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TMI BlogSecured Creditors in Liquidation Proceedings [ Section 52 ]X X X X Extracts X X X X X X X X Extracts X X X X ..... it on its own. This right is provided under section 52 of the IBC. Upon commencement of the liquidation process, secured creditors have two options for the recovery of money owed to them--either to relinquish their security interest to the liquidation estate and receive proceeds from the sale of assets by the liquidator, or to stay outside the liquidation process and recover the debt owed to them by enforcement of their security interest in accordance with section 52 of the IBC. Right of secured creditor [ Section 52(1) ] * A secured creditor in the liquidation proceedings may- * (a) relinquish its security interest to the liquidation estate and receive proceeds from the sale of assets by the liquidator in the manner specified in se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor may make an application to the Adjudicating Authority to facilitate the secured creditor to realise such security interest in accordance with law for the time being in force. Passing of order by Adjudicating Authority [ Section 52(6) ] * The Adjudicating Authority, on the receipt of an application from a secured creditor under section 52(5) may pass such order as may be necessary to permit a secured creditor to realise security interest in accordance with law for the time being in force. Yield of surplus [ Section 52(7) ] * Where the enforcement of the security interest under section 52(4) yields an amount by way of proceeds which is in excess of the debts due to the secured creditor, the secured creditor shall- * (a) account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 52. It also held that the AA has no jurisdiction to entertain the application under section 52(6) in absence of any cause of action as per section 52(5). * It noted that for realization of secured assets by a secured creditor, it must inform the liquidator, who is required to verify such security interest and permit the secured creditor to realize it. If a secured creditor applies directly to the AA for realization of secured assets under section 52(6), such an application is not maintainable. It remitted the matter to the liquidator to proceed in accordance with section 53 (read with section 52) of the IBC. Mr. Srikanth Dwarakanath, Liquidator of Surana Power Limited Vs. Bharat Heavy Electricals Limited - NCLAT Dated 18.06.2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dation process at the instance of a single creditor having only 26.24 percent share (in value) in the secured assets. The respondent did not hold a superior charge from the rest of the secured FCs. The NCLAT applied section 13(9) of the SARFAESI Act to end the deadlock, and held that the decision of 73.76 percent of the secured creditors, who had relinquished their security interest, shall be binding on the dissenting secured creditors. Bank of Baroda Vs. Mrs. Deepa Venkat Ramani & Another - NCLAT Dated 04.12.2019 * The appellant bank, a secured creditor of the CD, challenged the AA's order directing the liquidator to collect a certain amount from the Debt Recovery Tribunal (DRT-2 Chennai) for being dealt with under section 53 of Code. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme framed under section 230 to 232 of the Companies Act, 2013 becomes possible or the CD is not sold in its totality along with the employees and there is no option but to sell the assets of the CD and to distribute the same amongst the creditors in terms of section 53 read with section 52 of the Code, the liquidator may be asked to return the third party assets. Leo Edibles & Fats Ltd. Vs. The Tax Recovery Officer (Central) & Ors. - HC, Hyderabad Dated 26.07.2018 * Income-tax Department does not enjoy the status of a secured creditor, on par with a secured creditor covered by a mortgage or other security interest, who can avail the provisions of section 52 of the Code. At best, it can only claim a charge under the attachment order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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