Secured creditors-bankruptcy and liquidation, Financial Accounting

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SECURED CREDITORS

A secured creditor may:

  • Rely on his security and not prove at all.
  • Surrender his security and prove for the full amount of the debt.
  • Realise his security (if he has a power of sale) and prove for the balance; or
  • stimate the value of his security and prove for the balance.

 

 

He must disclose the security in his proof or surrender it to the trustee unless the court grants relief. If the creditor estimates his security

  • If proof used for voting purposes trustee may within 28 days require him to give up security on payment of its estimated value plus 20% or amount at which revalued by creditor;
  • If valued for dividend purposes trustee may redeem it at any time by paying its assessed value or if dissatisfied with valuation require security to be sold;
  • He may by writing, require trustee to redeem security or have it realised, and if trustee does not do so within six months property vests absolutely in creditor;
  • He may amend valuation and proof at any time unless he has called upon trustee to redeem it;
  • He may realise security and amend his proof accordingly.

 


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