Section 251: Leave to enforce security

251. Leave to enforce security (1) A secured creditor who is affected by appointment of an administrator may, within the specified period, apply to the Court for an order granting leave to him to enforce his security. (2) A secured creditor who makes an application to the Court under subsection (1) shall, on the day on which the application is filed with the Court, give notice of the application to the administrator. (3) The administrator shall, within 7 days of receiving the application,— (a) file with the Court a notice informing the Court whether the administrator supports or opposes the application; (b) at the same time file with the Court a report on the assets and liabilities of the company under administration to the extent that these are known to the administrator; (c) state any respects in which, to the knowledge of the administrator, the statement of assets and liabilities may be incomplete; and (d) provide a statement of reasons in support or opposition of the application, as the case may be. (4) The Court shall, within 7 days of receiving the administrator’s notice, conduct a hearing on the application. (5) The Court may, at the hearing conducted under subsection (4),— (a) proceed to make a determination on the application; or (b) where it considers that it is essential to receive further information and reports from either the secured creditor or the administrator in order to effectively determine the application, adjourn the hearing for that purpose for a period of not more than 21 days. I14 – 143 [Issue 3] Insolvency Act (6) The Court, when determining the secured creditor’s application, may make an order granting leave to the secured creditor to enforce the secured creditor’s security over the property of the company where it is satisfied that in all the circumstances of the case serious prejudice will be caused to the secured creditor if the application is not granted which outweighs the prejudice caused to other creditors arising from the granting of the application. (7) The Court, in making an order under subsection (6), may make that order on such terms as the Court thinks appropriate, including— (a) the making of an order that the secured creditor, the receiver or other person involved in the enforcement of the security shall not perform specified functions or exercise specified powers except as permitted by further order of the Court; (b) limiting the enforcement of the security to specified property; or (c) directing that the enforcing by a creditor of its security by any sale of property shall be conducted in the manner laid down by the Court or subject to any further leave or directions from the Court. (8) A secured creditor who is granted leave to enforce his security under this section shall, from time to time at intervals not exceeding 3 months, report to the administrator on the enforcement of his security and the proceeds thereby recovered by the secured creditor. (9) In the case of perishable property, the Court may, on an application under this section make an order granting leave to the secured creditor to forthwith enforce his security so far as it is a security over perishable property and to hold any proceeds that are recovered by the secured creditor on trust for the administrator pending the conduct of a hearing and the making by the Court of an order under subsection (6). (10) Nothing in this section shall prevent a person from giving a notice under a security agreement.