The Sole Proprietorship with Limited Liability or EURL grants many advantages to entrepreneurs. Indeed, by choosing this form of business, they are better able to protect their personal assets. However, it can happen that the entrepreneurial adventure takes another direction. The financial difficulties encountered by entrepreneurs can lead them to the simplified EURL judicial liquidation.
As a reminder, a judicial liquidation occurs when a company finds itself in a situation of insolvency and the recovery of its activity is purely impossible. The main objectives of the liquidation are none other than the cessation of activity and the sale of the assets of the company with a view to discharging its liabilities. If you need any advice or help, please do not hesitate to contact Phenix expertise, who is an expert in the field.
What are the particularities of a EURL?
To better understand the principle of simplified EURL judicial liquidation, it is first necessary to present the particularities of a EURL.
In principle, a EURL follows the same incorporation procedures as an LLC. The particularity of a EURL is that it allows an entrepreneur to own two distinct assets. If a simplified EURL judicial liquidation has to take place, the entrepreneur will be able to protect his personal assets, in theory.
However, in practice, banks accept to lend money only in return for collateral. Thus, if the EURL is endowed with a social capital qualified as low, the banks find themselves forced to ask for personal guarantees from the entrepreneur who is the sole partner of his company. The latter will therefore have to dig into his personal heritage. Ultimately, the protection of the personal assets of the entrepreneur is only speculative.
As this form of business is more flexible than the others, the sole partner is free to dissolve his activity. However, he must do so before the expiry date provided for by the statutes. To do this, he will have to follow a specific procedure.
Focus on the simplified judicial liquidation of a EURL
Judicial liquidation is inevitable when a company with only one partner can no longer pay its debts. In order for the dissolution request to be legally valid, the legal representative of the company will have to put together a file that he will have to submit to the CFE or center for formalities for companies. Numerous supporting documents must be included in the request, such as the early dissolution decision, the report on the dissolution of a company, the identity of the judicial liquidator, the registered office of the liquidation and the effective date of termination of the company. activity carried out by EURL. To this must be added the M2 form, the document attesting to the publication of the notice of dissolution and an original copy of the decision to validate the dissolution certified by the sole shareholder. You can see by this that legal dissolution by normal means represents enormous constraints in administrative matters.
However, the sole proprietorship may benefit from a simplified EURL legal procedure.
As its name suggests, EURL simplified judicial liquidation is a much less restrictive judicial liquidation procedure than that initiated by the commercial court. This procedure occurs when the assets of the sole shareholder are not made up of any real estate and if the number of his employees and the amount of his turnover do not exceed a certain threshold.
If the EURL simplified judicial liquidation is compulsory, a liquidator is appointed to carry out the inventories necessary for the procedure.
- Judicial liquidation is simplified insofar as the verification of debts and the sale of assets take very little time.
- Simplified claims verification: To put it simply, only salary claims and those that can be settled with the assets still available will be verified.
- Speeding up the sale of assets: by means of this simplified procedure, the company liquidator does not need the approval of the judge to start selling the company's assets. In this way, it shortens the sales procedure which can be done by auction or by mutual agreement. Subsequently, he may distribute the sum of money accumulated on the sales among the creditors, but respecting the decision of the commission judge.
- A shortened period: in principle, the closure of the judicial liquidation of the sole proprietorship must be pronounced no later than 6 months following the opening of the procedure. In the event of a complication, it is possible to extend the period by up to three months.
What are the conditions to benefit from a simplified judicial liquidation of the EURL?
Not all companies can take advantage of this simplified judicial liquidation. For a EURL to benefit from this procedure, it must be in one of the following two cases:
Mandatory simplified judicial liquidation: the sole proprietorship will have to go through this phase if it meets the following three conditions:
- EURL employs only one employee
- EURL does not own any real estate
- The EURL records a turnover excluding tax less than or equal to € 300,000
In other words, only EURLs with a limited number of employees and limited turnover are concerned.
- Optional simplified judicial liquidation: the EURL therefore has the choice of whether or not to proceed with a simplified EURL judicial liquidation if it meets the following conditions:
- Employs only 5 employees or less
- Does not own any real estate
- Records a turnover excluding tax of between € 300,000 and € 750,000
Declaring the liquidation of a sole proprietorship: a mandatory procedure
Whether you face judicial liquidation or amicably, it is imperative that you declare the cessation of activity to the center of business formalities according to your sector of activity.
For the sole proprietorship, you must complete the CERFA P4 form which you can send to the CFE via the internet. The effective declaration of the cessation of activity must be made at the latest within the month following the effective date of the cessation of activity. This is a completely free procedure.
After the declaration of cessation of activity, the company will undergo:
- A deletion from the Trade Register for craftsmen and RCS for entrepreneurs
- A deletion of the SIREN register
- A deletion of the files of professional affiliates of social organizations
- A deletion of the files of active professionals coming from the tax administration
Social security organizations will then be informed of your cessation of activity by the CFE.