Pledge Of Accounts Receivable Legal Issues

The Property Law, adopted on March 16, in 2007, adds receivables to the subject matter of the right impawn. The establishment of the pledge of receivables, has a great practical significance. It helps to finance small and medium-sized enterprises, revitalizing their stock assets. In addition, it can enhance the competitiveness of Banks and other financial institutions, by providing a new financial variety for them. But the law in our country can't meet the demand of the practice. There are only two terms about the pledge of accounts receivables. One specifies the receivables as the subject matter of the right impawn. The other stipulates how to proclaim the pledge of receivables, and what the pledgor can do after the publication. But it is adverse to the application and can't prevent the risk, because it doesn't regulate the specific scope of receivables, and the rights and obligations of litigants. The thesis studies and discuses the problem from four aspects, based on the current security laws and comparative and positive analysis. It consists of four parts:Part one explores the basic theory of the pledge of receivables. In practice, receivables are more used in accounting, but they are different from receivables in the sense of the property law. The latter refers to the broader implications. It means the right of the holder to obtain payment request, for providing certain goods, services or facilities. It includes the current and future money and income, but not includes the payment claim for notes or other securities. It includes the receivables not only that one party has performed its contractual obligation, and has received payment voucher, but not collects accounts receivable, but also that both have signed the contract, and haven't performed the obligation. It is controversial between scholars whether it covers toll collection rights. On the basis of analysis, toll collection rights for immovables facilities such as roads, bridges, tunnels and ferries, are mainly in unspecified, potential parties, while the parties of the contract has been determined, in the course of the pledge of receivables. However, they have no intrinsic differences.The pledge of receivables, has profound theoretical basis and rich practical value, although the establishment of it is controversial. It accords with the tendency of of all to exist in the development of the property law, arising in the background of the promotion of the status of the creditor's rights and the credit economy. And it helps to finance small and medium-sized, enrich the bank's financial varieties, reduce the risk of the bank , and meet the urgent needs of practice.Part two analyses the establishment of the pledge of receivables by comparison. Besides the consensus between the parties in writing, the establishment should be announced by certain ways. The thesis probes into the rationalization of the registration, on the basis of comparative analysis of the ways of publication in the other countries and regions. The effectiveness of registration is very strong, and it can reveal the pledge of accounts receivables to any third party. It can make up for the delivery of creditor certificate and the notification to the third debtor. However, if the pledge of obligation must be registered, it will result in a series of problems such as how to distinguish the right impawn and mortgage. In order to solve these problems, some scholars suggest that as real estate and personal estate, right can also be the subject matter of the real right for security based on its value, and our country should distinguish mortgage and pledge by the way of possession. The author agrees with this, but the idea is immature and should be further studied.As the body for the registration of the pledge of receivables, the Center of the Credit Men's Assurance of PBOC enacts the Measures of Registration of the Pledge of the Accounts Receivables to implement the Property Law. It delineates the rules of the registration, and has certain positive significance. It reduces the cost and improves the efficiency of the registration. However, it doesn't comply with our legislation idea that the pledge can be established only after registration, because it is in reference to acts of secured transactions for movable property in the United States and Canada, which adopts the counter publication legislation mode. In addition, it needs perfection in some specific rules, such as registration formalities, registration deadline, and so on. The thesis has an analysis of it.Part three expounds what effects the pledge of receivables has and how to implement it. The above contents are very important, but aren't regulated in the Property Law. After the establishment, the pledgee can claim the principal creditor's rights and the interest thereof, penalty, expenses for the realization of the impawn and storage, and compensation for the defects of the pledge of receivables. And its effectiveness governs receivables and the interest thereof, penalty, compensation for damages to and security for receivables. For the pledgee, he should perform some obligations such as not abusing the right, while enjoying the priority of compensation, etc. The pledgor can't change or abolish receivables without the consent of the pledgee. But he can still transfer receivable, because the real right holder can claim to any transferee for the effective of the real right. The pledgee can be fully protected. Meanwhile, the debtors of receivables will be limited to some extent, such as he can discharge only with the approval from pledgee or pledgor, and can't offset to the pledgor until receipt of notification. But the debtors can still enjoy rights of relief, such as the right of defense and cancellation based on the defects of the performance of the basic contract.The pledgee can claim directly to the debtor of receivables, if principal debtor doesn't perform his obligations when the principal contract expires. The direct claim is in conflict with the regulation that the hostage can't belong to the pledgee without any procedure. No matter how the scholars try to explain the conflict, the way of realization has been widely used in the country, which regulates the pledge of the creditor's right. As a debt, the duration between receivables and principal debt may be different. When the former is earlier than the latter, the debtor of receivables can escrow to perform his obligations, and the receiver is pledgee and pledgor. Instead, the pledgee can claim directly to the debtor of accounts receivables only when receivables expire. But the pledgee can convert them into money, auction or liquidate them with the approval from the pledgor prior to expiration.Part four discusses the potential risks of the pledge of receivables in practice, and how to face them. Receivables are a kind of money obligatory right, so the realization depends on the party, and whether it can realize is uncertain. The risk is that the pledgor may change or abolish receivables, and the third debtor may claim the right of defense, or may even escape or repudiate money. It is the main reason for the opposition during the legislation. The prevention from the risk of the pledge of receivables, is systemic. Not only needs the bank strengthen his risk control ability in the process of the impawn, such as examination prior to the loan and management after the loan. But also we should perfect the rule of priority for registration to solve the conflicts between different rights, and set up a social credit system by the joint efforts from the enterprise, intermediaries and the whole society, etc. Of course, the above is immature, and it needs further study.