Bankruptcy Law

Under the terms of Article L. 621-2(3) of the Commercial Code, applicable to the receivership procedure by virtue of Article L. 641-1, “one or more of the debtor's other assets and liabilities may be combined with the patrimonies covered by the procedure, in the event of merger of assets and liabilities with the latter”. This text was amended by the Ordinance of 15 September 2021 , which abolished …

Merger of personal and special purpose assets

Under the terms of Article L. 621-2(3) of the Commercial Code, applicable to the receivership procedure by virtue of Article L. 641-1, “one or more of the debtor's other assets and liabilities may be combined with the patrimonies covered by the procedure, in the event of merger of assets and liabilities with the latter”. This text was amended by the Ordinance of 15 September 2021 , which abolished the status of limited liability sole trader (EIRL) and replaced it with a single status of sole trader. EIRLs in existence on 15 February 2022 may continue to operate under this corporate form, but individual entrepreneurs may no longer set up an EIRL.

Until the PACTE Law , assets could also be combined in the event of “serious failure to comply with the rules set out in the second paragraph of Article L. 526-6 or the obligations set out in Article L. 526-13, or fraud against a creditor holding a general lien on the assets covered by the procedure”. Pursuant to Article L. 526-6, which lays down the rules governing the composition of the appropriation patrimony, the Court of Cassation held that the penalty should apply to a sole trader who had filed a declaration of appropriation without a description of the assets, rights and obligations assigned to his professional activity, in kind, quantity and value, even though he had used the acronym EIRL to open a bank account dedicated to his professional activity and registered the vehicle intended for this purpose, and even though the declaration had been accepted by the registry . Similarly, it had been court ruled that failure to comply with the essential provisions of the EIRL statute by an entrepreneur who had not allocated all the equipment used by the company to his professional activity, including that acquired after the declaration, and had made no reference to it in the identity of his bank account, as well as the evasion of employees' rights by means of bank transfers to his close relations in order to avoid having to pay them, justified the reunification of the debtor's personal and professional assets and the extension of the insolvency procedure opened against the EIRL to the latter . On the other hand, although the unenforceability of an EIRL's declaration of assignment against its creditors, due to its failure to comply with its obligation to inform them, allowed them to take legal action against the unaffected assets, it did not have the effect, in the absence of fraud, of extending the procedure initiated against the debtor to all of its assets .

In order to increase the use of the fiduciary trust and to punish only wilful irregularities, the PACTE Law has removed the reference to Article L. 526-6 from Article L. 621-2(3) and now refers only to fraud against creditors' rights. However, serious failure to comply with the accounting obligations set out in Article L. 526-13 of the Commercial Code, which states that “[t]he professional activity to which the assets are assigned is subject to independent accounting”, also remains. Thus, where a sole trader with limited liability has seriously failed to comply with his obligations to prepare independent accounts, kept by a person registered as a chartered accountant, for his business assets, in particular by failing to produce the annual financial statements, which include the balance sheet and profit and loss account, the combination of the personal assets and the business assets is justified . Similarly, the late and incomplete preparation of accounts by a sole trader with limited liability, who only produced a simplified balance sheet and a list of entries at the appeal stage, and the discrepancy between the liabilities declared and those resulting from the simplified balance sheet, demonstrate the failure to keep independent, regular and accurate accounts, which justifies combining the debtor's business and private assets . On the other hand, the fact that an EIRL did not mention the assets necessary for its business activity in its declaration of assignment, because it had not yet acquired them on the day it was established, does not constitute a serious breach of the rules governing the preparation of accounts that would justify the combining of its business and private assets .

Ordinance 2021-1193 of 15 September 2021 concerning amendments to Book VI of the Commercial Code.

Law 2019-486 of 22 May 2019 on the growth and transformation of businesses.

Cass. com., 7 February 2018, LawLex202100004187JBJ (LJ).

CA Caen, 8 September 2016, LawLex202100005119JBJ (LJ).

CA Versailles, 3 April 2014, LawLex202100005007JBJ (LJ).

CA Nîmes, 7 April 2021, LawLex202100005000JBJ (LJ). See also CA Lyon, 26 April 2018, LawLex202100005005JBJ (LJ).

CA Lyon, 9 October 2014, LawLex202100005008JBJ (LJ).

CA Angers, 5 July 2016, LawLex202100005117JBJ (LJ).

Bankruptcy Law

652. Merger of personal and special purpose assets

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652. Merger of personal and special purpose assets

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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