учебный год 2023 / Helsen, Security in Movables Revisited. Belgium’s Rethinking of the Article 9 UCC System

identification would increase the clarity of the system, it would also severely limit its flexibility. Their experience having lead them to the same conclusion, the drafters of the 1972 UCC explicitly rejected this option, conveying in the official comment to §9-110 (the previous version of the current §9-108) their intent that courts should reject pre-Code decisions that required exact and detailed description.75 It seems fairly clear that the drafters of the Belgian Pledge law share this opinion. As a general proposition, flexibility is put forward as one of the key objectives of the system, and more specifically pertaining to the identification of collateral, the preparatory works require that the encumbered assets must be clearly identifiable, not clearly identified.76

Now let’s turn first to the opposite end of the scale: the supergeneric description. This is a description using extremely broad language, such as ‘all the debtor’s assets’, or ‘all the debtor’s personal property’. Before the 2001 revision of Article 9, some US courts did in fact recognize this kind of description. The drafters of said revision, following the majority of case law, however, explicitly rejected this type of language.77 Note, however, that this applies only to the description of collateral in the security agreement. Supergeneric descriptions in the filing statement do not impede perfection of the security interest, as will be further discussed below.78 Supergeneric descriptions of collateral will most likely be rejected under Belgian law as well. In any case, it would be a stretch to claim that the Pledge law’s requirement of accurate description should include blanket pledges. Furthermore, security interests are exceptions to the fundamental

75X. Law & Practice of Secured Transactions: Working with Article 9 (New York, NY: ALM Media Properties, (losbl.)), §2.02, www.lexisnexis.com; L. AHERN, ‘The Law of Debtors and Creditors’, in X, Anderson on the Uniform Commercial Code, 3rd edn, §7.61, lawschool.westlaw.com; J. MCDONNELL, Uniform Commercial Code. Analysis of Revised Article 9 (New York, NY: Matthew Bender & Company 1999), p 98.

76Preparatory Works of the New Belgian Pledge Law, Parl. St., Doc. 53, 2463/001, pp 9 and 36.

77§9-108 UCC and comment 2; W. HILLMAN, Documenting Secured Transactions. Effective Drafting and Litigation, 2nd edn (New York, NY: Practising Law Institute) (loosel.), 15-3; V. CARDI, ‘Preserving Existing Security Interest under Revised Article 9 of the Uniform Commercial Code: A Concise Summary of the Transition Rules and Some Recommendations for Secured Parties’, 103(3). West Virginia Law Review 2001, p 306. See also Merchants National Bank v.

Halberstadt, Court of Appeals of Iowa 20 Apr. 1988, www.lexisnexis.com, which rejects supergeneric descriptions in filing statements, which a fortiori implies a rejection of such description in security agreements. For more references to case law, see L. AHERN, ‘The Law of Debtors and Creditors’, in X, Anderson on the Uniform Commercial Code, 3rd edn, §7:61, lawschool. westlaw.com.

78See §9-504 UCC; L. BROOME, ‘Supergeneric Collateral Descriptions in Financing Statements and Notice Filing’, 46(2). Gonzaga Law Review 2011, p 436; C. GRANT, ‘Description of the Collateral under Revised Article 9’, 4(2). DePaul Business and Commercial Law Journal 2006, p 235.

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principle of paritas creditorum, laid down in Articles 7–8 Belgian Mortgage Law (Hypotheekwet/Loi Hypothécaire).79

These articles hold that anyone is liable to their obligations by means of all their property.80 All of a debtor’s property serves as joint collateral to all creditors who are to share pro rata in the proceeds, unless there are legal rules of priority at play.81 Exceptions to general principles, especially principles as fundamental as these, are to be interpreted and applied restrictively. Furthermore, the Pledge law expressly strives to balance the interests of secured and unsecured creditors and the debtor, as well as try to increase the recovery of unsecured creditors.82 US experience in this matter will only further bolster Belgian courts’ resolve in denying supergeneric descriptions of collateral any legal consequence.

It is important to note, however, that neither US law nor Belgian law takes issue with the mere fact as such that all of a debtor’s assets are encumbered. The question is how this situation is created. If a creditor negotiates a multitude of security interests83 which, cumulatively, cover all of the debtor’s assets as a factual matter, but each one of them covers reasonably identifiable assets, then these security interests will remain valid. If, however, a creditor takes out a single security interest which purports to cover ‘all of the debtor’s assets’, then this description will not meet the necessary standards:

For example, debtor D is a company, which owns two cars and a lawn mower, and nothing else. On its passive, D owes a € 20.000 tort liability debt. Creditor C lends the € 20.000 to D with which D can discharge the debt, and takes a security interest in ‘the two cars with VIN #XXX and #XXY, as well as the lawnmower with serial number XYX’. Practically speaking, this security interest encumbers all of D’s assets, but because the description is not supergeneric, it will be valid.

If, however, the security agreement covered ‘all of D’s personal property’, this description would be deemed too broad, even though the assets effectively covered are the same.

Even though supergeneric and sufficiently specific descriptions of collateral might be factually identical in some cases, conceptually they are not. Supergeneric security interests are open-ended in two dimensions. Firstly, they will float along with any increase in assets within certain categories of goods.

79See i.a. Preparatory Works of the New Belgian Pledge Law, Parl. St., Doc. 53, 2463/001, p 12.

80Article 7 Mortgage Law.

81Article 8 Mortgage Law.

82Preparatory Works of the New Belgian Pledge Law, Parl. St., Doc. 53, 2463/001, pp 7 and 10.

83Or a security interest on a multitude of individually described assets.

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Giving this quality to a security interest is, as a principle, allowed.84 Security interests can cover categories of goods, including after-acquired property.85

Secondly, however, a supergeneric description also floats along with any new categories of goods added to the debtor’s estate, and this is deemed excessive:

For example: a security interest covering ‘all present and future motor vehicles in the debtor’s possession’ is open-ended within the category of motor vehicles. If the debtor acquires additional vehicles, then the collateral will increase.

A security interest covering ‘all the debtor’s personal property’, however, is open-ended across categories. If the debtor owned only motor vehicles at the time the security interest is granted, but subsequently acquires computers, machinery and a rare book collection, then all these additions would also be added to the collateral, to the detriment of other creditors.

A good illustration of this nuance is the pledge of the business. Since 1919, Belgian law has known such a pledge of a business. The enactment of the law of 25 October 1919 concerning i.a. the pledge on the business86 followed the enactment of the law of 15 April 1884,87 concerning agricultural loans, in allowing for the principle of register publicity of security interests on movable goods in Belgian law.88 Under the Pledge law, it will still be possible to pledge the business or the agricultural exploitation by defining the collateral as such.89 The old law of 1919 did not exhaustively define ‘business’ for purposes of determining the object of the pledge, leaving the development of this concept to the courts. It merely provided guidance by enumerating a number of categories of goods which could be deemed a part of the business. In abstract terms, the business is defined by case law and doctrine as the set of corporeal and intangible goods, which are brought together in the exploitation of a business in order to attract and retain clientele. Whenever the individual elements of this business are sold or otherwise

84For US law, see §9-108(b). For Belgian law, see Arts 7 and 8 Pledge law, the Preparatory Works of the Pledge law, Parl. St., Doc. 53, 2463/001, p 19, and the firmly established floating charge on the business (Law of 25 Oct. 1919), where this principle is uncontested with regard to inventory and receivables and enjoys wide support with regard to other types of collateral.

85Belgian law: see Arts 7 and 8 Pledge law, this also follows from the history of the pledge of the business and the subrogation principle enacted in Art. 9 Pledge law and susceptible to expansion through contract.

US law: W. BORGES (ed.), Manual of Credit and Commercial Laws (Columbia, MD: National Association of Credit Management 2002), p 5-32.

86Published 21 Nov. 1919.

87Published 11 May 1884.

88J. BAECK & M. KRUITHOF, Het nieuwe zekerheidsrecht (Antwerpen: Intersentia 2014), p 3.

89Preparatory Works of the New Belgian Pledge Law, Parl. St., Doc. 53, 2463/001, p 20; J. BAECK

& M. KRUITHOF, Het nieuwe zekerheidsrecht (Antwerpen: Intersentia 2014), p 44.

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disposed of, they are replaced by new additions, both in fact and in the object of the pledge. Case law, of course, abounds with factual determinations in the concrete application of this definition.90 This body of law will remain valuable in determining the exact identity of collateral defined as ‘the business’, since the Pledge law still does not provide a definition, and now no longer provides any explicit guidance as to the definition of this constantly evolving concept.91 One caveat must be made, however, when seeking to apply the definition of the business developed under old law to the new Pledge law. The law of 1919 did limit the coverage of the pledge of the business pertaining to the stock of goods held by the business to 50%.92 This limitation has been lifted by the Pledge law.93

The requirements on the definition of collateral subject to Belgian pledges will therefore be positioned somewhere on the scale between specific and supergeneric. While the exact determination will necessarily need to be left to the Belgian courts, US law and doctrine can be helpful in providing some guidelines:

–Safe harbour descriptions: §9-108 UCC gives parties the option to simply describe the collateral using the definitions offered by the UCC, in which case the sufficiency of the description is secured.94 The development of similar unequivocal concepts, through legislation, case law, or doctrine, would also usefully increase legal certainty in the Belgian application. A similar effort has taken place since 1919, when the floating charge on a business was enacted into law, without

defining exactly what that concept of business entailed.95 Subsequent case law and doctrine has developed and refined this concept, although its fleeting nature has made it impossible to come to a single

90A. CUYPERS & A. DE WILDE, ‘Wet 25 oktober 1919 – het in pand geven van een handelszaak’, in X., Voorrechten en Hypotheken. Artikelsgewijze commentaar met overzicht van rechtspraak en rechtsleer (Mechelen: Kluwer) (loosel.), I.A., www.jura.be; G. DE PESTEL, ‘Pand op de handelszaak (Wet van 25 oktober 1919) – Overzicht rechtspraak (1993–1998)’, TBH (Tijdschrift voor Belgisch Handelsrecht) 2001, pp 383–391; P. VANLERSBERGHE, ‘De handelszaak – overzicht van rechtspraak 1988–1998’, TBH 2001, pp 378–382; F. BOUCKAERT, ‘Overzicht van rechtspraak: pand op handelszaak (1988–1993)’, TBH 1994, pp 1044–1056.

91J. BAECK & M. KRUITHOF, Het nieuwe zekerheidsrecht (Antwerpen: Intersentia 2014), p 44.

92Article 2 Law of 25 Oct. 1919 (BS 21 Nov. 1919).

93Implied by Art. 7 Pledge law. See also J. BAECK & M. KRUITHOF, Het nieuwe zekerheidsrecht

(Antwerpen: Intersentia 2014), p 44.

94The only exceptions are collateral consisting of commercial tort claims, or in a consumer transaction, consumer goods, a security entitlement, a securities account, or a commodity account, see §9-108(e) UCC.

95Law of 25 Oct. 1919 on the pledging of a business (…) (Wet van 25 oktober 1919 betreffende het in pand geven van een handelszaak, het endossement van de factuur, alsmede de aanvaarding en de keuring van de rechtstreeks voor het verbruik gedane leveringen).

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definition.96 Similar efforts, pertaining to simpler concepts such as

‘equipment’, or ‘inventory’, could prove quite useful in the application

of the Pledge law.

–§9-108(b)(6) UCC closes the safe harbour descriptions with a catch-all provision, which allows for any other method, as long as it allows for objective determination of the identity of the collateral. The requirement of an objective determination indicates that this cannot be left to the subjective determination by the parties, which would, under Belgian law, be an illegitimate potestative provision.97

–After-acquired collateral: as discussed above, after-acquired collateral can be brought under the coverage of a US security interest or a Belgian pledge. The question at issue here is what kind of language is required to achieve this extension of the collateral. This is a matter of contract interpretation,98 and most courts have held that some language specifically referring to after-acquired collateral (e.g., ‘now owned or later owned’) coverage is required, unless the collateral is inventory or accounts, in which case the line is less clear,99 or trade custom or normal business practice would dictate such inclusion.100

Given Belgian law’s experience with the pledge of the business and the principle of in rem subrogation, a pledge entailing inventory will likely be interpreted as automatically including after-acquired inventory.

–Parties’ course of dealing: in the absence of ambiguity, US courts are reluctant to look at the parties’ course of dealing to interpret the language of the security agreement.101 This kind of caution does indeed appear warranted, especially given the fact that the legitimacy of the priority granted to security interests is founded on publicity, which only covers written instruments.

96See i.a. A. CUYPERS & A. DE WILDE, ‘Wet 25 oktober 1919 – het in pand geven van een handelszaak’, in X., Voorrechten en Hypotheken. Artikelsgewijze commentaar met overzicht van rechtspraak en rechtsleer (Mechelen: Kluwer, (losbl.)), sub I.A, www.jura.be; P. VANLERSBERGHE, ‘De handelszaak – overzicht van rechtspraak 1988–1998’, TBH 2001, pp 378–382.

97US law: P. COOGAN, et al., Secured Transactions under the Uniform Commercial Code (Albany, NY: Matthew Bender & Company 2014), §2A.04 (1), www.lexisnexis.com.

Belgian law: Art. 1174 jo. 1170 CC; Cass. 16 Dec. 1960, Arr. Cass. 1961, p 375; B. CLAESSENS & N. PEETERS, ‘Verbintenissen onder voorwaarde’ in X., Bestendig Handboek verbintenissenrecht (Mechelen: Kluwer, 2013), III.1–16.

98Comment 3 to §9-108 UCC.

99L. AHERN, ‘The Law of Debtors and Creditors’, in X, Anderson on the Uniform Commercial Code,

3rd edn, §7:63, lawschool.westlaw.com.

100W. HILLMAN, Documenting Secured Transactions. Effective Drafting and Litigation, 2nd edn (New York, NY: Practising Law Institute) (loosel.), 8-1.

101X. Law & Practice of Secured Transactions: Working with Article 9 (New York, NY: ALM Media Properties, (losbl.)), §2.02, www.lexisnexis.com.

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In the interest of completeness, it is worth repeating that the UCC uses limitations on the description of collateral for consumer protection, a goal that is pursued by the Pledge law through other means, which were discussed above. Pursuant to §9-108(e) UCC, a description only by type of collateral is an insufficient way to describe commercial tort claims. Moreover, in the context of consumer transactions, description only by type of collateral is also insufficient in describing consumer goods, security entitlements, securities accounts, or commodities accounts.102

5.4.Value Given

The third and final condition under the UCC for attachment of the security interest requires that value be given.103 In addition to the types of consideration sufficient to support a simple contract, §1-204 explicitly adds to the definition of value the immediate or promised extension of credit, security being given for or in partial satisfaction of a pre-existing claim, and the acceptance of delivery under a pre-existing contract for purchase. If the value given by the secured party consists of a commitment to extend credit, it is immaterial whether that credit is eventually drawn upon and whether or not a charge-back is provided for in case of difficulty in collection.104 Belgian law of obligations does not generally require that value be given. However, in the vicinity of insolvency, the granting by a debtor of a security interest without receipt of new funds, that is, granting security for pre-existing debt, is deemed suspect and can be challenged with the actio pauliana in its various forms.105

6. Enforceability of Security Interest Inter partes: Consequences

6.1.Introduction

The previous section discussed the conditions for enforceability inter partes of a pledge or security interest. This section will go into the consequences of that

102See also P. COOGAN, et al., Secured Transactions under the Uniform Commercial Code (Albany, NY: Matthew Bender & Company 2014), §2A.04 (1), www.lexisnexis.com; L. AHERN, ‘The Law of Debtors and Creditors’, in X, Anderson on the Uniform Commercial Code, 3rd edn, §7:61, lawschool.westlaw.com.

103§9-203(b)(1) UCC.

104§1-204 UCC; L. AHERN, ‘The Law of Debtors and Creditors’, in X, Anderson on the Uniform Commercial Code, 3rd edn, §7:65, lawschool.westlaw.com; J. BROOK, Secured Transactions

(Frederick, MD: Wolters Kluwer 2014), p 70; S. SEPINUCK (ed.), Practice under Article 9 of the UCC (Chicago, IL: American Bar Association 2013), p 38.

105Once the debtor has ceased to pay his debts as they come due, such granting of security without receipt of new funds falls within the scope of Art. 17 Bankruptcy law. A more general actio pauliana is laid down in Art. 1167 CC, which allows creditors to challenge any action by their debtor which fraudulently weakens their claims.

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enforceability, inter partes. In other words, what makes a secured creditor so different from an unsecured one? For now, this discussion will be limited strictly to the dynamic between the creditor and the debtor. As soon as third parties to the security agreement are affected, that dynamic changes. This latter dynamic will be the focus of section 7.

Obviously, unsecured debts are also enforceable. In order to determine what is so distinctive about being a secured creditor, this section will start by outlining the default position; the avenues of enforcement available to an unsecured creditor. Since this section is limited exclusively to the dynamic between the parties to the security interest or pledge, specific regimes dealing with insolvency (such as personal and corporate bankruptcy, reorganization, etc.) are left out of this discussion for now.

6.2.Default Situation: Seizure by Unsecured Creditor as a Benchmark

A detailed description of the enforcement of unsecured claims through seizure of assets would lead us too far and is unnecessary for purposes of this paper. I will therefore limit the following exposition to the functional foundations of forced execution on movable assets. From a terminological point of view, note that I will designate the concept of forced compliance with an obligation through judicial process sensu lato, ‘enforcement’. Such enforcement will sometimes take the form of coercive measures on the property of the debtor, such as seizure, forced sale, and appropriation, which I call ‘execution’ on that property.

Functionally speaking, the procedures for enforcement of unsecured debts by forcing the sale of corporeal movable goods in Belgium and the US are very similar. In both jurisdictions, the creditor will need to obtain a form of executory title,106 allowing him to enforce the debt. In addition to obtaining a judgment, which suffices in both jurisdictions, Belgian law also allows for seizure of assets based on a notarial deed.107 In any case, however, the debt that is being enforced must be certain and fully determined.108 After complying with a number of procedural steps,109 the executory title will eventually allow the creditor access to

106 A title suitable to serve as a basis for the execution and enforcement of the debt contained therein. Under US law, post-judgment execution will be based on an executable judgment. Prejudgment remedies are much more difficult to obtain, and a discussion of these remedies would lead us too far. See X., ‘The Law of Debtors and Creditors’, in X, Anderson on the Uniform Commercial Code, 3rd edn, §6.19, lawschool.westlaw.com.

107 Belgian law: Art. 1494 Judicial Code.

US law: X., ‘The Law of Debtors and Creditors’, in X, Anderson on the Uniform Commercial Code, 3rd edn, §6.1, lawschool.westlaw.com.

108Article 1494 Procedural Code (Gerechtelijk Wetboek, hereafter Judicial Code).

109Such as serving the debtor with notice of the judicial decision and of a demand to payment (Arts 1495 and 1499 Judicial Code).

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the official designated for the execution on assets of debtors. Under US law, it is worth noting that the creditor will first have to obtain a lien on assets belonging to the debtor through agreement with the debtor, statutory fiat, or judicial process.110 When it comes to forcing execution on the debtor’s personal property, the creditor will usually seek to obtain a writ of execution.111

Where the Belgian procedure of forced execution on a debtor’s assets is a collective one, providing no priority to the enforcing creditor,112 the (usually judicial) lien which the enforcing creditor must obtain to force sale of the assets in the US does give priority.113

In Belgium, the official charged with the execution on assets of debtors is the ‘gerechtsdeurwaarder/huissier de justice’. In the US, this task is left to the sheriff. Functionally speaking, the procedures in both jurisdictions converge as the execution official will, if the debtor fails to pay the debt on time,114 physically seize the assets or take control of them through other means where physical seizure is impossible, and sell them to the public. The proceeds will then be applied to the debt, and any balance turned over to the debtor.115

110X., ‘The Law of Debtors and Creditors’, in X, Anderson on the Uniform Commercial Code, 3rd edn, §6.18, lawschool.westlaw.com; P. COOGAN, et al., Secured Transactions under the Uniform Commercial Code (Albany, NY: Matthew Bender & Company 2014), §2.02 (3), www.lexisnexis. com

111X., ‘The Law of Debtors and Creditors’, in X, Anderson on the Uniform Commercial Code, 3rd edn, §6:49, lawschool.westlaw.com.

112M.E. STORME, Zekerhedenen insolventierecht. Deel II en v., 9th edn (Gent-Mariakerke 2014), p 206, www.storme.be; M.E. STORME, ‘Paritas creditorum, voorrang en roerende zekerheden’, 2

TPR 2006, p 951.

113X., ‘The Law of Debtors and Creditors’, in X, Anderson on the Uniform Commercial Code, 3rd edn, §6.18 and §6:53. Cf. the German concept of the Pfändungspfandrecht, a form of pledge obtained by seizure of assets.

114The actual sale of the seized assets can be postponed for a variety of reasons, such as the furnishing by the debtor of security for payment of the debt, see i.a. X., ‘The Law of Debtors and Creditors’, in X, Anderson on the Uniform Commercial Code, 3rd edn, §6.50, lawschool.westlaw.com. In Belgian law, this is called ‘kantonnement’, see i.a. Arts 1403–1407 bis

Judicial Code; E. DIRIX, ‘Overzicht van rechtspraak. Beslag en collectieve schuldenregeling (2002–2007)’, TPR 2007, afl. 4, p 2069.

115Belgian law: Art. 1516 Judicial Code; P. DAUW, Burgerlijk procesrecht (Antwerpen: Intersentia 2010), p 467. See also E. DIRIX, ‘Overzicht van rechtspraak. Beslag en collectieve schuldenregeling (2002–2007)’, TPR 2007, afl. 4, p 2134.

US law: X., ‘The Law of Debtors and Creditors’, in X, Anderson on the Uniform Commercial Code, 3rd edn, §6.59-…, lawschool.westlaw.com.

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6.3.Secured Creditor Execution Rights Outside of Bankruptcy: Self-help and Appropriation116

6.3.1.Introduction

In addition to the standard execution rights outlined above,117 being a secured creditor conveys a number of advantages, in the form of stronger execution rights and priority in case of conflict with other creditors of the same debtor. These conflicts will be discussed in the next section, allowing the following paragraphs to focus on the enforced execution rights of creditors who enjoy security in some of their debtors’ movable assets. First, I will discuss the execution on corporeal assets subject to a pledge or a security interest, followed by the rules and procedures for the execution on intangible assets.

6.3.2.Corporeal Assets

I will start by outlining the secured creditor’s possibilities of execution outside of bankruptcy from a material point of view. Under the Belgian Pledge law, if the pledger is not a consumer, then the creditor has the option to sell, rent out, or appropriate the pledged goods upon default, according to Article 47 Pledge law.

Obviously, default by the debtor in some form is the natural starting point of any kind of enforcement, and this immediately presents an interesting opportunity to use US law in the interpretation of this concept. The Pledge law simply mentions non-payment and insufficiency, without any further explanation. However, Belgian law pertaining to execution has traditionally used the concept of exigibility (‘opeisbaarheid/exigibilité’) as a precondition for access to measures of forced execution. Pursuant to Article 1188 CC, obligations that are meant to be met over time, such as loans, loose this benefit of postponed fulfilment when the debtor goes bankrupt or when the debtor has reduced the security he granted his creditors. In these cases, the obligation becomes immediately exigible.118

The UCC doesn’t provide any definition of default at all, leaving the parties free to negotiate and agree upon the circumstances that will be deemed to constitute a default.119 This freedom accorded to the parties in the US comports

116Note on method and translation: I am using ‘execution’ as the broader category of measures and actions which are meant to result in the creditor obtaining payment or performance of his claim. ‘Foreclosure’ refers to the narrower concept of execution on an asset which serves as collateral for such a claim, because it is subject to a pledge (Belgium) or security interest (USA). Foreclosure will (usually) extinguish the security interest in the collateral, and replace it with some form of proceeds.

117See i.a. Preparatory Works of the New Belgian Pledge Law, Parl. St., Doc. 53, 2463/001, p 57.

118Article 1188 CC; G. VAN MALDEREN & N. PEETERS, ‘Verbintenissen met een tijdsbepaling’ in X.,

Bestendig Handboek Verbintenissenrecht (Mechelen: Kluwer) (loosel.), III.2-12; M.E. STORME,

Insolventierecht in kort bestek (Gent-Mariakerke 2014), p 161 and 174, www.storme.be.

119§9-601 comment 3 UCC; S. SEPINUCK (ed.), Practice under Article 9 of the UCC (Chicago, IL: American Bar Association 2013), p 76. For an example of an event of default clause, see M.

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well with the freedom of contract, which also underlies the Belgian reform,120 as well as with the reality of secured finance, in which the underlying obligations and dynamics are often more complicated than a simple obligation to pay at a given time. US secured lending practice has evolved towards rather elaborate clauses outlining the events of default, which are designed to include any events that might upset the balance of the contract.121 For instance, clauses defining the events of default will often include any events that give rise to the acceleration of debts owed by the debtor to other creditors. This is known as a ‘cross-default provision’. The acceleration of debts owed to others is often a sign of distress, in which case the secured creditor wants to have the option to pull out of the loan as quickly and safely as possible by calling a default and foreclosing on the collateral.122 While such contractual freedom could prove quite useful in the Belgian context, it is unlikely that the parties will be able to push it as far as the ‘general insecurity clause’, which is common practice in the US. This type of clause usually reads something to the effect that the events of default will also include ‘any other change in the condition or affairs, financial or otherwise, of the Debtor or any guarantor or surety of the liability secured by this agreement which in the opinion of the Secured Party impairs the value of the collateral or imperils the prospect of the Debtor’s full performance or satisfaction of its obligations secured by this agreement’.123 This clause obviously gives very broad discretionary power to the secured creditor, however, that discretion is curtailed by the general obligation of good faith.124 Under Belgian law, such a clause will likely be struck down as being potestative, giving one of the parties a unilateral right to determine whether or not the contract will be carried out any further.125 In order to steer clear of the prohibition on potestative conditions, the creditor could formulate a wide default provision as a clause concerning the exigibility of the debtor’s

RUBERTO, et al., Commercial loan primer (Boston, MA: MCLE, 2002), p 41; W. BORGES (ed.),

Manual of Credit and Commercial Laws (Columbia, MD: National Association of Credit

Management 2002), pp 5–49.

120Preparatory Works of the New Belgian Pledge Law, Parl. St., Doc. 53, 2463/001, p 60.

121J. BROOK, Secured Transactions (Frederick, MD: Wolters Kluwer 2014), p 406.

122X., Commercial Law and Practice Guide (Albany, NY: Matthew Bender & Company, (losbl.)), §32.02, www.lexisnexis.com ; J. BROOK, Secured Transactions (Frederick, MD: Wolters Kluwer 2014), p 406.

123J. BROOK, Secured Transactions (Frederick, MD: Wolters Kluwer 2014), p 407; M. RUBERTO, et al., Commercial Loan Primer (Boston, MA: MCLE, 2002), p 42.

124§1-304 UCC; J. BROOK, Secured Transactions (Frederick, MD: Wolters Kluwer 2014), p 407.

125Article 1174 jo. 1170 CC; Cass. 16 Dec. 1960, Arr. Cass. 1961, p 375; B. CLAESSENS & N. PEETERS, ‘Verbintenissen onder voorwaarde’ in X., Bestendig Handboek verbintenissenrecht

(Mechelen: Kluwer 2013), III.1–16. For a comparative perspective, see J. DE CONINCK, ‘Parsimony in Contract Law – the Case of the Potestative Condition’, 15(6). ERPL 2007, J. DE

CONINCK, ‘Parsimony in Contract Law – the Case of the Potestative Condition’,15(6) ERPL 2007, p 857.

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