Secured creditor realising collateral in liquidation must pay liquidation costs and liquidator's fee before sale.

A secured creditor realising its security interest during liquidation must first account for the higher-priority liquidation dues it would have borne if it had relinquished the security interest. The liquidation regulations, read with the clarification to Regulation 4, also recognise the liquidator's entitlement to fee where amounts are realised or distributed in liquidation. Accordingly, sale of the secured asset is not free from the liquidation framework: the creditor must comply with the applicable liquidation regulations and pay liquidation costs, including the liquidator's fee, before realising the asset.

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Issues: Whether a secured creditor realising its security interest during liquidation is required to pay liquidation costs and the liquidator's fee, and comply with the liquidation regulations before sale of the secured asset.

Analysis: Regulation 21A(2) requires a secured creditor proceeding to realise its security interest to pay the amount payable towards the higher-priority liquidation dues that it would have shared had it relinquished the security interest. The liquidation regulations, read with the clarification to Regulation 4, recognise entitlement of the liquidator to fee where amounts are realised or distributed in liquidation. On the facts, there was no objection to the secured creditor realising the asset, but such realisation remained subject to compliance with the applicable liquidation regulations and payment of the liquidator's fee.

Conclusion: The secured creditor was held bound to pay the liquidation costs, including the liquidator's fee, and to comply with the relevant liquidation regulations while realising the secured asset.

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