The general shop warrant: a practical guide for companies

Are your stocks lying idle in your warehouse? Did you know that they could be an active source of finance for your business? The general warehouse warrant is a legal tool designed to do just that: turn your stored goods into collateral for obtaining credit, without losing immediate ownership of them. Although potentially very useful for optimising cash flow, its mechanism needs to be properly understood. This simplified guide explains the essentials: what a warrant is, how it works, its advantages and the precautions to take.

What exactly is a general shop warrant?

Imagine depositing your goods (raw materials, finished products, etc.) in a specialised, government-approved warehouse: a general shop. In exchange, you receive a two-part document: the receipt and the warrant.

Le receipt is like a title deed to the goods deposited. It allows you to sell or recover them. The warrantThis is the "credit" part of the security. You can detach it and give it to a lender (a bank, for example) as collateral for a loan.

Legally, warrants are quite unique:

• It works like a paper instrument (a type of promissory note): it represents a promise to repay a sum of money on a specific date.
• At the same time, it is a pledge on goods described in the warrant. Handing over the warrant to the creditor is equivalent to giving him this pledge.

This system is governed by the French Commercial Code (articles L. 522-24 et seq.). It should be noted that there is also an agricultural warrant for agricultural products and that a recent development makes it possible to envisage warrants in the following form electronicspotentially simplifying their management.

It should also be noted that other forms of warrants, such as the hotel warrant or oil tankerwere repealed in 2021 (by order no. 2021-1192 of 15 September 2021) because they were deemed obsolete.

How does the warrant work in practice?

To use this tool, several steps and conditions are necessary:

1. The depot The first step is to deposit eligible goods (stocks, raw materials, manufactured products - not operating equipment) in a authorised general shop. This deposit must be real and effective. Only certain professionals (manufacturers, traders, farmers, craftsmen) may use it.
2. Issuing the security The general shop issues the warrant receipt, which contains precise information on the depositor, the goods (type, quantity, value, insurance, etc.), the amount of the secured debt, the due date and the creditor.
3. The first endorsement For the warrant to become an active guarantee, the depositor (borrower) must endorse it in favour of the creditor (lender). This act, recorded on the back of the warrant, creates the commitment to pay and constitutes the pledge.
4. Transcription : This is a crucial stage. The first creditor must have this endorsement recorded ("transcribed") on the official registers of the general shop. Without this transcription, the pledge exists between the parties but is not valid vis-à-vis others (for example, other creditors or in the event of bankruptcy). Speed is of the essence here.

Once these steps have been completed, the creditor holds a warrant which gives him a right of lien on the goods, made public by the transcription.

Why use a warrant? Advantages and points to bear in mind

The warrant offers several advantages for a company:

• Easier access to credit This is a way of obtaining financing by using an asset that is often capitalised - stock.
• Asset valuation It transforms the "dormant" value of goods into financial leverage.
• Security for the lender The pledge on clearly identified assets held by a third party (the general shop), coupled with the fact that the security is a commercial paper, provides a solid guarantee, which can make it easier to obtain credit on better terms.

However, using the warrant requires vigilance:

• Formal rigour The information on the title must be accurate and complete. An error could undermine the guarantee.
• Importance of transcription The first creditor must ensure that the first endorsement is quickly transcribed in order to secure its pledge.
• Holder's rights The creditor holding the warrant has strong rights, in particular a right of retention (the warehouse cannot release the goods without the creditor's agreement or payment) and a lien (priority of payment in the event of a forced sale).
• Consequences of non-payment If the company does not repay on the due date, the creditor can sell the goods to pay himself.
• Collective proceedings In the event of the protection, reorganisation or compulsory liquidation of the depositing company, specific rules apply, but the rights of the warrant holder are generally well protected (the warrant will often have to be paid for in order to recover the goods).
• Avoid irregular assembly Warrants created on fictitious deposits or by unauthorised warehousekeepers have no legal value as general warehouse warrants.

Maturity of the warrant: payment or sale of the goods

What happens when the maturity date of the loan secured by the warrant arrives?

• Normal case: payment The company (or to be more precise, the holder of the receipt at the time) reimburses the sum due to the warrant holder. The warrant holder then returns the paid-up warrant, which releases the goods from the pledge. The holder of the receipt can then recover the goods. Payment before the due date is also possible, often via a consignment mechanism with the general shop.
• Default of payment If the debt is not repaid, the creditor holding the warrant must follow a specific procedure to enforce its guarantee:
  1. Have the non-payment recorded in an official document: the protest.
  2. Request public auction pledged goods (within one month of the protest).
  3. Pay yourself out of the sale price. Thanks to its privilegeIn the case of a sale, it will be paid before most other creditors, with the notable exception of sales and storage costs, and customs duties or taxes specific to the goods.
  4. If the sale price is not sufficient to cover the entire debt, the creditor can then take recourse against the initial subscriber and any previous endorsers of the warrant (forex recourse).

The general shop warrant can be an interesting lever for financing, but its implementation requires rigour. To assess the relevance of this tool for your company and to ensure that it is properly implemented, our team will be happy to advise you.

Frequently asked questions

What exactly is a general shop warrant?

This is a security issued by an approved warehouse (general shop) representing a claim (a loan) secured by the goods deposited there by a company.

What is the difference between a receipt and a warrant?

They are issued together: the receipt represents ownership of the goods deposited, while the warrant represents the pledge made on the same goods to secure a debt.

Who can use a warrant to finance stocks?

Mainly manufacturers, retailers, farmers or craftsmen who place their goods (raw materials, finished products, etc.) in an approved general shop.

Can any goods be warranted?

No, only raw materials, goods, commodities or manufactured products. The company's operating equipment is excluded.

How does a warrant guarantee a debt?

By a pledge: the goods deposited are allocated in priority to the repayment of the debt mentioned on the warrant. The creditor has a right to the goods.

What is the warrant transcription and why is it important?

This is the official recording of the first endorsement (creation of the pledge) in the general shop registers. It is essential because it makes the pledge valid and has priority over other creditors or the buyer of the goods.

Can a warrant be issued electronically?

Yes, a recent law ("Attractiveness" Act of June 2024) provides for the possibility of issuing, signing and transferring warrants electronically, subject to conditions of reliability.

What are the main advantages of a warrant for a company?

It makes it possible to obtain credit using the value of stocks, facilitates cash management and offers a solid guarantee to the lender, which can improve financing conditions.

What are the risks of not redeeming a warrant?

The main risk is that the creditor may sell the goods deposited at public auction to be reimbursed from the sale price.

What happens to the warrant if the depositing company goes into receivership or liquidation?

The right of the warrant holder is generally well protected: often, the administrator or liquidator will have to pay for the warrant in order to be able to dispose of the pledged goods.

Can the creditor take the goods if the warrant is not paid?

Not directly. He must first have the non-payment recorded (protest) and then ask for the goods to be sold at public auction; he then pays himself from the price obtained.

Can I pay for a warrant before its expiry date?

Yes, the holder of the receipt has the right to offer advance payment to the warrant holder, or to deposit the sum due with the general shop in order to release the goods.