FRANCE Law and Practice Contributed by: Raphaële Courtier, Sébastien de Monès, Victor Camatta and Jessica Chartier, Bredin Prat
• A Dailly law pledge or assignment is a very efficient way of pledging or assigning as security receivables, but its use is subject to very strict conditions: (a) it can be granted over professional receivables only; (b) the beneficiary of the pledge or assign- ment must be a licensed French credit institution or French financing company, a passported foreign credit institution or a specific French alternative investment en- tity (in other words, funds cannot benefit from a Dailly pledge or assignment); and (c) it must secure a financing granted to the pledgor/assignor; it cannot secure a guar- antee undertaking. Perfection of such security will occur upon mere execution by the borrower of a bordereau stating mandatory information. It does not require that the debtor be notified of the pledge/assignment. The assignment will become effective between the parties and enforceable against third parties on the date specified in the Dailly bordereau. • A transfer of receivables by way of security ( Cession de créances à titre de garantie ), cre- ated by the Ordinance. The applicable rules regarding perfection and enforcement are the same as those applying to an assignment of receivables. Therefore, it is not a new regime of assignment of receivables. The Ordinance only indicates that such mechanism can be used as a security interest (which was not permitted before the Ordinance as French courts requalified it in a pledge of receiva- bles). The conditions are as follows: (a) the transfer of receivables by way of security must be established in writing and will: (i) become effective between the parties
and enforceable against third parties on the date of the agreement; and (ii) be enforceable against the trans- ferred debtor only if the transfer has been notified to it or it has ac- knowledged it, unless it has already agreed; and (b) to the extent the secured obligation is not due, any monies received by the trans- feree will be kept in accordance with the cash collateral ( gage espèces ) mecha- nism, consecrated by the Ordinance (see below). • A cash collateral ( gage espèces ), which must be established in writing and is enforceable between the parties and against third parties by the remittance of the transferred amount. Unless otherwise agreed, the beneficiary may freely dispose of the amount so remitted. IP Rights IP rights (patents, software, trade marks, designs and models) can be subject to pledges. In order to be perfected, such pledges have to be registered (and, for some of them, renewed after five years) with the national trade marks and patent authority ( Institut national de la pro - priété industrielle ) and published in the official bulletin of industrial properties ( Bulletin officiel de la propriété industrielle ). Secured creditors will usually require debtors to renew and exploit their IP rights to maintain their value. Real Property Security interest over land and buildings usu- ally takes the form of a mortgage ( hypothèque ), which must be executed before a public notary and registered with the land registry office ( Con- servation des Hypothèques ) within the jurisdic- tion in which the property is located in order to be enforceable against third parties.
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