FRANCE Law and Practice Contributed by: Anne-Sophie Noury, Saam Golshani and Alicia Bali, White & Case
• claims secured by movable securities or the les - sor’s lien; • tax and social security claims (indirect taxes); and • unsecured claims, pro rata to their amount. Note that this order of priority is not relevant to all creditors – for example, creditors benefitting from a retention right over assets with respect to their claim related to such asset will be treated separately. 2.3 Secured Creditors The two most common types of security taken over real estate property by creditors are the mortgage ( hypothèque ) and the lender’s lien ( privilège du prê- teur de deniers ). Both require a notarial deed, which entails the payment of fees to the notaries involved (which is proportional to the principal amount secured but negotiable above a certain level), and must be registered in order to take rank. Both a mortgage and a lender’s lien give the secured party the same rights over the property, but a mortgage only takes rank upon the date of its registration while a lender’s lien takes rank from the date of the acquisition, provided that it is registered within two months (if not, it takes rank upon registration, like a mortgage). However, this difference ceased to exist on 1 January 2022 in respect of liens granted after that date, as such liens will be regarded as statutory mortgages ( hypothèque légale ). In either case, enforcement may be carried out by means of a court-supervised public auction or a court-ordered attribution of the property to the secured creditor(s) (subject to the creditor(s) paying the amount, if any, by which the value of the prop - erty as appraised independently exceeds the secured amount). In the case of a contractual mortgage only, enforcement may also – if agreed in the mortgage deed (or at the time of enforcement) – result from the direct appropriation of the secured property by the secured creditor (subject to the payment of any excess, as in the case of court-ordered attribution). Direct appropriation is seldom agreed by borrowers in normal financing circumstances but may be more likely to be imposed in a restructuring context. A fiducie may also be considered for security pur - poses in relation to real estate assets but leads to
certain disadvantages in terms of costs, which will be higher than for a mortgage as the notarial fees and the registration fee and duty are based on the value of the property rather than the amount secured. Security Over Equity Shares The most usual types of security over shares are the pledge over shares ( nantissement de parts ) and the pledge over a company’s securities accounts ( nan- tissement de comptes titres ), depending on the corpo - rate form of the company. As such, pledgors will ficti - tiously retain the shares/financial securities until they are fully paid up by the debtor. In addition, a fiducie over the shares of a company is usually considered in distressed or pre-distressed situations. Security Over Movable and Intangible Properties One of the main types of security over movable prop - erty is the pledge, known as gage in respect of tangi - ble assets and nantissement in respect of intangible assets. If the secured obligation is not performed, the pledged assets may be sold and the price paid to the secured creditor who has a priority right on that price (although not a first-rank priority right). Contractual appropriation is also possible if it is provided for in the security documents. The existence of a pledge is subject to a written instrument (which may be in elec - tronic format), and its efficiency against third parties is subject either to a recording in a special register or to the transfer of possession of the movable asset into the hands of the creditor. In respect of receivables, an assignment by way of security (transferring title in the collateral) may be used. When the secured assets are professional receivables and certain other conditions are met, parties can use the special regime (known as Dailly security assign - ments) provided for by the Monetary Financial Code. As of 1 January 2022, it is also possible to use the general assignment regime provided for by the Civil Code, which enables the transfer by way of security of all types of receivables between all types of parties. Security Over Intellectual Property Rights In relation to intellectual property rights, a pledge over trade marks, patents or software requires registration in the national register held at Institut National de la Propriété Intellectuelle .
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