With Rapides Packing and Frozen Foods of Louisiana, Inc. insolvent, its sole directors and shareholders, Donald Richard and Kenneth Vitello, favored two of Rap-ides’ unsecured creditors, corporations *912which they respectively owned, by granting these creditors promissory notes and mortgages on real property belonging to Rapides to secure pre-existing debts. Ultimately these creditor corporations foreclosed and Richard and Vitello individually acquired Rapides’ property at a sheriff’s sale in connection with the foreclosure.
La.R.S. 12:92(D) and La.R.S. 12:93(D) impose liability upon participating directors and recipient shareholders in favor of corporate creditors for the unlawful distribution of corporate assets to shareholders.
The narrow legal question presented is whether plaintiffs, two unsecured creditors of Rapides who have reduced their claims against Rapides to judgment, are entitled to recover from one or more of the designated defendants, Richard, and Vitello personally, and/or the creditor corporations which were favored, on the strength of La.R.S. 12:92(D) and/or La.R.S. 12:93(D).
For the reasons which follow we determine that plaintiffs are not entitled to the judgments they seek.
The facts of this case are not in dispute and are as follow. On February 24, 1978, and March 7, 1978, plaintiffs, AMP Service Corporation (hereinafter referred to as AMP) and Missouri Meat Company (hereinafter referred to as Missouri) each sold and delivered certain meat products to Rapides Packing and Frozen Foods of Louisiana, Inc. (hereinafter referred to as Rapides). Rapides was a Louisiana corporation owned by Donald Richard and Kenneth Vitello, they being its sole stockholders, officers and directors. On March 22, 1978, Rapides advised its trade creditors, including plaintiffs, that it was contemplating bankruptcy, offering in lieu of such action, to pay 25% of the total amount due in full discharge of all outstanding indebtednesses. This plan was unacceptable to the creditors. It was never put into effect.
On April 30, 1978, Rapides executed two promissory notes, payable on demand, one in the sum of $67,190.00 payable to Pistols Plumbing and Maintenance, Inc. (hereinafter referred to as Pistols), and another in the sum of $74,253.00 payable to Vitello Referigeration Service Company (hereinafter referred to as Vitello Refrigeration). Both notes were secured by an act of conventional mortgage covering the physical assets owned by Rapides (which essentially consisted of the plant property). At all pertinent times, Pistols was a Louisiana corporation solely owned by Richard, and Vi-tello Refrigeration was a Louisiana corporation solely owned by Vitello.1
The record reflects and plaintiffs concede in brief, that at the time the notes and mortgages were executed Rapides was justly and truly indebted to Pistols and Vitello Refrigeration, in the amounts for which the notes and mortgages were executed, for work they had previously performed, although such indebtedness had until then been unsecured.
The record further reflects that at the time the notes and mortgages were executed, Rapides was virtually insolvent and had ceased operations. Its plant property was subject to a first mortgage in favor of Calcasieu Marine National Bank which secured a promissory note with a balance due of $240,000.00. This note had been personally endorsed by Richard and Vitello. In addition to this first mortgage and the second and third mortgages granted to Pistols and Vitello Refrigeration, Rapides owed approximately $100,000.00 to its unsecured trade creditors.
On August 22, 1978, judgments were rendered against Rapides in favor of AMP in the sum of $22,283.03 and in favor of Missouri in the sum of $7,800.00.
On November 15,1978, Pistols and Vitello Refrigeration instituted foreclosure proceedings to enforce collection on their respective notes. On December 28, 1978, the encumbered property was sold at judicial sale to Richard and Vitello, they being the *913only bidders present at the sale, for the sum of $250,000.00, an amount sufficient to cover only the balance due on the first mortgage and costs of the foreclosure proceedings. Although the judicial sale reflects payment of the $250,000.00 in cash, Richard and Vitello merely paid the costs in cash and assumed payment of the indebtedness owed to Calcasieu Marine National Bank. Accordingly, Richard and Vitello apparently acquired the property free and clear of the Pistols and Vitello Refrigeration mortgages and other later inscribed encumbrances, including the plaintiffs’ judgments.2
On April 17, 1980, Richard and Vitello sold the property acquired by them at the December 28, 1978 judicial sale to the Cal-casieu Parish School Board for the sum of $350,000.00. According to the record, the sum of $73,361.51 was received by Richard and Vitello after payment of the bank mortgage, real estate commission, and property taxes. Richard testified that none of that sum constituted profit on the transaction because of the out of pocket expenses for maintenance of the plant property, insurance, interest on the bank loan and miscellaneous expenses, during the fifteen month period between acquisition at the judicial sale and sale of the property to the school board. (He itemized $75,319.58 of such expenses.)
One day before the sale of the property to the school board, April 16, 1980, AMP and Missouri filed the present law suits against Richard and Vitello personally, and Pistols and Vitello Refrigeration. They seek judgments in the same respective amounts as their judgments against Rap-ides.
Plaintiffs base their claims on La.R.S. 12:92(D) and La.R.S. 12:93(D), provisions of the Louisiana Business Corporation Law which create liability in favor of creditors in both directors and shareholders who participate in an unlawful distribution of corporate assets to shareholders. The statutes provide in pertinent part as follows:
Section 92. Liability of directors and officers.
(D) If any dividend shall be paid in violation of this Chapter, or if any other unlawful distribution, payment or return of assets be made to the shareholders, or if the corporation purchase or redeem any of its own shares in violation of this Chapter, the directors who knowingly, or without the exercise of reasonable care and inquiry, voted in favor thereof shall be liable jointly and severally to the corporation, or to the creditors of the corporation, or to both, in an amount equal to the amount of the unlawful distribution. An action to enforce such liability must be brought within two years from the date on which the distribution was made, and this time limit shall not be subject to suspension on any ground, nor to interruption except by timely suit. (Emphasis provided.)
Section 93. Liability of subscribers and shareholders.
*914(D) Every shareholder who receives any unlawful dividend or other unlawful distribution of assets shall be liable to the corporation, or to the creditors of the corporation, or to both, in an amount not exceeding the amount so received by him. An action to enforce this liability must be brought within two years from the date on which the unlawful distribution was received, and this time limit shall not be subject to suspension on any ground, nor to interruption except by timely suit. (Emphasis provided.)
Plaintiffs contend that the granting of the notes and mortgages to Pistols and Vi-tello Refrigeration was an unlawful distribution of corporate assets to shareholders. They make this contention notwithstanding that Pistols and Vitello Refrigeration were not shareholders of Rapides, and notwithstanding that the transactions were simply the granting of promissory notes and mortgages as security for pre-existing just debts.3 Richard and Vitello were the sole directors and shareholders of Rapides. They were also the persons who were the controlling owners of the creditor corporations, Pistols and Vitello Refrigeration. Thus, plaintiffs argue that Richard and Vi-tello are liable to them as directors who made an unlawful distribution of corporate assets to shareholders [La.R.S. 12:92(D) ], and as shareholders who were recipients of the corporate assets unlawfully distributed. La.R.S. 12:93(D).
The trial court found no distribution of Rapides’ assets in violation of the cited statutes and dismissed plaintiffs’ suits. The Court of Appeal affirmed the judgments of the trial court but for somewhat different reasons. While the Court of Appeal also found that there had been no unlawful distribution of corporate assets in favor of shareholders in violation of La.R.S. 12:92(D) and La.R.S. 12:93(D), they nonetheless concluded that the transaction was invalid. Yet they affirmed the lower court judgment upon finding that the defendants had derived no gain from the transaction.4 Missouri Meat Co. v. Donald Richard, et al., 407 So.2d 17 (La.App. 3rd Cir. 1982); AMP Service Corp. v. Donald Richard, et al., 407 So.2d 23 (La.App. 3rd Cir. 1982).
We granted writs to review the matter, chiefly prompted by a concern over the finding by the Court of Appeal that defendants received nothing of value.5 For the following reasons, we affirm the lower court judgments in favor of defendants.
In order for plaintiffs to prevail under La.R.S. 12:92(D) and La.R.S. 12:93(D) they must establish that there was an unlawful distribution of assets, and also that the unlawful distribution was made to shareholders. They have failed in both respects.
To begin with, there was no unlawful distribution of assets to Pistols and Vi-tello Refrigeration. Rapides, through its directors, Richard and Vitello, granted to Pistol and Vitello Refrigeration a promissory note and mortgage on the corporate property to secure a valid pre-existing debt for work these corporations had performed *915for Rapides sometime earlier. Simply granting a creditor security for a pre-exist-ing debt is not an unlawful transaction. Nor is it a distribution of corporate assets. Plaintiffs rely on several cases in support of their contention that it was an unlawful distribution of corporate assets. Abraham v. Lake Forest, 377 So.2d 465 (La.App. 4th Cir. 1979); McGregor v. United Film Corp., 351 So.2d 1224 (La.App. 1st Cir. 1977); and Pasternack v. Louisiana and Arizona Lands, Inc., 254 So.2d 142 (La.App. 3rd Cir. 1971). These cases are distinguishable and do not support their contention.6
Furthermore, there is a real question in this case, even if we are to assume that there was an unlawful distribution of assets, as to whether the unlawful distribution was made to shareholders. Under the facts involved in this case the notes and mortgages were granted not to Rapides shareholders Richard and Vitello, but to two distinct Louisiana corporations, Pistols and Vitello Refrigeration. And while admittedly the two corporations were owned and controlled by Richard and Vitello, the notes and mortgages were simply security contracts for legitimate pre-existing debts of Rapides.
Plaintiffs, other creditors of Rapides, have relied solely on La.R.S. 12:92(D) and La.R.S. 12:93(D) as the source of their remedy. These two are the only provisions of the Louisiana Business Corporation Law which expressly provide for the liability of directors and shareholders to creditors. As stated above, however, in order to obtain recovery under these provisions, the creditor must establish that there was an unlawful distribution of the corporate assets to a shareholder. Plaintiffs herein have simply not proven such.
These plaintiffs, however, were not without a remedy under the law.
The Louisiana Business Corporation Law, at La.R.S. 12:957 specifically reserves, to any person, any right that person may have, by law, against a director or shareholder of a corporation because of any fraud practiced upon him. One such right is the revo-catory action to annul contracts in fraud of creditors. La.C.C. art. 1968 et seq.
Articles 1970, 1983 and 1984 are particularly pertinent to the issue before us.8 Read together they provide that a transaction, by which there is a preference given to one creditor over the other creditors at a *916time when the debtor is in insolvent circumstances to the knowledge of the creditor who is being preferred, is deemed to be made in fraud of creditors, and the injured creditor may bring an action to have the transaction set aside. In connection therewith the preferred creditor shall “only lose the advantage endeavored to be secured by such contract.” La.C.C. art. 1983. However, the offended creditors’ right to set aside a security contract of that nature is restricted by La.C.C. art. 1987. That article provides that a contract of this nature cannot be set aside if it “were made more than one year before bringing the suit to avoid it.. . ,”9
Plaintiffs neglected to take advantage of their legal remedy. Instead, they waited until the property was to be resold to the school board (over twenty-three months after the security contract was granted, and over fifteen months after the foreclosure sale), at what they perceived to be a profit to Richards and Vitello, before bringing any action against these defendants. By that time, their cause of action had prescribed. Plaintiffs had ample opportunity to bring their revocatory action. As stated above, the security agreement between Rapides, and Pistols and Vitello Refrigeration, was entered into on April 30,1978. In March of that same year, plaintiffs had been notified that Rapides was in insolvent circumstances and contemplating bankruptcy. At the time the security agreement was entered into (promissory note secured by mortgage,) Rapides had ceased all operations. On August 22, 1978, both plaintiffs obtained judgments against Rapides for goods they had delivered to defendant but for which they had not been paid. It would have been a simple matter for plaintiffs to couple their suit on the debt with one to annul the note and mortgage, a procedure specifically authorized by La.C.C., art. 1975.10 On November 15, 1978 defendants Pistols and Vitello Refrigeration instituted foreclosure proceedings. Plaintiffs could have intervened in those proceedings. Even following the foreclosure of December 20, 1978 and until April 30, 1979, the anniversary of Rapides’ granting Pistols and Vitello Refrigeration the notes and mortgages, plaintiffs could have availed themselves of the revocatory action under La.C.C. arts 1970 and 1987. Since the property was not acquired by an innocent third party, there would have be no impediment, even after foreclosure and until April 30, 1979, to revoking the note and mortgage and the ensuing foreclosure sale. Plaintiffs instituted none of these proceedings. Instead plaintiffs waited until the property was about to be sold to the school board before bringing any action against these defendants. Their lawsuit, even if construed to be one to invalidate or avoid a security contract made in fraud of their rights, was not filed within the requisite one year provided by La.C.C. art. 1987.
The trial judge was correct in finding that plaintiffs were entitled to no relief under La.R.S., 12:92(D) and La.R.S. 12:93(D). The preferential treatment, by execution of the promissory notes and mortgages, was not an unlawful distribution of assets. Relief under La.R.S. 12:92(D) and La.R.S. 12:93(D) was not available to these plaintiffs and their remedy under the Civil Code articles cited hereinabove had prescribed.
Decree
For the foregoing reasons, the judgments of the district court and the Court of Appeal are affirmed.
AFFIRMED.
*917LEMMON and MARCUS, JJ., dissent and assign reasons.
BLANCHE, J., dissents.