The personal assets of the individual entrepreneur better protected

Posted 15 Feb. 2022 at 17:18Updated Feb 15. 2022 at 17:53

They are more than 3 million in France to work under the status of independent. A term without legal definition, which includes craftsmen, traders, agricultural entrepreneurs, liberal professions, as well as platform workers. Their only point in common is to have chosen not to organize themselves into a society.

This status spared them from having to carry out administrative procedures, but it had a major drawback compared to the main commercial companies (EURL, SARL, SAS): they were responsible for the debts contracted by their company on their personal assets (at the exception of the principal residence).

A real revolution

This will no longer be the case in three months, on May 14. The law in favor of independent professional activity of February 14, 2022, published this Tuesday in the “Official Journal”, better protects the personal assets of these entrepreneurs. “Their liability in the context of their professional activity will therefore be limited in principle to their professional assets”, explains Bruno Dondero, professor of law at the Ecole de la Sorbonne. A small revolution.

“Concretely, individual entrepreneurs will automatically (without having to carry out any administrative procedure) be endowed with two assets: a professional asset which will include the assets, rights and obligations useful for their professional activity, and a personal asset, intended to satisfy the other creditors and including other property, rights and obligations,” he explains.

The principle of heritage uniqueness dates back to the 19and century. Developed by two law professors from the Faculty of Strasbourg, it was widely criticized at the time because it subjected the individual entrepreneur to unlimited risks.

The risk of reducing access to finance

Thanks to this new law, the creditors of each category will in principle only be able to apprehend the assets of the corresponding heritage. But the entrepreneur will be able to waive the benefit of this separation of assets in favor of a bank creditor to obtain credit, for example.

The more we create an elusive heritage for creditors, the more we reduce access to financing.

Sophie VermeilleLawyer

Barely promulgated, the law is debated. “This law risks drying up the financing of the activity of entrepreneurs. Empirical studies (carried out outside France) show that access to financing is totally correlated with the amount of the subsistence minimum that is left to an entrepreneur in the event of personal bankruptcy. The more we create an elusive heritage for creditors, the more we reduce access to financing, “warns Sophie Vermeille, lawyer specializing in bankruptcy law.

De facto, this law removes the status of EIRL (Individual Entrepreneur with Limited Liability) established in 2010. Attractive at first glance, the latter had only met with limited success because of its excessive complexity.

From now on, all the difficulty for the lawyers will be to apprehend the delimitation between the personal heritage and the professional. In the event of litigation, it will be up to the individual entrepreneur to prove the assignment of a property to a heritage.

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