Seizure by way of execution vs. sequestration: what are the differences for intangible rights?

Before going into the details of how they are entered, it is essential todeepen your knowledge of intangible rights, their definition and scope. The seizure of intangible rights has two distinct faces: enforceable or protective. These two procedures meet different needs and are used in specific contexts.

Two approaches, two objectives

The purpose of an enforceable seizure is to sell the debtor's intangible rights in order to pay the creditor. A protective attachment merely seeks to make them temporarily unavailable. One is definitive, the other provisional. These principles apply in particular to shareholder rights and securitieswhich present specific challenges.

Enforceable attachment: powerful but demanding

Strict conditions

• Compulsory enforcement order (judgement, notarial deed)
• Receivables due and payable
• Compliance with legal deadlines

Formal procedure

1. Service on the third party holder
2. Notification to the debtor within 8 days
3. Immediate unavailability of rights
4. Sale possible after one month

For a more detailed overview of the practical steps involved and the pitfalls to be avoided, consult our practical guide to the seizure of intangible rights.

This procedure allows you to go all the way: selling the rights and paying the creditor. To understand the mechanisms and particularities of this forced sale which follows the seizure, it is essential to take this process further.

Attachment: flexible and preventive

Reduced conditions

• No writ of execution required
• Claim appears to be well-founded in principle
• Circumstances threatening recovery
• Authorisation from a judge (with some exceptions)

Simplified implementation

1. Service on the third party holder
2. Notice to the debtor
3. Rights unavailable for a limited period

It freezes the situation without going as far as selling.

Legal effects: essential differences

An enforceable attachment renders the rights unavailable until they are sold. A conservatory seizure temporarily blocks the rights until a writ of execution is issued.

The conservatory attachment must be converted into an enforceable attachment within one month of obtaining the writ of execution.

Dividends and income from rights are also frozen in both cases.

Strengths and weaknesses of each approach

Enforceable seizure

✓ Final solution
✓ Effective payment possible
✓ Superior legal force

✗ Requires a writ of execution
✗ Long procedure
✗ Higher costs

Precautionary seizure

✓ Speed of action
✓ Pressure effect on the debtor
✓ No initial enforcement order required

✗ Temporary measure
✗ Need for subsequent conversion
✗ Additional costs in the event of conversion

Strategies for creditors

Preventive attachment is often used as a psychological weapon. It shows the debtor your determination to recover the debt.

The effect of surprise applies to conservatorships: the debtor cannot anticipate and organise his insolvency.

For enforceable seizures, identify the debtor's intangible rights precisely before taking action. Target those that have a real market value.

When should you choose one or the other?

Opt for precautionary seizure when :

• You do not yet have a writ of execution
• The debtor risks organising his insolvency
• You want to exert immediate pressure
• You have information about a threatened heritage site

Prefer executory attachment when :

• You have a final enforcement order
• Negotiations have broken down
• The debtor no longer responds
• Intangible rights have an obvious market value

The two procedures can complement each other. Start with a precautionary seizure, then convert it into an enforceable seizure once the title has been obtained. If you have any questions or require assistance regarding the implementation or contestation of a precautionary or enforceable seizure of company shares, we strongly recommend that you contact consult a lawyer who is an expert in the field.

Sources

• Code of civil enforcement procedures, articles L. 511-1 to L. 511-2 and L. 521-1
• Articles R. 524-1 to R. 524-6 of the Code of Civil Enforcement Procedures
• Répertoire de procédure civile, "Saisie des droits incorporels" (Dalloz, 2023)