Point of view... The realization of the priority compensation right of accounts receivable.

Published:

2021-12-10

Introduction As an important financing method, accounts receivable pledge is widely used in judicial practice and has become a financial innovation tool, which plays an important role in invigorating the stock assets and future assets of enterprises and effectively expanding financing channels. However, the Civil Code does not clearly stipulate the realization of the pledge of accounts receivable, the subject matter of the pledge of accounts receivable is the right to request the payment of a certain amount of money, and it is not easy to convert the auction and sale of accounts receivable into money according to the general realization of the pledge of movable property. As a result, how to realize the priority of the right of payment of accounts receivable has become an unavoidable topic. This paper combs such cases in the light of the Supreme People's Court's adjudication cases, and makes a preliminary discussion on the realization of the pledge of accounts receivable from the perspective of maximizing the interests of creditors. What is Accounts Receivable Article 2 of the Measures for the Administration of Pledge Registration of Accounts Receivable stipulates that accounts receivable refer to the right of the obligee to require payment from the obligor due to the provision of certain goods, services or facilities and other payment claims enjoyed according to law, including existing and future monetary claims, but excluding payment claims arising from bills or other securities, as well as payment claims prohibited by laws and administrative regulations. Thus, for the first time at the departmental regulatory level, accounts receivable include existing accounts receivable and future accounts receivable. Article 440 of the Civil Code stipulates that the following rights that the debtor or a third party has the right to dispose of may be pledged: (1) bills of exchange, promissory notes and cheques; (II) bonds and deposit slips; (III) warehouse receipts and bills of lading; (IV) transferable fund shares and equity; (V) transferable property rights in intellectual property rights such as registered trademark exclusive rights, patent rights and copyrights; (VI) existing and future accounts receivable; other property rights that may be pledged in (VII) with the provisions of laws and administrative regulations. Thus, for the first time, the Civil Code provides at the legal level that accounts receivable include existing and future accounts receivable. The fourth paragraph of Article 61 of the Interpretation of the Guarantee System of the Civil Code stipulates that the people's court shall support the pledgee's request for priority payment of the funds in the specific account when the parties set up a specific account for the accounts receivable and the legal or agreed reasons for the realization of the pledge occur, if the right holder requests priority payment of the funds in the specific account; if the amount in a specific account is not sufficient to pay off the debt or a specific account has not been established, and the pledgee requests a discount or auction or sale of the project proceeds, etc., and the accounts receivable will be paid in priority with the proceeds, the people's court shall support it in accordance with the law. Thus, the Civil Code Interpretation of the Guarantee System will have accounts receivable that include rights to the proceeds of infrastructure and public utility projects, claims arising from the provision of services or services, and other accounts receivable that will be available. The realization of the right of priority compensation of accounts receivable. The Civil Code does not clearly stipulate the way to realize the pledge of accounts receivable, but because the pledge of accounts receivable is a kind of pledge of rights, according to the provisions of Article 446 of the Civil Code, the way to realize the pledge of accounts receivable is applicable to the way to realize the pledge of movable property as stipulated in the second paragraph of Article 436 of the Civil Code, that is, the pledgee and the pledgee agree to discount the pledged property, or priority payment for the price of the proceeds from the auction or sale of the pledged property. This paper is based on the classification of existing accounts receivable and future accounts receivable, and the analysis is as follows: (I) existing receivables At the time of the creation and realization of the existing pledge of accounts receivable, the debtor of the accounts receivable and the subject matter of the pledge have been determined, so the pledgee's right to exercise usually advocates the most advantageous way for it, I .e. to claim priority payment of the accounts receivable and to request the debtor of the accounts receivable to perform the debt directly to it. In judicial practice, the conditions for the exercise of the pledge of accounts receivable have been achieved, and there is no doubt that the pledgee has the right of priority in the payment of the accounts receivable when the period of performance of the debtor of the accounts receivable expires, but there are two main different views on whether the pledgee has the right to directly request the debtor of the accounts receivable to pay the accounts receivable directly to itself: Viewpoint 1: The right holder has the right to require the accounts receivable debtor to pay the accounts receivable to himself (the current mainstream view of judicial practice) (2019) Supreme Law Civil Final No. 1023 Qingdao Qinlu Hailian International Trade Co., Ltd., China Development Bank quality dispute second instance civil ruling on the quality of the right of the right to exercise the right of accounts receivable can require the debtor of accounts receivable to pay the corresponding amount. Our law does not provide for the specific realization of the right of accounts receivable. Since the subject matter of the pledge of accounts receivable is limited to monetary debts, the pledgee has the right to directly require the debtor of the accounts receivable to pay the corresponding amount when exercising the pledge, without the need for a discount, auction or sale. Viewpoint 2: The pledgee has no right to require the accounts receivable debtor to pay the accounts receivable to itself (2017) Supreme Famin Shen No. 1572 Overseas Chinese Yongheng Bank (China) Co., Ltd. Guangzhou Zhujiang New Town Sub-branch, Yantai Fengcai Packaging Co., Ltd. (formerly Yantai Haierfengcai Packaging Co., Ltd.) Financial Loan Contract Dispute Retrial Review and Trial Supervision Civil Ruling Letter Civil Judgment Letter The legal relationship between the pledgee and the creditors of accounts receivable pledge is formed, because the accounts receivable creditor did not assign its claim to the accounts receivable debtor to the pledgee, and there was no direct debt and debt relationship between the pledgee and the accounts receivable debtor, the pledgee did not have the right to request the accounts receivable debtor to pay the accounts receivable directly to it. Lawyer's point of view: based on the monetary creditor's right attribute of accounts receivable, the pledgee notifies the accounts receivable debtor of the establishment of the pledge of accounts receivable, and after obtaining the confirmation of the authenticity of the accounts receivable debtor, once the exercise conditions of the pledge of accounts receivable are fulfilled, the pledgee has the right to require the accounts receivable debtor to directly pay the accounts receivable to itself and enjoy the priority of compensation for the accounts receivable. This not only avoids the cumbersome procedures of discount or auction and sale required to realize the pledge of accounts receivable, reduces the exercise cost of the right holder, but also helps to speed up the settlement of disputes between the parties. (II) will have a way of realizing accounts receivable Supreme People's Court Guidance Case No. 53 The right to the proceeds of the sewage treatment project belongs to the future monetary claim, and the right holder may request the court to order it to collect the money directly from the debtor of the quality person and exercise the right of priority compensation for the money, so there is no need to take the way of discount or auction or sale. Moreover, the right of income is accompanied by a certain burden, and its business entity has a specific nature, so according to its nature, it is not appropriate to auction, sell. Therefore, the pledgee has the right to collect sewage treatment fees directly from the franchisee in accordance with the agreement, and to exercise the right of priority compensation for the sewage treatment service fees collected. After the publication of Guidance Case 53, it was widely interpreted as the pledgee of accounts receivable could claim rights directly against the debtor of the accounts receivable. A different view is that the subject matter of the pledge in Guidance 53 is the right to the proceeds of the franchise, which is different from the accounts receivable, and that there is no basis for extending the use of such cases to all accounts receivable pledge cases. Lawyer's point of view: In view of the franchise revenue rights involved in the 53 guidance case, the court in the reasons for the decision on the "franchise pledge guarantee agreement" agreed to the pledge subject matter as follows: "the sewage treatment project franchise is the right to operate and maintain the sewage treatment plant, and to obtain the corresponding income. The operation and maintenance of the sewage treatment plant is the obligation of the operator, and its right of income is the right of the operator. Since the operation and maintenance of the sewage treatment plant is not a transferable property right, the pledge of the sewage treatment project franchise right in dispute is essentially the pledge of the sewage treatment project income right." After clarifying the pledge target, the court compared the franchise income right involved in the case with the highway toll right, and held that "although the laws, administrative regulations and relevant judicial interpretations at that time did not stipulate that the sewage treatment project income right can be pledged, however, the right to income from sewage treatment projects is similar in nature to the right to income from roads.... the highway income right belongs to other rights that can be pledged according to law, and the similar sewage treatment income right should also be allowed to be pledged". therefore, although the enterprise management right and various franchises can also generate expected income, they do not have the nature of accounts receivable and cannot be pledged as accounts receivable, but the resulting toll right, that is, its exercise period and the amount of income can be determined, it is a defined property right ...... by its nature can also be included in the category of "accounts receivable" that can be pledged by law. Thus, the franchise proceeds rights involved in Guidance Case 53 are in the nature of accounts receivable, and the rules for the realization of their rights may be applied to other accounts receivable pledge cases by reference. Lawyer Advice 1. It is recommended that priority be given to pledging accounts receivable whose amounts have now been determined and whose liquidation period has expired, and that the pledgee and the sub-debtor jointly confirm them. If only future accounts receivable can be pledged, a pledge of rights not expressly provided for by law should be prudently established in accordance with the principle of property law. 2. The parties set up a specific account for accounts receivable The parties shall set up a specific account for the stolen money receivable. According to the fourth paragraph of Article 61 of the Guarantee Interpretation of the Civil Code, when a party sets up a specific account for accounts receivable and a legal or agreed reason for the realization of the pledge right occurs, the pledgee has the right to request priority compensation for the funds in the specific account. If the funds in the specific account are not enough to pay off the debts or no specific account has been set up, the pledgee has the right to request for discount or auction or sell the future accounts receivable, and to be paid in priority at the price received. 3. When the pledgee files a lawsuit to realize the pledge, the debtor of the accounts receivable may be listed as the defendant to sue, and the debtor of the stolen money receivable shall be required to pay the relevant amount directly to the pledgee shall be clearly listed as the claim. 4. The court decided to confirm that the pledgee has the right to receive priority compensation after the auction, sale price or discount of the accounts receivable. It is difficult for the pledgee to apply to the court for direct enforcement of the accounts receivable debtor. Usually, the pledgee needs to file a separate suit of subrogation against the accounts receivable debtor, thus requiring the accounts receivable debtor to perform its debts.

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