Collateral trust

Collateral Trust, the most robust form of pledge under French law

 

Fiducie is an operational tool with no equivalent in terms of risk-mitigation:

bulletIts enforceability rests on the transfer of the full ownership from the settlor to the trustee.

bulletThe establishment of a fiducie is fiscally neutral and involves reduced taxation and transaction costs.

bulletThe fiducie is totally bankruptcy-remote. It is kept isolated from the trustee’s own property, from all other fiducies and protected from any alienation by the grantor or its creditors.

bullet The scheme is very flexible as several assets, including liabilities, may be grouped within the same fiducie.

bullet It is managed according to a tripartite convention which details the rights and obligations of the parties. Its execution does not require any outside intervention.

In the event of default of the settlor / borrower :

Trust assets are transferred to the beneficiary with no delay and without requiring any legal action.

The lender can not be forced into granting debt write-offs.

The lender backed by assets in the trust is senior over all other creditors including privileged creditors.

Because collateral trust is such a strong risk-mitigation tool,

it offers lenders the possibility to get a contained exposure to more complex cases.