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CS Professional · Insolvency and Bankruptcy - Law and Practice · Liquidation of Corporate Person

In the liquidation of Sunrise Developers Ltd, a secured creditor attempts to take possession of a warehouse but the corporate debtor's former director blocks entry. The secured creditor has already been permitted by the liquidator to realise. What is the correct course?

The secured creditor may apply to the Adjudicating Authority to facilitate realisation when it faces resistance from the corporate debtor or a connected person. The Authority can pass whatever order is necessary to permit the secured creditor to realise its security in accordance with the applicable law.

  1. AThe secured creditor must relinquish its security to the liquidation estate
  2. BThe liquidator must take over possession and sell the warehouse himself
  3. CThe secured creditor may apply to the Adjudicating Authority, which may pass such order as necessary to permit realisation in accordance with lawCorrect
  4. DThe secured creditor must wait for the Board to issue directions

Explanation

Section 52(5) allows a secured creditor facing resistance from the corporate debtor or any connected person to apply to the Adjudicating Authority, and section 52(6) lets it pass necessary orders permitting realisation under law. Relinquishment is optional, not forced.

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