PERSONAL BANKRUPTCY AND OTHER PROHIBITION MEASURES
LexInter | November 14, 2006 | 0 Comments

PERSONAL BANKRUPTCY AND OTHER PROHIBITION MEASURES

Chapter III: Personal bankruptcy and other measures of prohibition

Article L653-1

(inserted by Law n ° 2005-845 of July 26, 2005 art. 1 I, art. 132 Official Journal of July 27, 2005 in force on January 1, 2006 subject to art. 190)

I. – When judicial reorganization or liquidation proceedings are opened, the provisions of this chapter are applicable:
1 ° To natural persons exercising the profession of trader, farmer or registered in the trade register and to any other natural person exercising an independent professional activity including a liberal profession subject to a legislative or regulatory status or whose title is protected;
2 ° To natural persons, de jure or de facto directors of legal persons;
3 ° To natural persons, permanent representatives of legal persons, managers of legal persons defined in 2 °.
These same provisions are not applicable to natural persons or directors of legal persons, exercising an independent professional activity and, as such, subject to disciplinary rules.
II. – The actions provided for in this chapter are prescribed by three years from the judgment declaring the opening of the procedure mentioned in I.

Article L653-2

(inserted by Law n ° 2005-845 of July 26, 2005 art. 1 I, art. 133 Official Journal of July 27, 2005 in force on January 1, 2006 subject to art. 190)

Personal bankruptcy entails the prohibition of directing, managing, administering or controlling, directly or indirectly, any commercial or craft enterprise, any agricultural operation or any enterprise having any other independent activity and any legal person.

Article L653-3

(inserted by Law n ° 2005-845 of July 26, 2005 art. 1 I, art. 134 Official Journal of July 27, 2005 in force on January 1, 2006 subject to art. 190)

The court may declare the personal bankruptcy of any person mentioned in 1 ° of I of article L. 653-1, subject to the exceptions provided for in the last paragraph of I of the same article, against which one of the facts above has been noted. -after:
1 ° Having pursued abusively a loss-making operation which could only lead to the cessation of payments;
2 ° Repealed.
3 ° Having embezzled or concealed all or part of his assets or fraudulently increased his liabilities.

Article L653-4

(inserted by Law n ° 2005-845 of July 26, 2005 art. 1 I, art. 135 Official Journal of July 27, 2005 in force on January 1, 2006 subject to art. 190)

The court may declare the personal bankruptcy of any manager, de jure or de facto, of a legal person, who has committed one of the faults mentioned in article L. 652-1.

Article L653-5

(inserted by Law n ° 2005-845 of July 26, 2005 art. 1, art. 136 Official Journal of July 27, 2005 in force on January 1, 2006 subject to art. 190)

The court may declare the personal bankruptcy of any person mentioned in Article L. 653-1 against whom one of the following facts has been identified:
1 ° Having exercised a commercial, craft or agricultural activity or a managerial position or administration of a legal person contrary to a prohibition provided by law;
2 ° To have, with the intention of avoiding or delaying the opening of the receivership or liquidation proceedings, made purchases with a view to resale below the price or employed ruinous means to obtain funds;
3 ° To have subscribed, on behalf of others, without consideration, to commitments deemed too important at the time of their conclusion, having regard to the situation of the company or the legal person;
4 ° Having paid or caused to be paid, after cessation of payments and with full knowledge of the latter, a creditor to the prejudice of other creditors;
5 ° Having, by voluntarily abstaining from cooperating with the organs of the procedure, obstructs its proper conduct;
6 ° To have removed accounting documents, not to have kept accounts when the applicable texts so require, or to have kept fictitious accounts, clearly incomplete or irregular with regard to the applicable provisions.

Article L653-6

(inserted by Law n ° 2005-845 of July 26, 2005 art. 1 I Official Journal of July 27, 2005 in force on January 1, 2006 subject to art. 190)

The court can pronounce the personal bankruptcy of the leader of the legal person who has not paid the debts of this one charged to him.

Article L653-7

(inserted by Law n ° 2005-845 of July 26, 2005 art. 1, art. 137 Official Journal of July 27, 2005 in force on January 1, 2006 subject to art. 190)

In the cases provided for in Articles L. 653-3 to L. 653-6 and L. 653-8, the court is referred to the court by the judicial representative, the liquidator or the public prosecutor.
In the collective interest of the creditors, the court may also be seized at any stage of the proceedings by the majority of the creditors appointed as supervisors when the legal representative having standing to act has not initiated the actions provided for in the same articles, after a formal notice remained without follow-up within a period and under the conditions set by decree of the Council of State.
In the same cases as those provided for in the first paragraph, the judge-commissioner may neither sit in the formation of the judgment, nor participate in the deliberation.

Article L653-8

(inserted by Law n ° 2005-845 of July 26, 2005 art. 1 I, art. 138 Official Journal of July 27, 2005 in force on January 1, 2006 subject to art. 190)

In the cases provided for in Articles L. 625-3 to L. 625-6, the court may pronounce, in place of personal bankruptcy, the prohibition to direct, manage, administer or control, directly or indirectly, either any company commercial or artisanal, any agricultural exploitation and any legal person, that is to say one or more of these.
The prohibition mentioned in the first paragraph may also be pronounced against any person mentioned in Article L. 625-1 who, in bad faith, has not handed over to the creditors’ representative, the administrator or the liquidator the information that he is required to communicate to him in application of article L. 622-6 in the month following the opening judgment.
It can also be pronounced against any person mentioned in article L. 653-1 who has failed to make, within the period of forty-five days, the declaration of cessation of payments, without having, moreover, requested the opening of a conciliation procedure.

Article L653-9

(inserted by Law n ° 2005-845 of July 26, 2005 art. 1 I, art. 165 II Official Journal of July 27, 2005 in force on January 1, 2006 subject to art. 190)
   The voting rights of executives suffering from personal bankruptcy or the prohibition provided for in Article L. 625-8 are exercised in meetings of legal persons subject to a safeguard, receivership or liquidation procedure by a agent appointed by the court for this purpose, at the request of the administrator, liquidator or commissioner for the execution of the plan.
The court can order these managers or some of them to transfer their shares or shares in the legal person or order their forced transfer through the care of a legal representative, if necessary after expertise. The proceeds of the sale are allocated to the payment of the share of the social debts in the event that these debts have been charged to the directors.

Article L653-10

(inserted by Law n ° 2005-845 of July 26, 2005 art. 1, art. 139 Official Journal of July 27, 2005 in force on January 1, 2006 subject to art. 190)

The court which declares the personal bankruptcy can pronounce the incapacity to exercise an elective public office. The incapacity is pronounced for a period equal to that of the personal bankruptcy, within the limit of five years. When the decision has become final, the public prosecutor notifies the person concerned of the incapacity, which takes effect from the date of this notification.

Article L653-11

(inserted by Law n ° 2005-845 of July 26, 2005 art. 1, art. 140 Official Journal of July 27, 2005 in force on January 1, 2006 subject to art. 190)

When the court declares personal bankruptcy or the prohibition provided for in Article L. 653-8, it fixes the duration of the measure, which may not exceed fifteen years. He can order the provisional execution of his decision. Forfeitures, prohibitions and the inability to exercise an elective public function automatically cease at the fixed term, without the need for a judgment to be pronounced.
The closing judgment for the extinction of the liabilities, including after fulfillment of the obligation to the social debts pronounced against him, restores the business manager or the directors of the legal person in all their rights. It exempts them or relieves them from all disqualifications, prohibitions and inability to exercise an elective public function.
The interested party can ask the court to release him, in whole or in part, from disqualifications and prohibitions and from the inability to exercise an elective public function if he has made a sufficient contribution to the payment of the liabilities.
When it has been the subject of the prohibition provided for in Article L. 653-8, it may be relieved if it presents all guarantees demonstrating its ability to manage or control one or more of the companies or persons. covered by the same article.
When there is a total recovery of disqualifications and prohibitions and of incapacity, the court’s decision entails rehabilitation.

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