French Commercial code
In forceI. - The court shall open proceedings provided for in Titles II to IV of this Book if the conditions are met. The provisions specific to open proceedings shall apply, subject to this title.
II. - In the context of the open proceedings, if the conditions provided for in 2° of article L. 681-1 are not met on the date of the opening judgment, the provisions of Titles II to IV of this Book that concern the assets, rights or obligations of the debtor are understood, unless otherwise provided, as referring to the elements of the business assets alone. Those which concern the rights or obligations of the debtor's creditors shall apply, unless otherwise provided, within the limits of the business assets alone.
III. - If the conditions set out in 1° and 2° of Article L. 681-1 are met on the date of the opening judgment, the provisions of Titles II to IV of this Book which concern the assets, rights or obligations of the sole trader debtor are understood, unless otherwise provided, as covering both the elements of the business assets and those of the personal assets.
The rights of each creditor in respect of the business assets, the personal assets or all or part of these assets shall be determined in accordance with Section 3 of Chapter VI of Title II of Book V and of this Book.
The court shall deal, in the same judgment, with the debts owed by the sole trader in respect of his business and personal assets, according to the right of pledge of each creditor, unless otherwise provided.
IV. - By way of derogation from III, where the distinction between business and personal assets has been strictly respected and the right of lien of creditors whose rights have arisen in connection with the business activity of the sole trader does not relate to the latter's personal assets, the court initiating the proceedings shall, with the agreement of the debtor, refer the matter to the over-indebtedness commission for the purpose of dealing with the debts owed by the sole trader from his personal assets. Book VII of the Consumer Code and the sixth paragraph of Article L. 526-22 of this Code then apply. The court exercises the functions of the judge in charge of protection disputes, which it may delegate in whole or in part to the official receiver.
The court and the over-indebtedness commission keep each other informed of the progress of each of the proceedings opened.
V. - The court hears disputes relating to the separation of the assets of the sole trader that arise in connection with the proceedings opened.
VI. - The judgment opening safeguard, receivership or compulsory liquidation proceedings entails, ipso jure, until the closure of the proceedings or, where applicable, until the end of the operations of the plan, a prohibition on any sole trader debtor, subject to the payment of his income, from modifying his business assets, where this would result in a reduction in the assets of these assets.
Any deed passed in violation of this article shall be annulled at the request of any interested party or the public prosecutor within three years of its date.
VII. - When judicial liquidation proceedings are opened, the sole trader may engage in a new professional activity. A new business asset is then created. These professional assets are not affected by the proceedings opened.
The debtor may not constitute more than two assets separate from his personal assets.
The option to engage in a new professional activity under the conditions provided for in the first paragraph of this VII does not apply to a debtor who, in respect of any of his assets, has been the subject, for less than five years, of a judicial liquidation procedure closed for insufficient assets or a decision to close a professional recovery procedure.
In the event of a division of the business assets as provided for in this VII, the judicial liquidation judgment shall entail a prohibition on any transaction resulting in a reduction in the assets of the assets that are the subject of the proceedings in favour of any other activity carried on by the debtor.
