THE CORPORATIONS LAW

CHAPTER 5 - EXTERNAL ADMINISTRATION

PART 5.6 - WINDING UP GENERALLY

Division 6 - Proof and ranking of claims

Subdivision C - Special provisions relating to secured creditors of insolvent companies

SECTION 554F   REDEMPTION OF SECURITY BY LIQUIDATOR  

554F(1)  [Debt in excess of value of security]  

This section applies where a secured creditor's proof of debt is in respect of the balance due after deducting the creditor's estimate of the value of the security.

554F(2)  [Liquidator may redeem security]  

The liquidator may, at any time, redeem the security on payment to the creditor of the amount of the creditor's estimate of its value.

554F(3)  [Liquidator dissatisfied with creditor's valuation]  

If the liquidator is dissatisfied with the amount of the creditor's estimate of the value of the security, the liquidator may require the property comprised in the security to be offered for sale at such times and on such terms and conditions as are agreed on by the creditor and the liquidator or, in default of agreement, as the Court determines.

554F(4)  [Where property auctioned]  

If the property is offered for sale by public auction, both the creditor and the liquidator are entitled to bid for, and purchase, the property.

554F(5)  [Creditor may require liquidator to elect]  

The creditor may at any time, by notice in writing, require the liquidator to elect whether to exercise the power to redeem the security or to require it to be sold and, if the liquidator does not, within 3 months after receiving the notice, notify the creditor, in writing, that the liquidator elects to exercise the power:

(a)  the liquidator is not entitled to exercise it; and

(b)  subject to subsection (6), any equity of redemption or other interest in the property comprised in the security that is vested in the company or the liquidator vests in the creditor; and

(c)  the amount of the creditor's debt is, for the purposes of this Division, taken to be reduced by the amount of the creditor's estimate of the value of the security.

554F(6)  [Equity of redemption]  

The vesting of an equity of redemption or other interest in property because of paragraph (5)(b) is subject to compliance with any law requiring the transmission of such interests in property to be registered.