Unsecured loaner, do you have any hope of getting paid?
For the layman, the field of loan collection may seem disproportionately complex, leading to his discouragement.
In fact, it suffices to look at a minimum on this subject to find oneself in terms such as “unsecured loan”, “privileged creditor”, “foreclosure”, or even “collective proceedings” and “article 2284 of the Code. French civil society “.
The Key Elements That a Unsecured Creditor Must Know in Order to Get Paid
That being said, in the context of business relations, everyone may be led to become unsecured creditor, hence the interest of knowing all the ins and outs of this notion, and this is precisely the objective of this article. Let us now look at some basic definitions that need to be mastered before we can get to the heart of the subject, namely actions that maximize the chances of getting paid .
It must be kept in mind that unsecured loan is unlikely to be honored one day.
Unsecured or preferred creditor: what are the differences?
All unsecured creditors compete with each other
When a company is in a situation of judicial reorganization, it has a legal obligation to establish a repayment program for its liabilities – or, in other words, to free itself from its loans.
Therefore, and it being understood that the persons to receive a certain sum of a loanor are called creditors, it is necessary to distinguish them according to their status, unsecured or privileged. It is at this moment that articles 2284 and 2285 of the French Civil Code take on their full meaning. According to them, the owner of a unsecured loan shares a right with all other persons – physical or moral – in the same case, which is called the general right of pledge. This is specifically the right to sell the property (s) of the loanor to recover its claims, but in the absence of any right of preference, all unsecured creditors compete with with each other.
In addition, in the event of a collective action against the loanor, no individual pursuit by a unsecured creditor can be initiated. What is more, if the target company goes into liquidation, the general right of pledge is the sole judge-commissioner, on request of the liquidator.
Preferred creditors have priority over unsecured creditors
Conversely, the so-called “privileged” creditors benefit from a special security, through a right of preference. We find here in particular the employees of the company that is facing serious difficulties, the social agencies, as well as, as it should, the tax administration.
It should be noted that while senior creditors are paid more than unsecured creditors, not all are equally equal before the law. Thus, for example, the Treasury will collect its claims before the persons benefiting from the privilege of conciliation opened following a collective procedure.
In addition, a privilege may well relate to only one good of the loanor, and not the others, by restricting itself to a particular machine tool, vehicle or asset – but it may also encompass more than one property. In any event, a lien arises from either a legal obligation or a guarantee granted or obtained in court.
Specifically, if we take the case of a judicial liquidation to illustrate our point, the amount of the sum to be distributed among the unsecured creditors – in proportion to their respective claims – is equivalent to all of the company’s assets. after deduction
• the cost of the liquidation itself,
• subsidies reserved for executives,
• and sums paid in priority to the privileged creditors (according to an order itself defined in the legal framework).
As for the preliminary phase of the judicial recovery, it is at the level of the type of liabilities that the following distinction takes place:
• The super-privileged liability concerns employees of the company, and it is imperative that it be paid with an immediate payment;
• Preferred liabilities, relating to creditors with a right of preference;
• And finally the liability for unsecured creditors, who are, in fact, most often forced to accept the use of the loan forgiveness presented, as well as the delays – up to 10 years – chosen by the company .
On this point, we draw your attention to the fact that refractory creditors often have even longer repayment terms than acceptors.
The means available to unsecured creditors to recover their loan
Agree to negotiate the amount of the claim down
Let us note from the outset that for the most eager creditors, Article L626-19 of the Commercial Code provides for the possibility of a reduction in repayment terms, but that this will be proportional to the decrease in their loan, which they will be ready to grant.
Thus, some creditors accept significant loan reductions – up to more than 40% – in exchange for a reduction in the repayment period equally significant – from 5 to 2 years, for example.
Grouping up between unsecured creditors
In addition, as part of a bankruptcy recovery plan, jointly established between the loanor and the administrator, a committee consisting of several unsecured creditors can be perfectly formed to have more weight in the negotiations with the company in difficulty.
Oblique action and Paulian action
The unsecured creditors have two basic types of action at their disposal: the so-called “oblique” and the so-called “paulienne”.
In the first case, in accordance with Article 1341-1 of the Civil Code, it is a question of “short-circuiting” an apathetic loanor. To schematize, let’s take a company X that finds itself in the position of loanor vis-à-vis a person Z, but it turns out that a third company, Y, also owes money to X. Through ‘an oblique action , and provided that X is in insolvency and that his directors have not initiated a recovery procedure against Y himself, it is possible for Z – the unsecured creditor , in our example – to speak directly to Y.
Beware, however, this type of action is possible only in the case of a receivable meeting certain criteria, of course due, but also liquidity. To put it differently, oblique action makes sense only if it is the only way for the creditor to collect his due. In any case, if the claim of Y vis-à-vis X is certain and X demonstrates a real inertia, it is in any case a particularly useful law.
As for the Pauline action , it is described in Article 1341-2 of the Civil Code, it clearly targets dishonest loanors, namely those who knowingly alienated certain assets – by giving them to an accomplice, for example – so to voluntarily provoke their insolvency, thus subtracting them from the patrimony taken into account by the general pledge. Faced with such a practice, the Pauline action authorizes the creditor to sue the fraudulent act at the origin of the transfer of the property in question, so that they may be reinstated in the assets taken into account.
The case of personal bankruptcy
In addition, it should be noted that if it is a personal bankruptcy proceeding that has just begun, unsecured creditors have the right to sue the head of the company individually.
The manager is considered to have taken surety – both personally and jointly – against the creditors of the company
In such a situation, the manager is considered to have taken surety – both personally and in solidarity – with the creditors of the company. Therefore, this person is not only prohibited from administering or running a business, whether directly or not, but it also faces the risk of seeing his personal wealth amputated to pay the loans of his company.
Personal bankruptcy is not the most common procedure, as it can be profoundly unfair to an entrepreneur who has tried to keep his business afloat, but to a dishonest leader, and for creditors without particular guarantees, it is of real interest.
Finally, our last tip is mainly for people who would not feel perfectly comfortable with all the elements we have just discussed, and it would be as simple as it is concise: never hesitate to seek help from specialized loan collection firms.