Dailly assignment

A Dailly assignment allows a company to assign or pledge its receivables owed by business customers to the party extending it credit, by mere delivery of a schedule (bordereau). Articles L. 313-23 to L. 313-34 of the French Monetary and Financial Code open this method of transfer to credit institutions, financing companies and certain lending alternative investment funds (AIFs), which makes it available to private debt funds in these categories. The schedule bears the heading “acte de cession de créances professionnelles” (deed of assignment of business receivables), a reference to the applicable articles, the name of the beneficiary and the identification of the receivables. A document missing any of these particulars does not qualify as a Dailly assignment. The assignor signs the schedule and the assignee dates it. From that date, the assignment takes effect between the parties and becomes enforceable against third parties without further formality, whatever the date on which the receivables arise or fall due. The security interests and ancillary rights attached to each receivable pass to the assignee with it. Even when granted by way of security and without a price, the assignment transfers ownership of the receivables. The signatory remains jointly and severally liable as guarantor of their payment unless otherwise agreed. The lender may at any time notify the customer debtor that it is prohibited from paying the company; after this notification, the customer obtains a valid discharge only by paying the lender. Receivables assigned before the opening of insolvency proceedings remain the property of the assignee.

A services mid-cap invoices €240m a year to business customers, with average outstanding receivables of €40m. Its lender grants it a €30m facility secured by the Dailly assignment of the receivables owed by its top twenty customers. Each month, the company delivers a schedule listing the new invoices. The customers continue to pay the company as long as the lender has not notified the assignment. After an event of default, the lender notifies the customers, who then pay the lender.

• Check that your lender falls within the categories of article L. 313-23: credit institution, financing company or AIF covered by that text.
• Negotiate an assignment that is not notified to customers as long as no event of default has occurred.
• Have the joint and several guarantee of payment of the assigned receivables, which article L. 313-24 provides by default, excluded.
• Review the anti-assignment clauses in your customer contracts before assigning the receivables concerned.