Collateral is an essential tool for companies financing their activities. L'order no. 2021-1192 of 15 september 2021 is a genuine revolution. It unifies the pledge regime, eliminates texts that were scattered across several codes and clarifies the distinction between pledge and collateral. These changes facilitate access to credit and enhance legal certainty.
A unified system for pledging tangible movable property
The reform puts an end to the duality between civil and commercial pledges. All pledges are now governed by the Civil Code, regardless of their purpose. Article 2333 defines a pledge as "an agreement by which the pledgor grants a creditor the right to be paid in preference to his other creditors on a present or future movable asset or group of movable assets".
The simplification is spectacular. The ordinance repeals five entire chapters of the Commercial Code, amounting to 70 articles. In particular:
- Commercial pledges (art. L.521-1 to L.521-3)
- The hotel warrant (art. L.523-1 to L.523-15)
- The oil warrant (art. L.524-1 to L.524-21)
- Pledging of tools and equipment (art. L.525-1 to L.525-20)
- Pledging of stocks (art. L.527-1 to L.527-11)
Article 2346 paragraph 2 provides for a simplified method of realisation: "Where the pledge is constituted as security for a professional debt, the creditor may arrange for the public sale of the pledged property by a notary, bailiff, auctioneer or sworn goods broker, eight days after simple notification".
Motor vehicle pledges are governed by ordinary law. Article 2338 paragraph 2 only provides for special publicity: "A pledge on a registered land motor vehicle or trailer is published by entry in a register held by the administrative authority". This registration prevents any new registration on the same vehicle.
Pledges on buildings by destination
Article 2334 provides for the possibility of pledging "movable assets that are fixed by destination". This innovation meets a practical need: to enable the financing of expensive equipment (turbines, transformers, solar panels) without mortgaging the entire property.
In the event of a conflict between the mortgagee and the pledgee, Article 2419 stipulates that: "The mortgagee shall be responsible for the payment of the mortgage.order of preference between mortgagees and pledgeesInsofar as their pledge relates to property deemed to be immovable, it is determined by the dates on which the respective titles were published". However, the right of retention is excluded.
This rule protects creditors who have specifically financed such equipment. Article L.112-3 of the Code of Civil Enforcement Procedures now allows the seizure of buildings by destination independently of the building "for the realisation of the pledge on which they are encumbered".
Publicity and enforcement of pledges
Article 2337 maintains the distinction between possessory and non-possessory pledges. In the first case, it is the delivery of the property to the creditor or to an agreed third party that renders the pledge enforceable. In the second case, only publication in a special register has this effect.
The ordinance generalises the single register of non-possessory pledges, already provided for in article 2338. This register will centralise all registrations, with the exception of motor vehicle pledges. This centralisation enhances legal certainty by avoiding the multiplication of special registers.
For fungible things, the regime is adapted. Article 2341 requires the creditor to "keep such things separate from things of the same kind which belong to him", unless the contract exempts him from doing so. In that case, the creditor becomes the owner, subject to the obligation to return the same quantity of equivalent things.
Article 2342 authorises the pledgor of a non-possessory pledge to dispose of the fungible things pledged "on condition that they are replaced by the same quantity of equivalent things". The Order reverses the previous rule: this option becomes the rule unless otherwise agreed.
Article 2342-1 states: "Where the pledgor has the option of disposing of the pledged assets, the assets acquired in replacement are automatically included in the scope of the pledge". This real subrogation strengthens the effectiveness of the inventory pledge.
Pledging intangible movable property modernised
A pledge, defined in article 2355, is "the assignment of intangible movable property or a group of intangible assets, present or future, as security for an obligation". It is subject to the rules governing non-possessory pledges, with the exception of fictitious rights of retention.
There have been significant improvements in the pledging of receivables:
- Article 2361 abolishes the requirement of a date certain
- Article 2361-1 governs the case of successive pledges of the same claim
- Article 2363 states that the secured creditor has a "right of retention on the claim".
- Article 2363-1 specifies the enforceability of defences against the secured creditor
The main innovation is the exclusive right to payment granted to the pledgee. Article 2363 provides that after notification, only the creditor "may receive payment of the pledged claim". This exclusive right brings the pledge of a claim closer to a fiduciary assignment.
For pledges of securities accounts, article L.211-20 of the French Monetary and Financial Code has been adapted. A new I bis regulates the ranking of successive pledges of the same account: it "is governed by the order in which they are declared".
More efficient methods of production
The Ordinance maintains and generalises the various methods of enforcing security on movable property. Article 2346 simplifies the judicial route by removing the requirement for authorisation to "proceed with the sale of the pledged property".
Judicial attribution remains possible. Article 2347 allows the creditor to "apply to the court for the property to remain in payment to him". If its value exceeds the amount of the debt, the creditor must pay the difference to the grantor.
The commissory pact is maintained in article 2348. It enables the creditor to become the owner of the pledged property in the event of the debtor's default. The value of the property must be determined "by an expert appointed out of court or by judicial decision", unless there is an official quotation.
Article 2348 now allows the trustee to sell the property "at the price he considers, under his responsibility, to correspond to the value of the property" if no buyer can be found on the basis of a valuation.
The law also maintains the principle of indivisibility of the pledge. Article 2349 provides that a pledge "is indivisible notwithstanding the divisibility of the debt between the heirs of the debtor or those of the creditor".
The reform of movable securities provides a more flexible and efficient approach to credit. To structure your movable collateral, our firm can advise you on the options best suited to your business. A personalised legal analysis will help you avoid the pitfalls of this complex reform.
Sources
- Order no. 2021-1192 of 15 September 2021 reforming the law on securities
- Civil Code, articles 2333 to 2366 (version in force since 1 January 2022)
- French Commercial Code (repeal of articles L.521-1 to L.527-11)
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