Did you know that the trust has become necessary today as a means of security for alternative financing?
In this article, we will illustrate the concept of trust through the example of our partnership with Pristine. The trust was set up in the context of inventory financing for a large distribution group.
Nowadays, the trust has become almost indispensable as security in the case of alternative financing, given the value of the borrower’s credit.
The trust was introduced into French law on 19 February 2007 by Law No 2007-211.
This contract links a settlor wishing to transfer rights, property or securities to a trustee (whose assets are specially created for the project) whose mission is to contribute to the good of one or more beneficiaries.
This is why, today, the trust makes it possible to secure risks concerning financing, transactions, turnarounds and corporate governance.
We recently assisted a large retail group in the context of a secured financing through a trust set up with our partner Pristine. Pristine specialises in the management of trusts to secure financial transactions. The team has both legal and financial expertise in the field of security law, capital markets and investment. Pristine is regulated and approved by the AMF and is ISO 9001 certified.
In the context of our partnership, the example of a trust concerned a retail group seeking liquidity to finance new stocks in a “deconsolidated” form. In other words, the group did not want this financing to appear as debt in their accounts.
We used our specialist subsidiary Chetwode Inventory Services to buy the stock from the retail group immediately and to sell it back gradually.
Pristine therefore intervened to secure the transaction by taking the Chetwode Inventory Services shares in trust. Pristine can, under the agreement, for example, remove the company’s manager and replace him with another in the event of a default or non-payment. The transaction lasts for one year until the lender (an investment fund) has been repaid.
Do you have a trust project? You can contact us here to find out more.