In our previous article, we explored precautionary measures, essential legal tools for protecting your debts when their recovery is threatened. Preventive attachment is undoubtedly the most direct way of 'freezing' your debtor's assets before they disappear. It is a preventive action aimed at making some of your debtor's assets unavailable.
It can take a number of different forms, but we're going to focus here on two particularly common and effective types: seizure of tangible assets (cars, stocks, equipment, etc.) and seizure of receivables (particularly money held in bank accounts). Although very effective in securing what is owed to you, these seizures follow precise rules that you need to master. We'll look at how they work, what their effects are and how they can lead to payment.
Attachment of movable tangible property
This measure makes the material assets belonging to your debtor, such as his furniture, vehicles, business equipment or stocks of goods, unavailable (article L. 521-1 of the Code of Civil Enforcement Procedures - CPCE). However, certain assets that are essential to the debtor's day-to-day life or business are protected by law and declared unseizable (article L. 112-2 of the CPCE).
How does the data entry process work?
In practical terms, it is a bailiff who carries out the operation. He acts either on the basis of an authorisation obtained in advance from the judge (as explained in our article on the procedure) or, in certain specific cases (also detailed in this other article), directly if you already have a title such as a judgement or an unpaid cheque.
The bailiff goes to the place where the goods are located. This may be the debtor's home, business premises, or even a place belonging to a third party (a storage warehouse, for example - articles R. 521-1 and R. 522-5 of the CPCE). He will present the title or authorisation justifying his intervention. Before proceeding, he asks the debtor (if he is present) whether the goods have already been subject to a previous seizure (article R. 522-1 of the CPCE).
The bailiff then draws up a precise inventory of the goods seized in a document called a "procès-verbal de saisie". This detailed description is important to avoid any subsequent disputes or substitutions. If the debtor is present, the bailiff gives him a copy of the report and verbally reminds him of the consequences of the seizure. If the debtor is not present, he will be served with the document at a later date.
What are the immediate effects?
As soon as the act of seizure is drawn up, the listed assets become unavailable (article L. 521-1 of the CPCE). This means that the debtor can no longer sell them, give them away or even move them without authorisation (except in exceptional cases and with prior notification of the creditor, article R. 221-13 of the CPCE).
The debtor (or the third party from whom the assets have been seized) becomes the owner of the assets. caretaker. He is responsible for their preservation and must not allow them to deteriorate. Any misappropriation or wilful destruction of the seized assets would expose the debtor to criminal penalties (as set out in article 314-6 of the French Criminal Code). In principle, the debtor may continue to use the seized assets (unless they are consumable, such as raw materials), but may no longer legally dispose of them.
What happens after foreclosure? Towards sale
Attachment is only the first step. To obtain payment, you must first obtain a writ of execution (a final judgment against your debtor), if you do not already have one.
Once this title has been obtained, if the debtor still does not pay, the bailiff can serve the debtor with a "conversion deed" (article R. 522-7 of the CPCE). This document transforms the protective attachment into an attachment for sale. It contains an order to pay the sum due (principal, interest and costs) within eight days.
If payment is not made within this period, the bailiff may then organise the sale of the seized assets (articles R. 522-8 to R. 522-10 of the CPCE). The sale may be amicable if the debtor finds a buyer and the creditors agree, or forced (auction). The proceeds of the sale will be used to pay off your debt.
Attachment of receivables (bank accounts, etc.)
This seizure does not involve material objects, but money owed to your debtor by third parties. The most common example is the seizure of the credit balance of a bank account, but it can also involve a sum owed by one of your debtor's customers, or rent owed to him by a tenant (article L. 523-1 of the CPCE). Only claims involving a sum of money may be subject to seizure.
How does this "triangular" operation work?
In this case, the bailiff intervenes with a third party who holds funds on behalf of your debtor (the bank, the customer, the tenant, etc.). This is a three-stage operation:
- Service on the garnishee : The bailiff serves the writ of attachment directly on the third party (e.g. the bank). This document contains, in particular, the identity of the debtor, the title or authorisation allowing the seizure and the amount claimed (article R. 523-1 of the CPCE).
- Obligations of the garnishee : On receipt, the third party (the bank) must declare to the bailiff the extent of its obligations towards the debtor (the balance of the account on the day of the seizure, for example) and inform him of any other seizures or assignments of claims (articles L. 211-3 and R. 523-4 of the CPCE). If the third party fails to comply with this information obligation, it may be ordered to pay the debt itself or to pay damages (article R. 523-5 of the CPCE). For bank accounts, specific rules apply for calculating the balance actually available, taking into account current transactions (article L. 162-1 of the CPCE).
- Informing the distrainee debtor : Within eight days of service on the third party, the bailiff must inform your debtor of the seizure, serving him with a copy of the seizure deed and the authorisation or title. This document must mention the debtor's rights, in particular the right to contest the seizure (article R. 523-3 of the CPCE). Failure to comply with this eight-day time limit will render the seizure null and void.
What are the specific effects of this seizure?
The seizure of receivables has a number of important features:
- Partial unavailability : Unlike the seizure of movables, the unavailability only concerns the amount of the sum for which the seizure is made (as authorised by the judge or mentioned in your title). If your debtor's bank account contains more than this amount, he can freely dispose of the surplus (article L. 523-1 of the CPCE). This is a balance to avoid totally paralysing the debtor's cash flow.
- Protection of a minimum subsistence level (Solde Bancaire Insaisissable - SBI) : The law protects a subsistence minimum in the bank account of the individual debtor. A sum equivalent to the fixed amount of the RSA for a single person must be left available (article L. 162-2 of the CPCE). The notice to the debtor must mention the amount left available.
- Consignment and lien : In return for only partial unavailability, the law stipulates that the blocked sum is considered to be recorded by operation of law in favour of the distraining creditor. Above all, this seizure gives you a privilege on this sum (article L. 523-1 CPCE, referring to article 2350 of the Civil Code). This means that you obtain priority over this specific sum over any other creditors who may act after you.
And after the seizure? Towards direct payment
As with the seizure of movables, you must obtain a writ of execution if you do not have one. Once you have this writ of execution, the protective attachment of debts becomes a attachment.
The bailiff serves the garnishee (the bank, for example) with a "conversion deed" containing a demand for payment (article L. 523-2 and R. 523-7 of the CPCE). This deed is also served on the debtor (article R. 523-8 of the CPCE). The debtor then has a period of time (one month to contest the seizure-attribution itself, but the period may be shorter to contest the conversion deed specifically, see article R. 211-11 CPCE) in which to contest.
If there is no valid challenge within the time limit, the conversion deed will take effect. immediate award of the claim seized in your favour. The garnishee (the bank) must then pay the blocked funds directly to you, up to the amount of your conviction (within the limit of the funds seized and declared by the third party). This payment extinguishes the debtor's debt to you and the third party's debt to the debtor, up to the limit of the sums paid.
What happens if several seizures are made on the same property?
Several creditors may be seeking to seize the same assets.
- For tangible personal property : The same assets may be subject to more than one protective attachment (article R. 522-11 of the CPCE). A seizure for sale may also be carried out on assets that have already been seized as a precautionary measure (article R. 522-12 of the CPCE). In this case, the law provides for the creditors to be informed and for the terms and conditions of the sale (amicable or forced) so that the proceeds are divided between them, depending on any liens they may have or the date of their actions.
- For receivables : The situation is different because of the consignment effect and the privilege conferred by the first protective attachment (articles L. 523-1 and L. 521-1 paragraph 3 of the CPCE). In principle, once a sum has been made unavailable and allocated to the first seizing creditor, another seizure (protective or allocation) carried out subsequently on the same sum cannot take precedence over the rights of the first. Competition between creditors over the sum initially blocked is therefore largely neutralised by the lien of the first distraining creditor.
Attachment of movable property or receivables is a technical but highly effective procedure for a creditor faced with a recalcitrant debtor or one who is organising his insolvency. They require rigour and responsiveness.
If you find yourself in one of these situations and are considering a protective attachment, or if you are the subject of such a measure, do not hesitate to contact our firm to discuss your options.
Sources
- Code of Civil Enforcement Procedures (CPCE)
- Civil Code
- Penal code
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