A New Form Of Guarantee In The Banks Decree: The Non-Holding Pledge

Decree Law n. 59/2016, containing urgent provisions on enforcement and insolvency procedures, as well as for investors in banks in liquidation, and converted with amendments into Law n. 119/2016, in Chapter 1, dedicated to measures to support businesses and to speed up the recovery loans, has created the figure of the non-holding pledge, outlining a significantly derogatory discipline, in term of sectoriality and specialization, of the general codicistic rules governing the ordinary credit guarantee instruments, in particular those on pledges.

The regulatory intervention is part of the evolutionary path that, over the years, has progressively affected the national system of guarantees. The process of globalization and internationalization of the credit market had made necessary to start a process of renewal, through the introduction of new forms of guarantee more in line with the requirements of the modern business law and international trade, increasingly frequented by financial products and by a growing number of dematerialized assets.

The rigidity of the civil code discipline, in which the pledge is anchored to the datio rei and to the dispossession of the debtor, made this guarantee instrument unsuitable to perform its fundamental function within the financial markets. Hence, the regulatory intervention aimed at combining the financing needs of the companies with the protection of creditors, with a view to optimizing the certainty and the timely enforcement of the guarantee right.

More specifically, the new form of guarantee, oriented to the Community model of the so-called floating charges (floating guarantees), provides in the art. 1 the faculty, for the enterpreneurs registered in the Register of Companies, to pledge assets that can be determined or determinable, to guarantee credits (granted to them or to third parties) inherent to the business activity, without however the need to deprive themselves of the same assets.

From here, we can point out the connotations given by the Legislator to the figure at issue: (i) speciality in relation to the general figure of the pledge, due to the absence of dispossession; (ii) inherence to the business of both the credit backed by the collateral, and the assets and/or right to be subjected to the pledge.

With regard to its application area, paragraph 1 of art.1 indicates the subjects allowed to opt for this form of guarantee, i.e. “entrepreneurs registered in the Register of Companies”.

If the status of entrepreneur set the basis and limit of the non-holding pledge operativity, on the opposite side of the relationship, the art.1 of the Decree, does not contain any provision about the nature or activity of the secured creditor.

As for the objective profile, the rule limits the scope of the non –holding pledge to the company’s assets, specifying that they must be determined, or determinable, even if future, including also receivables deriving from the company’s activities and intangible assets.

The express regulatory reference to the pertinence to the business of the assets/credits covered by the guarantee, excludes from the area of the regulation all the entrepreneur’s personal assets/credits, as well as the credits generated for purposes other than the typical business activity of the company itself (hypothesis for which the ordinary pledge regime still applies).

Another innovative and functional feature for the purpose pursued by the Legislator, that strictly concern the functioning of the new pledge figure, is its natural “rotativity”, expressly stated in paragraph 2 of art.1

In fact, unless contrary agreed between the parties, the constituent debtor is entitled to transform, alienate, or in any case, more generally, to dispose of the assets subjected to the pledge in accordance with their economic destination, with consequent transfer of the pledge to the product resulting from the transformation, to the valuable consideration of the assignment, or to the substitute asset acquired by such consideration, without the need to provide a new guarantee.

Not less important, in the regulatory framework in question, is the discipline of the enforcement phase and the manner in which the guarantee is enforced, modelled in order to be as close as possible to the typical financial guarantees, particularly with regard to the speed of the related process.

In fact, for the enforcement phase, paragraph 7ter provides that the creditor who intends to enforce the guarantee must notify by certified email the notice to the debtor, to any other creditors who have transcribed a non-holding pledge as well to any third part granting the pledge, as they can raise opposition within 5 days from the notice.

Unless the title provides otherwise, the guarantee’s provider is required to deliver the asset to the creditor within 15 days from the notice. Should he fail to do so, the creditor may apply to the bailiff, even verbally, for enforcement, even without an enforceable title and injunction.

The Legislator, granting the creditor with such powers, treats the pledge in the same way as an enforceable title and, consequently, does not require the injunction to let up the enforcement procedure begin.

Finally, also from the point of view of the enforcement methods and, expecially, with regard to the exercise of the powers and faculties of the self-executory, there are elements of speciality.

For example:

1. the creditor may directly sell the assets subject to the pledge, holding the relevant consideration up to the guaranteed amount, without subordinating the sale to an authorized person pursuant to art. 2797 c.c.;
2. moreover, the creditor may directly enforce or assign the pledged receivables up to the amount of the guaranteed sum and collect the consideration, after informing the collateral provider, thus as an exception to the general provision of articles 2803 e 2804 c.c., according to which the creditor can only collect the credits under pledge or request the assignment of them.

In conclusion, the Legislator, aiming to support both of the  business activity and the protection of entrepreneurial investments, has come to propose a guarantee instrument of greater dynamism and rapidity in terms of credit recovery, thus reconciling and remedying the endemic slowness and poor efficiency of the executive system that for too long has led a financial paralysis in the credit system, discouraging foreign investitors.

Author: Avv. Giulia Loi

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Contributing Advisors