Bankruptcy Law

Since Ordinance No 2008-1345 of 18 December 2008, the opening of a safeguard procedure is no longer reserved to “traders” stricto sensu but to “any person carrying on a commercial activity” . This new wording extends the scope of the provisions of Book VI of the Commercial Code to de facto traders, i.e. persons not registered in the Company and Trade register (registre du commerce et des sociétés) …

Conduct of a business activity

Since Ordinance No 2008-1345 of 18 December 2008, the opening of a safeguard procedure is no longer reserved to “traders” stricto sensu but to “any person carrying on a commercial activity” . This new wording extends the scope of the provisions of Book VI of the Commercial Code to de facto traders, i.e. persons not registered in the Company and Trade register (registre du commerce et des sociétés) or those carrying on a commercial activity in defiance of an incapacity, a prohibition or an incompatibility. The mention of a “commercial activity” refers to the performance of commercial acts by nature listed in Articles L. 110-1 and L. 110-2 of the same code, as opposed to commercial acts by accessory or by form, which do not allow the person who performs them to benefit from an insolvency procedure . Open to persons who, without being traders, carry on a commercial activity, even if not regular , the safeguard procedures apply a fortiori to traders, i.e. those who carry on commercial activities and make it their habitual profession . The status of trader is presumed in two cases.

First, Article L. 123-7 of the Commercial Code provides that “the registration of a natural person [in the Company and Trade register] carries with it a presumption of traders status”. The text specifies that this presumption can be rebutted with respect to third parties and administrations. On the other hand, with respect to the registrant, it is irrebuttable, unless the registrant establishes that the third parties in question were aware that the registration did not reflect his real activity . The presumption may also be invoked against a debtor who does not prove that he ceased to carry on business after his business was leased and who claims to have remained registered only in the capacity of lessor of the business . However, it does not apply to a person registered in the Company and Trade register as a collaborating spouse and not as a trader . Removal from the Company and Trade register does not result in the debtor's liabilities arising from his previous commercial activity being transferred to the provisions relating to the overindebtedness of individuals ("surendettement des particuliers") . Similarly, a debtor whose former commercial activity generated debts is subject to the provisions relating to insolvency proceedings because of his capacity as a trader .

Secondly, a person may be classified as a trader regardless of the activity he carries on. According to Article L. 210-1 of the Commercial Code, "general partnerships, limited partnerships, limited liability companies and joint stock companies are commercial by virtue of their form and whatever their purpose. The exception extends to general partners  and active partners .

While company managers act in principle on behalf of the company and cannot in this capacity be subject to insolvency proceedings in their personal capacity, this is not the case when they perform commercial acts in their personal name and for their own account, on a regular basis . However, the mere fact of presenting oneself as the manager of a company and not as a corporate representative, receiving several invoices from suppliers at one's personal residence and paying a fine imposed on the company on one's personal account does not imply the performance of commercial acts . In addition, a person acting on behalf of a company in formation, without legal personality, may be subject to insolvency proceedings provided that he has performed commercial acts on behalf of the company . On the other hand, the mere fact of having taken the necessary steps to start the business  or of having been named in the articles of association as manager  is not sufficient to justify the opening of personal insolvency proceedings against the founder. Similarly, the partner of a de facto company can only be the subject of insolvency proceedings if it is shown that he has carried out commercial acts and made them his usual profession or that he himself has operated the commercial enterprise that is the subject of the company .

See in particular Court of Cassation, 2e civ. 20 April 2017, LawLex202100005838JBJ, holding that the commercial nature of the debt assured by a guarantee is not sufficient to confer trader status on the latter.

Cass. com. 23 May 1989, LawLex202100003653JBJ. See also Cass. com., March 30, 1993, LawLex202100005699JBJ (RJ), for two brothers who had exploited the family business and had ensured its effective management by substituting themselves for their elderly mother in the exercise of a commercial profession, on a regular basis.

Cass. com., 4 October 2005, LawLex202100003651JBJ (RJ).

Cass. com., 15 January 1991, LawLex202100005819JBJ (RJ).

Cass. com., 18 November 1986, LawLex202100005817JBJ (LJ).

Cass. com., 2 May 1989, LawLex202100005818JBJ (LJ).

Cass. com., 27 April 1993, LawLex202100005700JBJ (LJ).

CA Lyon, 13 June 2013, LawLex202100003623JBJ, holding that a court-supervised liquidation proceeding may be opened with respect to a debtor who engages in a commercial activity, such as the rental of professional furnished accommodation, without the need to have the status of a merchant or to habitually perform commercial acts.

See, for a debtor registered with the RCS but claiming to be a farmer, without succeeding in demonstrating that his creditors had knowledge of his actual activity, Court of Cassation, com., 27 September 2016, LawLex202100002164JBJ.

Cass. com., 23 November 2004, LawLex202100005909JBJ (LJ). See also Cass. com., 17 February 2015, LawLex202100005684JBJ.

Cass. 2e civ., 14 September 2006, LawLex202100005824JBJ.

Cass. 2e civ., 2 July 2009, LawLex202100005703JBJ.

Cass. 2e civ., 22 October 2009, LawLex202100005823JBJ.

C. com. Law No 221-1. For an application, see Cass. 2e civ, 5 December 2013, LawLex202100005685JBJ excluding the managing partner of a general partnership from the benefit of the provisions relating to the overindebtedness of individuals. See also CA Douai, 26 October 2017, LawLex202100005820JBJ, granting the benefit of the insolvency proceedings regime to the founding spouses of a general partnership due to their status as partners.

Bankruptcy Law

37. Conduct of a business activity

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37. Conduct of a business activity

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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