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existence of a pledge, the creditor is satisfied through the liquidation of
the current pledges instead of seizure phase.
In the event a pledge has been established, the most important
issue to pay attention to is the “obligation of primary application to the
pledge”. Pursuant to article 45 of the EBC
“Even if the debtor of a
receivable guaranteed by a pledge, is a person who is subject to bank-
ruptcy, the creditor may only proceed by liquidation of the pledged
movable. However, if the amount of the pledged movable does not suf-
fice for the payment of the debt, the creditor may proceed to bankrupt-
cy or seizure for his remaining receivable”
. Therefore, general seizure
proceedings cannot be initiated prior to applying to liquidation of a
pledge.
In the event of enforcement proceeding by means of liquidation of
the pledge, the pledged property shall be specified in the request of
proceeding. If the pledged property belongs to a third person, the pro-
ceeding will be executed against both the debtor and the third person
(the owner). After the initiation of an enforcement proceeding, an
execution order will be sent to the debtor. If the debtor does not pay
his debt within 7 days or doesn’t submit a decision on the stay of
execution proceedings with respect to such execution order, the
pledged property will be sold.
Stay of execution may be required only if the relevant debt has pre-
scribed, is paid or if an extension for the payment of such debt is grant-
ed. The debtor may prove the payment of the debt or the extension
granted for the payment of debt only through the documents prepared
by official authorities.
For the enforcement proceedings without a judgment by means of
liquidation of pledged movables, a payment order will be issued
instead of an execution order. Unlike enforcement proceedings based
on a judgment, the debtor may either pay his debts within 15 days or
may object to the enforcement proceedings within 7 days. In the event
of an objection to the enforcement proceedings, such objection should
be removed or cancelled on order to finalize the execution proceedings.
The judgment of a court shall be necessary under both circumstances.
Once the objection is removed as a result of such court proceedings,
the liquidation of the pledge shall continue.
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