One of the ways for the creditor to recover a partial or total amount of debt owed by the debtor, is by appropriating the subject matter insured. In an extrajudicial settlement, the pledgee (lienor) can exercise the right of lien on the basis of a forfeiture clause, which is only valid in the case of an outstanding secured debt. The secured debt can also be reimbursed (by the pledgee) by appropriation of the subject matter insured in judicial proceedings, e.g. enforcement and bankruptcy procedures. ZIZ (The Law on Enforcement and Security of Claims) contains various clauses in relation to the pledgee, who can appropriate immovable and moveable properties, also securities, if he is the only pledgee and if he assumes the role of the buyer in the enforcement proceedings. However, in the enforcement proceedings governed by the ZFPPIPP (Financial Operations, Proceedings and Compulsory Dissolution Act), non-realisable assets can be transferred to the pledgee if he/she approves the appropriation thereof.
According to ZFZ (The Financial Collateral Act), the appropriation of subject matter insured is possible in the case of financial collateral with the legal right to a lien and financial collateral with the transfer into insurance. The amending ZFZ also regulates the extrajudicial implementation of notarized mortgage through the appropriation of immovable assets.
Next to liens, SPZ (Law of Property Code) also regulates the fiduciary transfer of ownership in the collateral insurance which is also one of the options to secure the possible debts. If the secured debt remains unpaid after the expiration date, the fiduciary can be reimbursed by retaining the moveable assets at an appropriate cost rate.
The pledgees usually decide to appropriate the subject matter insured for it can present the fastest and easiest, and sometimes even the only way for the debtors to reimburse their debts to the pledgees. When appropriating the subject matter insured, we are most often faced with the question of prohibition of the forfeiture clause and the possible enrichment of the collateral taker.