All sole traders have the option of filing a declaration of unseizability, to protect their property in the event of insolvency proceedings. However, this declaration must be made in advance: once judicial liquidation, safeguard or reorganization proceedings have begun, it is unfortunately too late.
What is a declaration of unseizability?
While the main residence of a sole trader, craftsman, self-employed professional or micro-entrepreneur is automatically exempt from seizure by his professional creditors in the event of insolvency proceedings, this is not the case for his other real estate assets.
Whether built or unbuilt, owned, shared or undivided, a sole trader's real estate assets may be seized in the event of compulsory liquidation, reorganization or safeguard, provided they are not related to his or her business activity. This may include a second home, land or an apartment under construction.
To protect their assets from professional creditors, sole traders can file a declaration of unseizability.
When and how do I file a declaration of unseizability?
It is imperative that the declaration of unseizability be filed before any insolvency proceedings are initiated. As confirmed by a decision of the Commercial Chamber of the French Supreme Court (Cour de cassation) dated March 10, 2021, "this declaration only has effect if it has been published prior to the opening of the collective proceedings, even if they are safeguard proceedings".
The declaration of unseizability must be made before a notary. It is then published at the Service de publicité foncière and mentioned in a legal gazette, in the Registre du commerce et des sociétés or in the Répertoire des métiers, depending on the registration status of the individual entrepreneur.
It contains a detailed description of the property to be exempted from seizure, specifying whether it is owned, held in common or undivided.
In this case, the property of the sole trader is considered unseizable by his business creditors, in the event of subsequent business debts. On the other hand, they are not protected if the entrepreneur has incurred personal debts, and can therefore be seized by personal creditors.