Public filing with regard to non-possessory security rights in tangible assets as contemplated by the DCFR: of no benefit to unsecured (trade) creditors

The public filing system as proposed by the Draft Common Frame of Reference (DCFR) will not benefit unsecured (trade) creditors. The contrary assumption, from which some legal scholars would seem to proceed, would appear to be fostered by an understanding of how banks provide credit and how suppliers behave, which is not consistent with reality. In addition, there would seem to be a broadly felt sympathy for the position of unsecured creditors (in or outside bankruptcy). In this article, I will argue that no matter how pitiful the position of unsecured (trade) creditors may seem to be, it is a mistake to think that their position would be enhanced by the introduction of a public filing system. When considering the need to introduce such system, the position of (unsecured) trade creditors should, therefore, not put any weight in the scale.