Pledges of business assets: Definition and formalities
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In summary: The pledge of goodwill is a real guarantee which makes it possible to secure a debt by pledging the goodwill for the benefit of a creditor;
In the event of default of payment, the creditor may request the forced sale of the assets to recover his debt, with a right of priority;
The pledge may be conventional (agreement between the parties) or judicial (imposed by a judge);
The elements of the business that can be pledged include in particular the trade name, the right to the lease, the clientele, and the equipment, but not the stocks or the debts.
Pledge of business assets: What is it? Definition
The pledge of goodwill is a real guarantee allowing a debtor (business owner or company) to use his goodwill as collateral to secure a debt, generally within the framework of a professional amortizable loan . This guarantee, defined by article L142-1 of the French Commercial Code , aims to secure the repayment of a debt.
Unlike the real estate mortgage , the pledge only concerns the business assets, an intangible asset which brings together several elements essential to the operation of a commercial or craft activity.
This mechanism is particularly popular with banks or other credit institutions when it comes to granting significant financing to entrepreneurs. In the event of default by the debtor, the secured creditor has a priority right to reimburse himself through the forced sale of the business.
