Professional recovery of an individual contractor

Verified 02 December 2024 - Directorate for Legal and Administrative Information (Prime Minister)

The process of professional recovery allows the individual entrepreneur (EI) toEIRL: titleContent or the micro-entrepreneur, who is in cessation of payments and who has very few assets to obtain debt relief, without resorting to a judicial liquidation. Businesses are excluded from this scheme.

Recovery from work is applicable toIndividual entrepreneur (IS), atEIRL: titleContent or at micro-entrepreneur filling all the following conditions:

  • Status of cessation of payments
  • Impossibility of judicial redress
  • No employee in last 6 months
  • Possession of a active less than €15,000 : this threshold is determined by taking into account all the professional and personal assets of the sole proprietor
  • Have been in operation for more than a year
  • No Prud'homale proceeding in progress
  • No closure of bankruptcy proceedings due to insufficient assets
  • No closure of a vocational reinstatement procedure for less than 5 years

The individual contractor applying for a vocational reinstatement must be good faith. If it is proved that it is in bad faith, the court may order the judicial liquidation.

Warning  

The value of the individual entrepreneur's principal residence is not taken into account in the calculation of the asset.

Only the individual entrepreneur (or micro-entrepreneur or EIRL) can request the opening of a professional recovery.

Court referral

Only the individual contractor can request the opening of a professional recovery procedure. They have to go to the commercial court or the court of law depending on the activity.

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Commercial or craft activity

The sole trader must complete the application form for the opening of the administration or liquidation procedure (with professional recovery).

Application form for the opening of collective proceedings for the individual contractor (EI)

This application must be filed or sent in 2 copies:

  • at the registry of the commercial court of the place where the company has its seat
Who shall I contact
  • or online through the digital court

Digital court

The court opens the vocational reinstatement procedure only after it has ascertained that the conditions are met.

FYI  

If the contractor does not fulfill the conditions, the court shall reject his application and decide on the request to open the bankruptcy procedure.

Agricultural or liberal activity

The sole trader must complete the application form for the opening of the administration or liquidation procedure (with professional recovery).

He must file it with the court of law where his company has its seat.

Application form for the opening of collective proceedings for the individual contractor (EI)

Who shall I contact

The court opens the vocational reinstatement procedure once it has ascertained that the conditions are met.

FYI  

If the contractor does not meet the conditions, the court shall reject his application and decide on the application to open the bankruptcy procedure.

Organization of the vocational reinstatement procedure

The court shall initiate the procedure for professional reinstatement and shall designate the following persons:

  • One appointed judge to collect any information on the amount of the contractor's liabilities and the value of the contractor's assets
  • One judicial representative who is responsible for assisting the judge appointed.

The judicial representative must inform the creditors known from the initiation of proceedings by reference to the statement of claims and liabilities provided at the initiation of the procedure.

The court representative shall request creditors to communicate, within two months, the amount of their claim and the date of the due dates.

The procedure shall be opened during a 4-month period, without possible extension.

FYI  

The proceedings may, however, end before the expiry of the four-month period, in the event of the opening of the winding-up proceedings.

Unlike in a bankruptcy, the entrepreneur is not relieved of the management of the company. It retains the power to manage and dispose of its assets.

The personal reinstatement procedure does not allow creditors to be stopped. However, where the individual entrepreneur is formal notice or sued by a creditor during the professional recovery procedure, the judge appointed (who is appointed by the court at the opening of the procedure)can defer payment of amounts due within 4 months.

The judge may also order the suspension of enforcement proceedings (e.g. seizures) within a maximum of 4 months.

Warning  

At any time during the vocational reinstatement procedure, the court may open winding-up proceedings if it is established that the contractor is not good faith.

Debt forgiveness

The closure of the professional recovery entails the forgiveness of the debts prior to the opening judgment which were communicated to the judge.

However, some debts are not forgiven.

The following claims remaining due :

  • Employees' claims (wages, holiday pay, etc.)
  • Maintenance claims (maintenance)
  • Claims arising from a criminal offense committed by the sole trader (e.g. embezzlement)
  • Claims related to property acquired under an inheritance opened during the proceedings
  • Claims relating to rights attaching to the creditor (e.g. damages for personal injury)
  • Claims for repayment of sureties or persons who have given a guarantee

FYI  

Where the professional reinstatement procedure is accepted, the President of the Tribunal may decide that the Public Treasury advances the taxes, or emoluments fees charged by the court registries, notification and publicity fees.

Delivery of the final judgment and publication of the judgment

The court orders the closure of the professional recovery without having to order a judicial liquidation.

In the 15 days of the final judgment, the Registrar of the General Court shall carry out the following formalities:

  • Insertion of the Notice of Closure in the Official Bulletin of Civil and Commercial Advertisements (bodacc)
  • Publishing to a legal listing support (Shal) the place where the company has its business address
  • Publishing to RNE: titleContent , and for a commercial activity, publication also in SCR: titleContent.

FYI  

Creditors whose debts are canceled may obtain from the Registrar a certified extract from the judgment.