Unsecured creditor: the rank that recovers almost nothing, and the three levers to move out of it

A lender financing a business without security over assets, a supplier delivering on a simple invoice, a landlord whose rent is accumulating: all occupy the same rank in their debtor's collective proceedings, the last. The published statistics on the outcome of French collective proceedings converge on one point, which every head of credit knows: a considerable share of cases are closed for shortfall of assets (insuffisance d'actif), and the dividend paid to the unsecured creditor (créancier chirographaire) is most often nil or residual. No text fixes this recovery rate, which comes from the statistical studies of the Ministry of Justice, the Banque de France or restructuring professionals, and must therefore always be tied to a dated source. This guide approaches the problem from the other end: not to record the rank, but to examine the three legal levers that make it possible to move out of it, with, for each, the useful time window, the grounds of nullity, and the rank actually obtained.

The unsecured rank: an absence of protection, not a second rank

The unsecured creditor is not a second-rank creditor. It is the creditor that has nothing other than its title: no security interest over assets, no privilege, no right of retention, no ownership retained or transferred by way of security. In the ranking of creditors, it comes after all protected creditors, on whatever remains of the proceeds of realisation of the assets.

In compulsory liquidation (liquidation judiciaire), the order of distribution of the proceeds of realisation is found in Article L. 643-8 of the French Commercial Code. It is to that text that paragraph II of Article L. 641-13 now refers for the payment of unpaid post-commencement claims, and it is also to that text that Article L. 611-11 refers for the rank of the conciliation privilege, since Ordonnance No. 2021-1193 of 15 September 2021. Commentaries that still place this order in “paragraph II of Article L. 641-13” repeat a repealed wording: checking the applicable version, case by case, is part of the institutional creditor's due diligence.

The practical consequence is brutal. The unsecured creditor bears the residual risk of the business, after the super-privileged employees, the legal costs of the proceedings, the privileged post-commencement creditors, the holders of registered security interests and the special privileges. On an asset burdened by a first-ranking mortgage and a pledge over the business (nantissement de fonds de commerce), the margin available to the unsecured creditors as a body is, in most cases, theoretical.

Why unsecured recovery is structurally doomed

Four mechanisms combine to neutralise the unsecured creditor from the opening judgment.

First, the stay of proceedings. Paragraph I of Article L. 622-21 interrupts or prohibits any legal action seeking an order against the debtor to pay a sum of money or rescission of a contract for non-payment. Paragraph II stops or prohibits any enforcement procedure against movable and immovable property, as well as any distribution procedure that had not produced an attributive effect before the opening judgment. The date of the attributive effect therefore becomes decisive: an attachment of debts (saisie-attribution) served the day before the judgment takes effect, while the same measure begun the day after is sterile.

Next, the prohibition on payments. Paragraph I of Article L. 622-7 carries by operation of law a prohibition on paying any claim arising before the opening judgment, with the sole exception of payment by set-off of related claims. The exception is narrow but strategic: it justifies, beforehand, structuring contractual flows so as to create a defensible connection between reciprocal claims.

Third, the discipline of filing claims. Article L. 622-24 requires all pre-commencement creditors, employees excepted, to send their declaration to the creditors' representative (mandataire judiciaire) within the periods set by decree of the Conseil d'État, the period running, for holders of a registered security or those bound to the debtor by a registered contract, only from notification of the personal warning. The sanction was tightened by Ordonnance No. 2021-1193: under Article L. 622-26, claims and security interests not properly declared are unenforceable against the debtor, and that unenforceability also operates against co-obligors who are individuals, who granted a personal security or who allocated or assigned an asset as security. Relief from forfeiture can be requested only within six months. A bank that declares its claim without declaring the security that secures it ends up, in practice, unsecured. The periods, content and relief from forfeiture are presented in our article on declaring a claim in collective proceedings.

Finally, the gap between pre-commencement and post-commencement claims. Claims arising properly after the opening judgment for the needs of the conduct of the proceedings or in consideration for a service provided during the observation period are paid on their due date (paragraph I of Article L. 622-17) and, failing that, by privilege. But this procedural privilege is not absolute: paragraph II of Article L. 622-17 expressly reserves the wage super-privilege of Articles L. 3253-2, L. 3253-4 and L. 7313-8 of the French Labour Code, the legal costs arising properly after the judgment for the needs of the conduct of the proceedings, and the privilege of Article L. 611-11.

That privilege is also lost through inaction. Paragraph IV of Article L. 622-17 strips an unpaid claim of the privilege if it has not been brought to the attention of the administrator, failing that the creditors' representative, the commissioner for the performance of the plan or the liquidator, within one year of the end of the observation period. In liquidation, paragraph III of Article L. 641-13 provides six months from publication of the judgment opening or ordering the liquidation, or one year from publication of the judgment adopting the disposal plan, with the exception of the costs and expenses of the proceedings. Two periods, two starting points: a timing error sends the post-commencement creditor back into the general body of creditors.

First lever: security over assets, useful only if taken in time

Moving out of the unsecured rank by security over assets (sûreté réelle) is the classic route. Its difficulty is not technical, it is chronological.

The suspect period annuls security taken too late

Item 6° of paragraph I of Article L. 632-1 strikes down as null by operation of law any contractual security interest in property or contractual right of retention created over the debtor's assets or rights, since the date of cessation of payments, for previously incurred debts.

Any contractual security interest in property or contractual right of retention created over the debtor's assets or rights for previously incurred debts, unless they replace an earlier security of at least equivalent nature and base and with the exception of the assignment of claims provided for in Article L. 313-23 of the Monetary and Financial Code, made in performance of a framework agreement concluded before the date of cessation of payments.

Only two escape routes, and they are narrow: replacement of an earlier security of at least equivalent nature and base, and the assignment of business receivables made in performance of a framework agreement predating cessation of payments. The operational reading is simple: security obtained in exchange for rescheduling an existing exposure, when the debtor's cash is already drained, is security at high risk of annulment. The lender's reflex must be the opposite: tie the security to new money, at the same time, and document that simultaneity. The fate of payments and security obtained after cessation of payments is examined in our article on the nullities of the suspect period.

The same article strikes down as null the transfer of assets or rights into a fiduciary estate made since cessation of payments, unless the transfer was made as security for a debt contracted at the same time (10°), as well as any amendment to a fiducie contract allocating assets already transferred to the security of debts predating that amendment (11°).

After the judgment, the asset base is frozen

Ordonnance No. 2021-1193 added to the text a rule that financing practice must build into its documentation. Paragraph IV of Article L. 622-21 prohibits by operation of law, from the opening judgment, any increase in the base of a contractual security interest in property or of a contractual right of retention, whatever the means, by the addition or supplementing of assets or rights, in particular by registration of securities, fruits and products, or by transfer of the debtor's assets or rights. Any provision to the contrary, including one concerning assets or rights not yet in existence on the day of the judgment, is inapplicable from the time of pronouncement.

The reservation deserves to be noted by banks: the increase may validly result from an assignment of claims under Article L. 313-23 of the Monetary and Financial Code made in performance of a framework agreement concluded before the opening. The Dailly framework agreement therefore retains a value of its own, Article L. 313-27 of the same Code providing that the assignment becomes enforceable against third parties on the date stamped on the slip when it is handed over, without any other formality, and that handing it over carries by operation of law the transfer of the security, guarantees and accessories attached to each claim. The precise interplay between that effect and the freezing of the asset base, for claims arising after the judgment, depends on a reading by the case law that must be validated case by case.

Securing a post-commencement claim requires the supervisory judge's authorisation

During the proceedings, paragraph II of Article L. 622-7 allows the supervisory judge (juge-commissaire) to authorise the debtor to grant a contractual security interest in property to secure a claim arising after the opening of the proceedings. The earlier wording listed exhaustively the mortgage, the pledge and the nantissement; it is now generic. The opinion of the public prosecutor is required only if the act is liable to have a decisive effect on the outcome of the proceedings. A creditor that agrees to refinance a business under proceedings therefore has a lawful route, but it goes through an order of the supervisory judge, not a simple bilateral amendment.

The particular case of the security fiducie

The security fiducie (fiducie-sûreté), whether over movables (Article 2372-1 of the Civil Code) or immovables (Article 2488-1), secures a present or future obligation, which must be determinable in the latter case. Failing payment, and unless otherwise stipulated, the fiduciary creditor acquires free disposal of the asset, its value being determined by an expert appointed by agreement or by the court, except for officially quoted assets or sums of money, any contrary clause being deemed not written (Article 2372-3).

Its reputation for effectiveness in collective proceedings calls for a decisive distinction. Where the assets transferred are the subject of an availability agreement under which the settlor debtor keeps the use or enjoyment of them, Article L. 622-23-1 prohibits, on pain of nullity, any assignment or transfer to the fiduciary or to a third party solely by reason of the opening of the proceedings, the adoption of the plan or a default in payment of a claim that arose before the opening judgment. Those assets are moreover among those that may be reclaimed under the first paragraph of Article L. 624-16. In other words, the fiducie designed to leave the operating tool in the debtor's hands is, in proceedings, largely neutralised. A fiducie without an availability agreement is not covered by that text, but its exact treatment depends on an analysis in the doctrine and case law that no text settles head-on.

The supervisory judge may also authorise payment of pre-commencement claims in order to obtain the return of assets and rights transferred by way of security into a fiduciary estate, where that return is justified by the continuation of the business (paragraph II of Article L. 622-7). For the fiduciary creditor, this is more a point of negotiation than a threat.

Second lever: the right of retention, the only security that holds through the thing itself

The right of retention is the most under-used lever of creditor recovery, because it requires physical organisation beforehand rather than a registration.

Article 2286 of the Civil Code lists exhaustively who holds it: the person to whom the thing has been handed over until payment of its claim, the person whose unpaid claim arises from the contract obliging it to deliver the thing, the person whose unpaid claim arose in connection with holding the thing, and the person who has the benefit of a non-possessory pledge (gage sans dépossession). The right is lost by voluntary relinquishment of possession.

Actual retention and fictitious retention do not share the same fate

The distinction governs everything. Paragraph I of Article L. 622-7 makes unenforceable by operation of law the right of retention conferred by 4° of Article 2286, that of the non-possessory pledge, during the observation period and the performance of the plan, unless the pledged asset is included in a sale of the business decided under Article L. 626-1. The same text prevents the conclusion and enforcement of a forfeiture clause (pacte commissoire). Fictitious retention, long presented as the great advantage of the non-possessory pledge, is therefore disarmed so long as the business is in safeguard or in reorganisation with a plan.

Actual retention, which concerns a thing physically held, keeps its force. The texts assume that it can be asserted against the proceedings, in particular through the supervisory judge's power to authorise payment of a pre-commencement claim in order to withdraw the pledge or a thing lawfully retained, and through the opening reservation in the order of distribution of Article L. 643-8. The exact scope of that enforceability is, however, a matter for the case law and must be assessed case by case.

In liquidation, the retainer has a timetable and an option

Article L. 642-20-1 sets out the mechanics. Where the pledge or the thing lawfully retained is not withdrawn, the liquidator must, within six months of the compulsory liquidation judgment, ask the supervisory judge for authorisation to proceed with realisation, and then notify that authorisation to the creditor fifteen days before realisation. The pledgee creditor, even if not yet admitted, may ask the supervisory judge for judicial attribution before realisation; if its claim is then rejected in whole or in part, it returns the asset or its value, subject to the amount admitted. Where the liquidator sells, the right of retention is carried over by operation of law onto the price.

For the creditor, those fifteen days are a window for decision, not a period for information: it is the moment to choose between judicial attribution of the asset and carrying over onto the price.

The notified pledge of receivables, retention over flows

Ordonnance No. 2021-1192 of 15 September 2021, in force on 1 January 2022, strengthened Article 2363 of the Civil Code: after notification, the pledgee creditor has a right of retention over the receivable given in pledge and alone has the right to its payment in both principal and interest. The earlier, less firm, wording referred only to validly receiving payment. For a lender secured on trade receivables, rents or an operating account, notification to the assigned debtor is not an administrative formality: it is the act that turns a security of rank into a capture of flows.

Third lever: the conciliation privilege, new money as an instrument of rank

The third lever does not improve the rank of an existing claim: it creates a new rank for new money. This is the conciliation privilege (privilège de conciliation) of Article L. 611-11.

The conditions are cumulative and must be read literally. There must be conciliation proceedings that gave rise to the approved agreement referred to in paragraph II of Article L. 611-8. An agreement merely recorded by the president of the court, on the parties' joint application, does not give rise to the privilege. Approval itself requires that the debtor not be in cessation of payments or that the agreement put an end to it, that the terms of the agreement be such as to ensure the continuity of the business, and that the agreement not prejudice the interests of non-signatory creditors. The conditions for obtaining this privilege and its actual rank are covered separately in our article on the conciliation privilege of the provider of fresh money.

The protected object is twofold, which is often forgotten: the new cash contribution granted in order to ensure the continuation of the business and its continuity, but also the supply of a new good or service in the same framework, the privilege then applying to the price of that good or service. A strategic supplier can therefore also move out of the unsecured rank.

Two exclusions frame the mechanism. It does not apply to contributions made by the debtor's shareholders and partners as part of a capital increase. And the creditors who signed the agreement may not benefit from it, directly or indirectly, in respect of their support granted before the opening of the conciliation. Any attempt to recharacterise an old exposure as new money runs up against that sentence.

The rank obtained is that provided for in paragraph II of Article L. 622-17 and paragraph I of Article L. 643-8. The privilege is among the exceptions that paragraph II of Article L. 622-17 sets against the privileged post-commencement claims, alongside the wage super-privilege and the legal costs of the proceedings. Its exact interplay with those two heads of ranking, in the order of L. 643-8, depending on whether or not the liquidation follows an observation period, deserves checking case by case.

Two neighbouring mechanisms complete the toolbox, without being confused with it. On the one hand, 2° of paragraph III of Article L. 622-17 ranks, among post-commencement claims, claims arising from a new cash contribution granted in order to ensure the continuation of the business for the duration of the proceedings, those contributions being authorised by the supervisory judge to the extent necessary for the continuation of the business during the observation period and being made public. On the other hand, the last paragraph of Article L. 626-10 confers that same rank on cash contributions made for the performance of the safeguard plan, provided they are mentioned separately in the plan, with the same exclusions as the conciliation privilege. This “post money” of the plan does not have the rank of the conciliation privilege: it ranks among post-commencement claims.

The creditor's decision timetable

The levers do not coexist: they close one after another.

• So long as the debtor is in bonis and before any cessation of payments: creation of security over assets, putting in place a Dailly framework agreement, notification of pledges of receivables, structuring the physical holding of assets to found an actual retention.
• From the first signs of deterioration: this is the conciliation window. New money brought in under an approved agreement ranks by privilege; the same money brought in two months earlier, outside proceedings, remains unsecured.
• After cessation of payments and before the opening judgment: red zone. Any new security for an old debt is null by operation of law, except replacement of a security of at least equivalent nature and base.
• After the opening judgment: the asset base is frozen by paragraph IV of Article L. 622-21; only the supervisory judge's authorisation makes it possible to secure a post-commencement claim; the priority becomes defensive, with the declaration of claims and security, then informing the competent organ within the periods of Articles L. 622-17 IV and L. 641-13 III.
• When the plan is being prepared: Article L. 626-32 allows the plan to be imposed on dissenting classes and refers expressly to the class of unsecured creditors, as well as to the test of the order of priority that would apply in compulsory liquidation or to the sale price under Article L. 642-1. The thresholds in 5° a), relating to classes of equity holders, are set by decree and may not be lower than 150 employees or €20 million in turnover.

One point to watch, for cases to come: the wording of Article L. 622-24 was amended by Law No. 2025-1403 of 30 December 2025, some of whose provisions apply only to collective proceedings opened and compulsory liquidations ordered from 1 January 2027. The rules for the final establishment of tax and social security claims must be checked against the opening date of the proceedings concerned.

What needs to be decided now

The unsecured rank is not corrected in litigation: it is decided when the facility is signed, sometimes two years before the default. The hierarchy of levers is clear. Actual retention over a thing is the most resilient security, because it depends on no registration and obliges the organ of the proceedings to negotiate its withdrawal. Registered security over assets comes next, on the imperative condition that it was taken outside the suspect period and tied to simultaneous money. The conciliation privilege is the only lever still available when deterioration is already under way, but it requires approval, and therefore a negotiation conducted before cessation of payments or intended to end it. The security fiducie, finally, keeps its promises only if it is built without an availability agreement in favour of the settlor, failing which Article L. 622-23-1 empties it of effect at the very moment it was meant to serve.

Three concrete actions are called for from an institutional creditor. Map your exposures by actual rank, and not by nominal exposure: an unregistered security, an unnotified pledge or a non-possessory pledge is worth, in proceedings, an unsecured rank. Revisit your credit documentation to build in a Dailly framework agreement and notification clauses that can be activated without delay. And set a simple internal rule: as soon as a debtor asks for rescheduling, treat the request as an indicator of cessation of payments and have the risk of nullity of the envisaged security under Article L. 632-1 assessed before anything is signed.

Frequently asked questions

What exactly is an unsecured creditor? It is the creditor that has no security interest over assets, no privilege, no right of retention and no ownership retained or transferred by way of security. Its claim is backed only by the debtor's general assets. In compulsory liquidation, it is paid from the balance of the proceeds of realisation of the assets, after the protected creditors, according to the order of distribution in Article L. 643-8 of the Commercial Code. In practice, in cases closed for shortfall of assets, that balance is nil.

Can an unsecured creditor still take security when its debtor is in difficulty? Legally yes, but the risk is high. Item 6° of paragraph I of Article L. 632-1 of the Commercial Code strikes down as null by operation of law any contractual security interest in property or contractual right of retention created since the date of cessation of payments for previously incurred debts. Only two exceptions: replacement of an earlier security of at least equivalent nature and base, and the assignment of business receivables made in performance of a framework agreement concluded before cessation of payments. As the date of cessation of payments is fixed retroactively by the court, the uncertainty is real.

Does the conciliation privilege apply to an agreement that is merely recorded? No. Article L. 611-11 expressly refers to conciliation that gave rise to the approved agreement mentioned in paragraph II of Article L. 611-8. An agreement recorded by the president of the court on the parties' joint application does not give rise to the privilege. Approval requires that the debtor not be in cessation of payments or that the agreement put an end to it, that the agreement ensure the continuity of the business and that it not prejudice the interests of non-signatory creditors.

Does the right of retention survive the opening of collective proceedings? It all depends on its nature. The fictitious right of retention attached to the non-possessory pledge, provided for in 4° of Article 2286 of the Civil Code, is made unenforceable by operation of law during the observation period and the performance of the plan by paragraph I of Article L. 622-7, unless the pledged asset is included in a sale of the business decided under Article L. 626-1. Retention of a thing actually held, on the other hand, keeps its force, and is carried over by operation of law onto the price where the liquidator sells under Article L. 642-20-1.

What happens if a bank declares its claim but forgets to declare its security? Since Ordonnance No. 2021-1193, Article L. 622-26 provides that claims and security interests not properly declared within the periods are unenforceable against the debtor, and likewise against co-obligors who are individuals, who granted a personal security or who allocated or assigned an asset as security. An application for relief from forfeiture can be made only within six months, running from publication of the opening judgment or, for holders of a registered security, from receipt of the warning.

Are post-commencement claims always paid before all the others? No. Paragraph II of Article L. 622-17 reserves the wage super-privilege of Articles L. 3253-2, L. 3253-4 and L. 7313-8 of the Labour Code, the legal costs arising properly after the judgment for the needs of the conduct of the proceedings, and the conciliation privilege of Article L. 611-11. The procedural privilege is moreover lost if the competent organ is not informed within the year following the end of the observation period (paragraph IV of Article L. 622-17) or, in liquidation, within six months of publication of the judgment, or one year after the judgment adopting the disposal plan (paragraph III of Article L. 641-13).

Is the security fiducie really the most effective security in collective proceedings? Not in all its configurations. Where the settlor debtor keeps the use or enjoyment of the assets transferred under an availability agreement, Article L. 622-23-1 prohibits, on pain of nullity, any assignment or transfer to the fiduciary or to a third party solely by reason of the opening of the proceedings, the adoption of the plan or a default in payment of a pre-commencement claim, and those assets may be reclaimed under the first paragraph of Article L. 624-16. A fiducie without an availability agreement is not covered by that text, but its exact treatment depends on analysis in the case law and must be reviewed before any structuring.