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Banking Law - a brief overview

The field of Banking Law is extremely wide and this page attempts to address only one particular area viz. the needs of financial institutions outside France who seek information relating to security or collateral offered in regard to goods, chattels or real property in France.

1. Charge over assets of a corporation

N.B. There is no equivalent at French Law to the floating charge found in many common law jurisdictions.

1.1.Charge over shares of the corporation per se

A charge over shares is known in French as a nantissement sur actions ou sur parts sociales but its worth is self-evidently only that of the corporation at any given time.

De facto it is susceptible to giving a particular creditor only very slightly more leverage than an unsecured creditor.

1.2.Charge over assets of the corporation per se

The whole business entity may be offered as collateral, viz. this would include both tangible and intangible assets and is known in French as a nantissement sur fonds de commerce.

However, a creditor may not usually pick and choose to force the sale of a particular asset in the event of his non-payment but must instead petition for the corporation to be made subject to a Judicial Insolvency Measure (Redressement ou Liquidation Judiciaire) and thereafter to seek to have his ranking as a secured creditor recognised by the Insolvency Practitioner appointed by the Court.

1.3. Charge over a specific asset

A charge may be taken over a specific asset, such as machinery or production equipment.

2. Charges over real property

A charge over real property may be the object of a contractual agreement between the parties or may be pursuant to proceedings, which could, at least in the first instance, be an ex-parte measure.

3. Publicly available information

Information may be obtained first in regard to charges over the assets of a corporate body, and second a charge over real property from official publicly available sources in France.

The order and ranking of creditors who benefit from such a charge may also be established from the same source.

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