Bankruptcy Law

Any manager, de jure or de facto, of a legal entity, who has used the assets or credit of the legal entity in a manner contrary to the interests of the latter, for personal ends , is liable to personal bankruptcy. In order for the offense to be constituted, the court must characterize the manager's personal interest. This is the case when it is established that the manager has housed his family fo …

Use of company assets and credit for personal purposes

Any manager, de jure or de facto, of a legal entity, who has used the assets or credit of the legal entity in a manner contrary to the interests of the latter, for personal ends , is liable to personal bankruptcy. In order for the offense to be constituted, the court must characterize the manager's personal interest. This is the case when it is established that the manager has housed his family for many years, rent-free, in premises leased to the company, without it being necessary to establish that these assets were allocated to the business activity . On the other hand, the mere merger of assets and liabilities between companies which have been the subject of an extension of the procedure cannot justify a personal bankruptcy order against a manager who is alleged to have used the assets or credit of the legal entity in a manner contrary to the interests of the latter, without his or her personal interest being characterized, which cannot be deduced from the mere identity of the companies' managers .

Article L. 653-4, 3° also punishes the use of company assets or credit when this is intended to benefit another legal entity or business in which the manager is directly or indirectly involved. The existence of excessive and overvalued inventories resulting from exaggerated orders placed with a supplier which happens to be a company managed by the debtor's manager by right, establishes the use of corporate assets, contrary to the interest of the latter, to favor another corporate entity in which the manager is directly or indirectly interested . In the case of a group of companies, the offense is constituted when the Chairman of the Board of Directors of a company fails to collect claims on two subsidiaries of which he is the manager, and makes everyday account advances to these companies, even allowing one of them to collect sums due to the parent company . Similarly, a manager who makes cash advances to a sister company of the debtor company, on terms that preclude repayment, is using the credit of the legal entity in a manner contrary to its interests, notwithstanding the existence of a cash management agreement .

For the same facts, the court may order a management ban instead of the manager's personal bankruptcy . A management ban may therefore be imposed on the manager of a debtor company who has sacrificed the interests of the latter by selling it a company in difficulty, then granting it advances which drained its cash, before withdrawing all financial support, despite his commitments, in favor of a group company in which he had an interest, since he was the manager and the latter was the majority shareholder of the debtor company, which paid him a salary .

Cass. com., 17 June 1997, LawLex202200010405JBJ (RJ).

CA Versailles, 6 July 2021, LawLex202300008790JBJ (LJ).

Cass. com., 22 June 1993, LawLex202300008732JBJ (RJ).

Cass. com., 20 June 2000, LawLex202100004258JBJ (LJ).

Cass. com., 8 January 2020, LawLex202200005209JBJ (LJ), approving CA Versailles, 20 February 2018, LawLex202100001642JBJ (LJ).

Bankruptcy Law

1001. Use of company assets and credit for personal purposes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

1001. Use of company assets and credit for personal purposes

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise