Individual entrepreneurs: what to do in case of difficulties?

Since May 15, individual entrepreneurs have had a unique status characterized by the separation of their assets into two distinct assets. Thus, they now have a professional asset, which is made up of property that is “useful” for their activity, and a personal asset, which is made up of other assets.

Big advantage of this new statute: except some exceptions, only the goods composing the professional inheritance of the individual contractor are exposed to the continuations of his professional creditors. His other assets (thus those included in his personal assets, namely a residence, movable assets, a car, etc.) are, for their part, protected from the covetousness of the latter.

This protection also applies in the event of receivership or judicial liquidation. Indeed, in this case, the personal property of the entrepreneur cannot be sold by the judicial liquidator in order to settle the liabilities of the company.

Seize the tribunal

In practice, when an individual entrepreneur experiences financial difficulties and can no longer settle his debts, he must, whether these debts be personal or professional, seize the commercial court or the judicial court, depending on his profession, and send it a certain number of documents, in particular the situation of his cash, the amount of his receivables and his debts, the security he may have granted, the property, rights and obligations relating to each of his two assets (professional and personal) as well as that, where applicable, the deeds of waiver of the protection of his personal assets that he has subscribed with regard to such or such professional creditor.

The court will then proceed as follows. When the individual entrepreneur is in a state of cessation of payments only on his professional assets, he will open collective proceedings. When the debts only concern his personal assets, the court will refer the case to the over-indebtedness commission. Finally, last hypothesis, when the debts concern both his personal assets and his professional assets, the distinction between his professional and personal assets will have been strictly respected, and the right of pledge of his professional creditors will not relate to his personal assets, the court may open a collective procedure for the treatment of his debts concerning his professional assets and seize the commission of over-indebtedness for his debts concerning his personal assets.

Clarification: to benefit from the over-indebtedness procedure, the entrepreneur must request it either at the time of the referral to the court, or during the hearing before the court. If the court decides to send the file to the over-indebtedness commission, the creditors reported by the entrepreneur will be informed.

Decree No. 2022-890 of June 14, 2022, JO of 16