of the exequatur judgment).

This did not mean that the process was without issue. The first instructed bailiff agreed to act but at the point of preparing to access the properties and despite the exequatur, the judgment of the French criminal court and a notary's property attestation, suddenly claimed that he was not comfortable with the legality of the TIBs ownership of the properties and refused to proceed. A second bailiff was quickly located, the process was repeated and was successful at the second time of asking.

An Unexpected Twist in the Tale

As with all good stories, just at the point where everything seemed to be progressing and the sale and recovery of French assets was within touching distance, there was an unexpected and sudden twist in the tale.

As is entirely usual during any insolvency procedure, towards the latter part of 2023, one of the joint trustees resigned. The relevant applications were made to Court and a block transfer order (BTO) obtained which was duly delivered to us by way of update. So far, no drama.

Unfortunately, "catastrophe" ensued when our French colleagues were updated with the news of the resignation and BTO. Under French law, the exequatur judgment had been granted to the TIBs as named individuals, as had their French property rights under the criminal judgment as at the date of their appointment. We were immediately thrown into unknown territory.

According to our French colleagues, it could be argued from the wording of the exequatur judgment that the TIBs in their capacity as joint trustees had been awarded the relevant rights and powers (particularly in relation to the French property assets) or, more concerningly, that the powers had been granted to the two TIBs as individuals (irrespective of their position as joint trustees).

If it was the latter, it would be necessary to apply back to the French courts for recognition of the BTO under French law and for the BTO to be registered at the Land Registry to specifically reference the replacement TIB. On the basis that the exequatur had taken 13 months to obtain and was arguably less complex, it would appear that the battle was about to be lost.

It was, of course, at this precise point that an offer was received for one of the French properties but in circumstances where it was not clear if the replacement TIB had authority under French law to execute the relevant sale documents. Zut alors!

However, our trusty TIBs refused to be defeated. To overcome the latest hurdle, the retiring TIB thankfully agreed to enter into a simple Trust Deed whereby he remained as legal owner to the French assets and agreed to execute all necessary documentation to complete a sale at which point, he would be immediately discharged. In support of this and to further assist the understanding of a TIBs general interest in land under English law (a further concept not understood under French law), it was also necessary to prepare a further short legal opinion detailing how legal title is held by a TIB.

To reiterate, legal ownership and title to French property assets would not even have been a consideration in the Pre-Brexit golden era of automatic recognition. However in this case the battle was won with a sale completed of the first property, and the second property now secured and about to go onto the open market, more on which to follow……