Pledging intangible movable property: legal regime and enforcement of claims

By Yasmine EDDAM2 July 2025

Financing is the driving force behind business development. To obtain credit, creditors require solid and effective guarantees. Among the tools available to economic players, pledging intangible assets, and more specifically pledging receivables, occupies a prime position. This security enables a debt to be secured by assigning one or more intangible assets, such as a portfolio of customer invoices. Although the mechanisms involved are complex, this form of security is extremely flexible. To fully understand the issues involved, we need to situate it in the wider landscape of the securities lawwhich organises the way in which an asset can guarantee an obligation.

Definition and legal status of pledges of intangible movable property

Pledging is a contract whereby a debtor gives an asset to a creditor as security for a debt. French law makes a fundamental distinction depending on the nature of the collateral. This clarification is essential to understanding the applicable framework.

Specificity of "pledge" vs "pledge".

The distinction between pledge and collateral is based on whether the asset is tangible or intangible. Article 2355 of the Civil Code defines a pledge as "the assignment, as security for an obligation, of present or future intangible movable property or a collection of intangible movable property".. This is in contrast to a pledge, which relates exclusively to tangible assets (stocks, equipment, vehicles). Pledging therefore involves intangible assets: receivables, company shares, patents, business goodwill, etc. This distinction is not purely theoretical; it determines the rules for creating and realising the security.

General regime (pledging of receivables and other intangible assets)

The Civil Code establishes a general regime for the pledging of intangible movables, with a particular focus on the pledging of receivables, which is the most frequently used form of security. The aim of this body of rules, which emerged from the reform of the law on security interests, is to simplify and make more secure the use of this form of security. It applies by default, except where a specific text provides for special arrangements for certain types of intangible property.

Specific plans (patents, company shares, financial instrument accounts, life insurance policies)

In addition to the general system, there are several special systems, depending on the nature of the assets pledged. These include

A pledge of a patent or trademark must be entered in the National Register of Industrial Property in order to be enforceable against third parties.
Pledges of shares in non-trading companies or limited liability companies (SARLs) are recorded in a notarial deed or private deed and notified to the company so that it can be informed of the transfer of the guarantee.
The pledge of a securities or financial instruments account, governed by the French Monetary and Financial Code, is made by a simple declaration signed by the account holder. This mechanism is particularly useful for the creation of guarantees on digital assets when held via regulated platforms.
A life insurance policy is pledged by means of an endorsement to the contract, signed by the policyholder, the insured and the beneficiary creditor.

Each of these regimes derogates in part from the general law to take account of the specific features of the assets and the existing registers of publicity.

Type of receivables pledged as collateral

One of the great strengths of pledging receivables is its flexibility. It can relate to a single receivable or to a group of receivables, and these receivables can be present or future. For example, a company can pledge all its invoices to be issued to a given customer to secure a credit line. The only condition is that the receivables, if they are future, must be sufficiently identifiable in the pledge deed. The deed must make it possible to identify them individually, for example by mentioning the debtor, the place of payment, the amount or the due date.

Creation of a pledge of receivables

The validity of a pledge of receivables depends on compliance with specific formal requirements, although the law has sought to relax these requirements in order to facilitate inter-company credit.

Simplified formalities for writing

Under article 2356 of the Civil Code, a pledge of a claim must be in writing. This requirement is a condition of the validity of the security (ad validitatem). If it is not in writing, the pledge is null and void. However, the law does not impose any other onerous formalities. A simple private deed is all that is required, and there is no need for a notarial deed (with some exceptions) or tax registration for the deed to be valid between the parties. This simplicity makes it much easier to use in business life.

Contents of the deed (designation of secured and pledged claims)

To be effective, a written deed must contain certain mandatory information. It must state precisely :

The secured debt: the loan, credit facility or any other obligation that the pledge secures. The amount, due date and ancillary items must be indicated.
The pledged receivable(s): the debtor's receivables from its own customers that are pledged as collateral. As mentioned above, they must be specific or, at the very least, determinable.

Imprecise drafting of the deed may lead to difficulties of interpretation and, in the most serious cases, to the guarantee becoming ineffective. It is therefore advisable to pay particular attention to the description of the claims to avoid any ambiguity.

Scope of pledge of receivables

Once validly constituted, the pledge produces effects that need to be defined in terms of their scope and duration.

Scope and duration of the pledge

Unless otherwise stipulated, the pledge of a debt extends to all its ancillary items, such as contractual interest or penalties for late payment. The collateral follows the fate of the secured debt. Consequently, the pledge is intended to last as long as the principal obligation has not been extinguished. It terminates automatically when the debt it secures is repaid in full.

Pledging an account (determining the balance, interactions with seizures and insolvency proceedings)

The pledge of a bank account is a special application of the pledge of receivables. In this case, the pledged claim is the account holder's claim against the bank, corresponding to the credit balance on the account. The difficulty lies in the fact that this balance fluctuates by its very nature.

Case law holds that the pledgee's right does not relate to each individual transaction, but to the final balance of the account. The preferential right of the secured creditor will only crystallise on the balance existing on the day the guarantee is called upon or on the day of the opening of collective proceedings. This situation can give rise to complex conflicts with other creditors who would seize the same account or in the event of the company's bankruptcy. The date of creation of the pledge will then be decisive in establishing the priority of rights. Managing receivables in such a context is a major challenge, particularly when it comes to verification of claims in insolvency proceedings.

Effects of pledging a receivable

Pledging organises relations not only between the debtor and the creditor, but also with third parties, first and foremost the debtor of the pledged claim.

Option of multiple pledges

The same claim may be the subject of several successive pledges in favour of different creditors. In such cases, a conflict may arise between the pledged creditors. The resolution of this conflict is apparently simple: the ranking of creditors is determined by the date of the pledge deed. The first in time is first in right. This rule encourages creditors to formalise their security quickly to ensure the best possible ranking.

Effective date of pledge and enforceability against third parties

In accordance with article 2361 of the Civil Code, the pledge takes effect between the parties on the date of the deed. It is also on this date that it becomes enforceable against third parties. It is no longer necessary, as in the past, to carry out a publication or registration formality to ensure that the debtor's other creditors are aware of the existence of the security. The mere force of the dated written instrument is sufficient to give the pledgee a right over the debtor's claim.

Enforceability of the pledge against the debtor of the pledged claim (notification)

While the guarantee is enforceable against third parties from the date of the deed, it is not enforceable against the debtor of the pledged claim (the so-called "sub-debtor") until it is notified to him. Article 2362 of the Civil Code provides that this notification may take the form of service by a court commissioner or a simple letter. The debtor may also intervene in the pledge deed to take cognisance of it.

The effect of this notification is crucial. Before it, the debtor of the pledged claim can validly pay his debt to his original creditor (the debtor of the secured claim). This payment discharges the debt. After notification, he can only be discharged by paying into the hands of the pledged creditor. If he were to pay his original creditor, he would run the risk of having to pay a second time.

Enforcement of collateral

The purpose of a security interest is to be realised in the event of default by the principal debtor. The procedures for enforcing a pledge of receivables vary depending on whether or not the pledged receivable is overdue.

Pledged debt due prior to the secured debt

Let's imagine that the pledged debt (a 30-day customer invoice) falls due, while the secured debt (a loan repayable in a year's time) is not yet due. The pledged creditor, who has been notified, must collect the funds. However, he cannot appropriate them immediately. Article 2364 of the Civil Code requires him to keep them in a special deposit account. These funds are "consigned" to him and will be assigned to him in payment if his own claim becomes due and is not paid. If the principal debtor repays his debt, the funds are returned.

Pledged claim falling due after the secured claim

This is the most common case. The principal debtor fails to repay the loan on the due date. The pledged creditor can then call on the guarantee. If the pledged claim is itself overdue and unpaid, the creditor can demand direct payment from the notified debtor. If the pledged claim is not yet due, the pledgee cannot force early payment. He then has two main options: he can apply to the courts for the pledged claim to be assigned to him in payment (judicial assignment), or for the claim to be sold at auction. The judge will ensure that the interests of the various parties are protected, in particular by setting off the value of the claim against the secured debt.

The pledge of receivables is an effective guarantee mechanism, but its implementation requires great precision, both in the drafting of the deed and in the notification and enforcement procedures. An error or imprecision can deprive the security of all its effectiveness. To secure your financing transactions or guarantee your own debts, the assistance of a lawyer is essential. Our firm can advise you on commercial law to structure the cover best suited to your situation.