Individual entrepreneur, personal assets, professional assets, credit institutions, securities, debt recovery, French law, Monetary and Financial Code, Code of Civil Enforcement Procedure
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Abstract
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Abstract
The article discusses the protection mechanisms for individual entrepreneurs under French law, specifically regarding their personal and professional assets.
Contents
The mechanisms of protection of the individual entrepreneur prior to the birth of the debt
Principle: credit establishments, future creditors, may request securities on the entire professional and personal assets of the individual entrepreneur
Conditions of application of the principle
The mechanisms of protection in the pursuit of the individual entrepreneur by creditors
Principle: possibility for the individual entrepreneur to request priority pursuit on assets allocated to their professional activity
Exception: creditor's ability to deprive the entrepreneur of protection
The mechanisms of protection of the individual entrepreneur prior to the birth of the debt
Principle: credit establishments, future creditors, may request securities on the entire professional and personal assets of the individual entrepreneur
Conditions of application of the principle
The mechanisms of protection in the pursuit of the individual entrepreneur by creditors
Principle: possibility for the individual entrepreneur to request priority pursuit on assets allocated to their professional activity
Exception: creditor's ability to deprive the entrepreneur of protection
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Extract
[...] Conditions of application of the principle: Credit institutions may only obtain securities on personal assets with the explicit agreement of the individual entrepreneur. Attention, this possibility is enclosed in different formalism: paragraph 1 of article L313-21 of the Monetary and Financial Code 'the credit institution or the financing company indicates, taking into account the amount of the financial contribution sought, the amount and guarantee it wishes to obtain' In addition, another formal requirement: explanation of the second paragraph Sanction: third paragraph. [...]
[...] Furthermore, there is no separation between the private and professional assets of this individual. And this is due to the principle of the unity of assets. According to this principle, debts arising from the entrepreneur's activity can be pursued on the individual's personal assets and vice versa. This is why the Law for Economic Initiative No. 2003-721 of August authorized the individual entrepreneur to declare the rights he holds on the immovable property where his main residence is located or on unbuilt or built real estate not used for his professional purposes (now Article L526-1 and following of the Commercial Code). [...]
[...] Exception: ability of the creditor to deprive the entrepreneur of protection - second paragraph: if the creditor establishes that the asset is not sufficient or that it puts the recovery of his debt at risk. For example, he is a simple unsecured creditor and other creditors with securities or the public treasury, for example, have a better rank than him. [...]
[...] They can request security on both the assets used for professional activity and the personal assets or personal security of the individual entrepreneur. However, in the second case, a precise formalism must be respected, otherwise the securities granted will be without effect A. Principle: credit institutions, future creditors, may request securities on the entire professional and personal assets of the individual entrepreneur Describe the first paragraph of Article L313-21 of the Monetary and Financial Code: Possibility of requesting a real security on a non-essential asset or a real or personal (taking a person or a credit institution as a guarantor) on personal assets. [...]
[...] Similarly, Article L161-1 of the Code of Civil Enforcement Procedures allows the entrepreneur to propose to the creditors the pursuit of his assets in priority over the assets he has assigned to his professional activity, provided that the debt in question arose within the framework of the entrepreneur's professional activity. These provisions reveal that the entrepreneur is protected both prior to the birth of the debt and subsequent to the pursuit of it (II). However, these protection mechanisms are accompanied by guarantees for creditors who would not be able to suffer the bad faith of the individual entrepreneur. [...]
