Document ID: chunk:federal_register_of_legislation:C2020A00130:clause:1_454h
Version: federal_register_of_legislation:C2020A00130
Segment Type: clause
Provision Reference: sch 1 cl 454H
Character Range: 39303–40699

454H  Sale of property subject to a possessory security interest

Scope
 (1) This section applies if:
 (a) a company is under restructuring; and
 (b) property of the company is subject to a possessory security interest; and
 (c) the property is in the possession of the secured party; and
 (d) either:
 (i) there is no other security interest in the property; or
 (ii) there are one or more other security interests in the property, but none of the debts secured by those other security interests has a priority that is equal to or higher than the priority of the debt secured by the possessory security interest; and
 (e) the secured party sells the property.

Distribution of proceeds of sale
 (2) The secured party is entitled to retain proceeds of the sale as follows:
 (a) if the net proceeds of sale equals the debt secured by the possessory security interest—the secured party is entitled to retain the net proceeds;
 (b) if the net proceeds of sale exceeds the debt secured by the possessory security interest—the secured party is entitled to retain so much of the net proceeds as equals the amount of the debt secured by the security interest, but must pay the excess to the restructuring practitioner on behalf of the company;
 (c) if the net proceeds of sale fall short of the debt secured by the possessory security interest—the secured party is entitled to retain the net proceeds.