486 s e c u r i t y r i g h t s i n m o va b l e p r o p e r t y

rights in the stock.27 These rules apply not only to the present stock, but also to stock purchased in the future.

(b)If these requirements are met, A will have a valid pledge over the stock. In the event of C’s insolvency, he has the right to preferential satisfaction (Absonderungsrecht): the proceeds of sale of the pledged objects are primarily used to satisfy his claim. If another creditor of C executes against the stock, A’s rights have priority over the rights of this creditor: again, the proceeds of sale will be used primarily to satisfy A’s claim; the second creditor would receive only any eventual surplus.

(c)They are quite common.

(d)No court decisions exist on this issue. It has to be pointed out, however, that an arrangement where the value of the collateral greatly exceeds the value of the secured loan could be against the bonos mores (gute Sitten, § 879 (1) ABGB.)

Variation

A pledge that is granted after the pledgor has begun to experience financial difficulties can, in certain circumstances, be set aside by C’s insolvency administrator.

The Austrian Bankruptcy Act contains provisions detailing which transactions disadvantageous to the bankrupt’s creditors can be avoided by the administrator of C’s assets. There are the following categories:

(1)§ 28 (a) KO: Transactions based on the debtor’s intention to defraud his creditors. If the other party knew of this intention, the transaction can be avoided by the administrator if it took place within ten years prior to the commencement of insolvency proceedings. If the other party did not know of this intention but could have known it, the transaction can be avoided by the administrator if it took place within two years prior to the commencement of insolvency proceedings. If the other party did not know the intention and could not have known of it, the transaction cannot be avoided. It is for the administrator to prove that the requirements for avoidance are met, unless the other party is a near relative of the bankrupt.

27OGH 27 Apr. 1994, 3 Ob 45/94 ÖBA 1994, 992; OGH 18 June 1997, 3 Ob 2403/96w ÖBA 1998, 123.

(2)§ 28 (b) KO: Transactions by which the debtor sold goods at dumping prices. The buyer must know that the transaction at a dumping price was to the disadvantage of the seller’s creditors. Such a transaction can be avoided if it took place within the last year prior to the commencement of insolvency proceedings.

(3)§ 29 KO: Gratuitous transfers within two years prior to the commencement of insolvency proceedings.

(4)§ 30 (1) N 1 KO: The payment or grant of an incongruous security right (such as a pledge, etc.) in respect of a debt when the creditor in question was not entitled28 to claim payment or security at that time, provided that the payment or grant took place after the debtor became unable to pay his debts. The transaction can be avoided by the administrator if it took place within the year prior to the commencement of insolvency proceedings.

(5)§ 30 (1) N 3 KO: The payment or grant of an incongruous security right (such as a pledge, etc.) in respect of a debt by which the debtor prefers one creditor over others, provided that the creditor knew of the debtor’s intention to prefer him and that the payment or grant took place after the debtor became unable to pay his debts. The transaction can be avoided by the administrator if it took place within the year prior to the commencement of insolvency proceedings. It is for the administrator to prove that the requirements for avoidance have been met, unless the other party is a near relative of the bankrupt.29

(6)§ 31 KO: The payment or grant of an incongruous security right (such as a pledge, etc.) in respect of a debt, or any other legal act by the bankrupt that is to the detriment of the creditors; provided that the transaction was carried out for the benefit of a creditor who either knew or should have known of the incapability of the debtor to pay his debts. The transaction can be avoided by the administrator if it took place within the six months prior to the commencement of insolvency proceedings. It is for the administrator to prove that the requirements for avoidance have been met, unless the other party is a near relative of the bankrupt.

The avoidance of a transaction on grounds (1) to (3), supra, can also take place outside of insolvency (cf. §§ 2 and 3 Avoidance Act (Anfechtungsordnung)).

28This could be because either the original agreement did not provide for such a right or the creditor gave credit without exercising his right!

29§ 30 n. 1 and n. 3 KO are based on the principle that the debtor, once he is unable to pay his debts, must treat all his creditors alike -- he is not allowed to prefer one above the others: see Koziol, Grundlagen und Streitfragen der Gläubigeranfechtung 15 ff.

right of expectancy. When C pays the price in full to the seller, A acquires full ownership of the new stock.

(iii)Under a security transfer of a circulating stock, the creditor usually empowers the debtor further to transfer the goods (article 239 para. 1 A.K.). This solution serves the interests of the creditor and corresponds to the destination of the merchandise.

(2)According to article 16 of L. 2844/2000 on ‘Contracts concerning movables or claims subject to publicity, and other contracts providing security’31 (Symvaseis epi kiniton i apaitiseon ypokeimenes se dimosiotita kai alles symvaseis parochis asphaleias), A is able to obtain an enterprise charge over C’s new stock, without a security transfer of ownership being necessary. The enterprise charge, in contrast to security ownership, must be registered in special books kept at the so-called ‘pledge registry’. The debtor will be obliged to inform the creditor periodically about the status of the stock.

(b)In the event of C’s insolvency, it is disputed whether A can claim the goods as owner,32 or whether he is simply entitled to preferential payment out of the proceeds of the sale.33 The latter view prevails. Accordingly, A has the rights of a secured creditor (application by analogy of the provisions on pledge, article 1237 A.K.) unless the insolvency administrator pays the debt in full (article 645 EmbN).

(c)Security transfer of ownership is the method usually adopted.

(d)A general clause regulating this case does not exist in Greek law. It is obvious that the problem has proved to be increasingly interesting in the case of security transfer of ownership of replaced stock. Neither Greek courts nor Greek literature have dealt with the problem.

It could be suggested that in this case it may be possible for the debtor to ask for the judicial reduction of the collateral, when its value is disproportionately higher than that of the secured claim (article 409 A.K. by analogy). According to article 409 A.K., which regulates excessive penalties, ‘if the agreed penalty is disproportionately high, the court, at the petition of the debtor, may reduce it to the due measure’. This clause stems from the principle of good faith (article 288 A.K.).

31See supra, Greek report, case 1(a).

32See G. Simitis, I di emboreumaton isphalismeni trapeziki pistosis 72; K. Simitis, I anamorphosis tou plasmatikou enechyrou 34.

33AP 1307/1994, DEE 1995, 407. This view is followed by Georgiadis, Kyriotis 223 and the authors mentioned there. See also Kotsiris, Nees morphes symvaseon tis sygchronis oikonomias 340; N. Rokas, Stoicheia ptocheutikou dikaiou 35.