SECURED CREDITORS:

A secured creditor may:

(a) realize his security and prove as an unsecured creditor for the balance (if any) of his debt;

(b)value the security and prove for any balance. In this case the liquidator may either redeem the security at the creditor's value or require it to be sold;

(c)rely on his security and not prove at all; the liquidator may then redeem by payment in full;

(d)surrender his security and prove for the whole debt.

A secured creditor who proves his debt must disclose his security and prove only for the balance as an unsecured creditor.

The liquidator may find that the security given by a floating charge over the undertaking and assets of the company has been enforced (before liquidation began) by the appointment of a receiver and manager who is in charge of the entire business and property of the company. The liquidator should consider whether the charge has become invalid by reason of the commencement of liquidation (paragraph 10 below). If however it is valid the liquidator must wait to see whether there will be any surplus from the company's assets which the receiver will pay over to him when the secured creditors who appointed the receiver have been paid in full. The sequence of events may be reversed i.e. the liquidator causes a floating charge to crystallize and a receiver is appointed after the liquidator has taken control. In that case the liquidator must hand over the business to the receiver since he represents creditors who have a prior claim.