Bankruptcy Law

The pledgee, even if not yet admitted, may apply to the bankruptcy judge, prior to realization, for judicial attribution of the pledge, by virtue of Article L. 642-20-1(2) of the Commercial Code. Judicial allotment enables the pledgee to obtain ownership of the asset over which he has a pledge, without having to submit to the law of competition.

The right to apply for judicial attribution of a pledge, which does not apply to pledges of a business , is available only to pledgees and not to creditors with a right of retention . In the absence of a provision requiring the exercise of a right of retention, judicial allocation of the pledge is available to creditors holding a pledge on plant and equipment who do not pursue the realization of the encumbered asset . Furthermore, since the request for judicial attribution does not constitute an action for revendication , the creditor is not bound by the time-limits for such an action, even if the pledged asset is held by a third party . Furthermore, when the pledgee authorizes the debtor to lease the equipment by affixing a plate indicating the pledge, the creditor has a right of resale on the pledged equipment, so that the judicial decision to allocate the pledge can be set up against the lessee, the third party holder, if he has been involved in the case . 

The pledgee regains the right to request judicial allocation of the pledge after the debtor's court-supervised liquidation has been declared , even in the presence of subsequent privileged claims , including the super-privilege of employees . Nor do seizures effected on the debtor's everyday account, with the sums in question allocated to a special account, constitute an obstacle to the judicial allocation of a pledge on the debtor's everyday account, since, in the absence of conversion of these seizures prior to the opening of the procedure, the sums in question are deemed to be held in the pledged account on the date of the court ruling opening the judicial liquidation . 

Where the application for attribution has been interrupted by the opening of the procedure, the secured creditor must make a new application to the bankruptcy judge  . He must, however, have declared his claim, and the accompanying security interest, within the statutory time-limit, as a liability of the court-supervised liquidation. A request for the allocation of a pledged claim is fully justified when its holder has a claim admitted on a privileged basis for an amount greater than that of the pledged claim . In the absence of a timely declaration, and where the creditor has not served the pledge before the opening of the insolvency procedure, the application for judicial attribution of a pledge concerning intangible movables must be rejected . Furthermore, if the claim is subsequently rejected in whole or in part, he must return the property or its value to the liquidator, subject to the admitted amount of his claim . 

While judicial assignment of the pledge constitutes a right, it can become an obligation for the pledged creditor, when he is secured by both a pledge on equipment and a surety bond. The pledgee commits a fault when, by refraining from requesting judicial attribution of the pledge, he deprives the guarantor of the benefit of subrogation which could have benefited him . 

Lastly, the pledgee may no longer apply for judicial allocation of pledged equipment, once it has been returned to the sellers , or once the ordinance authorizing the liquidator to sell the pledged equipment has become res judicata . Similarly, the creditor's letter informing the liquidator of his intention not to oppose the ordinance authorizing the sale of the business, and the writ of summons requesting the deferral of the pledge on the fraction of the sale price corresponding to the pledged equipment, establish his waiver of the right to judicial allocation of the pledged equipment before its liquidation .

Cass. com., 13 October 1998, LawLex202300005613JBJ (LJ).

Cass. com., 9 June 1998, LawLex202100001587JBJ (LJ).

Cass. com., 14 October 1997, LawLex202200009200JBJ (LJ).

Cass. com., 19 January 1988, LawLex202300005616JBJ (LJ).

Cass. com., 23 January 2001, LawLex202300005456JBJ (LJ).

Cass. com., 13 May 2003, LawLex202100001585JBJ (LJ).

Cass. com., 5 April 1994, LawLex202300005626JBJ (LJ).

Cass. com., 16 April 1996, LawLex202300007467JBJ (LJ).

Cass. ass. plén., 26 October 1984, LawLex202300005620JBJ (LJ) ; Cass. com., 9 July 1991, LawLex202300005621JBJ (LJ) ; 12 February 1979, LawLex202300005628JBJ (LJ).

Cass. com. 28 January 1997, LawLex202300005624JBJ (LJ); 11 June 2003, LawLex202300005627JBJ (LJ); 4 March 2003, LawLex202300005625JBJ (LJ), holding that the beneficiary of a warrant concerning batches of eaux de vie is not entitled to claim the pledged goods, but has the right under Article L. 642-20-1 of the Commercial Code to apply for judicial allocation.

Cass. com., 28 January 1997, LawLex202300005624JBJ (LJ).

Cass. com., 28 May 1996, LawLex202100003077JBJ (LJ).

Cass. com., 6 March 1990, LawLex202100001584JBJ (LJ).

Cass. com., 6 January 1998, LawLex202100001586JBJ (LJ).

Cass. com., 25 September 2019, LawLex202300005611JBJ (LJ).

925. Judicial assignment of pledges