Article 781 — Sale and Distribution from Encumbered Assets

1/ Where the trustee in bankruptcy realizes encumbered immovable or movable, tangible or intangible assets of the estate, and decides to distribute the proceeds, creditors with security over these assets shall be paid in priority over other creditors, after deduction of costs and expenses for the realization of such encumbered assets. 2/ Secured creditors who have been paid out of the proceeds of the assets as laid down in Sub-Article (1) shall be treated as unsecured creditors for the residual amount still remaining due.