Registers of preferential rights and pledges

Like real property mortgages and pawn on cars, preferential rights and pledges are statutory or conventional guarantees which enable the creditor of a sole trader or a company (banks, tax authorities, social security) to make sure that the sums owed to him will be paid off.

Registration of those guarantees must be made with the registrar of the Commercial Court who is responsible for verifying that they are in conformity with the legislation and the acts.

Information may be delivered to every person concerned in the form of a statement signed by the registrar. The preferential rights and pledges statement shall mention the amount of the sums owed by a business to its creditors, and allow the business to know its indebtedness status.

The following entries shall be registered at the registry :

preferential right of the social security and the complementary funds.
It secures the payment of unpaid social security and family allowances contributions.

preferential right of the Public Treasury for tax matters, which concern all unpaid taxes regardless of their type (direct taxation: corporate tax, land tax … and excise duty: custom duties … ).

TheseTwo registrations of preferential rights illustrates the financial difficulties incurred by an business. The business who is unable to pay its social security contributions and its taxes runs the risk of having difficulties to pay off its other creditors.

referential right of the business seller

pledge on a business, often paired with the preferential right of the seller and for the same amount, but it may be totally independent (conventional pledge, judicial pledge). It gives to the seller or the lender the right to have priority over the other creditors on the sale of the business.

pledges on tools and equipments.

pledges on shares in a non-trading company.
Shares of a non-trading company represent a partner’s right, open to be pledged.

personal property lease transactions. They shall mention the equipments used for the working of the business, without having ownership, as it is financed by lease.

rental contracts and sale contracts with a retention of title clause. They allow the owner of a good to make his ownership right recognized in the eventuality of an administrative order or winding-up proceeding.

Protests and certificates of non-payment of cheques.
They allow the bearer of the bill of exchange to prove that the bill remains unpaid and to take legal proceedings against the signers.
The validity of those guarantees depends on their date of registration at the registry (usually within fifteen days); moreover their duration is variable (up to ten years, renewable), and finally, they are among themselves subject to classification upon their nature (general prior charges and special prior charges)

The registrar assumes an important responsibility if there happens to be a mistake on the identification of the creditors or the debtors, as well as on the retained sums.

Information regarding financial difficulties, pledges and preferential rights is precious, not only for the President of the Court, who is responsible for preventing business problems, but also for all economic actors who are interested in knowing the exact financial position of their partners or competitors.

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