Difference between revisions of "Creditors' Remedies against Debtors (10:III)"

After seizing collateral, the secured party under s 59(2) may dispose of it either in its present condition or after repairing it (though s 68(2) protects the debtor from incurring unnecessary expenses because all rights, etc., under the ''PPSA'' must be discharged “in good faith”). Further, s 59(3) provides that the secured party may dispose of the collateral by a private or public sale (either as a whole or in commercial units or parts) and, if the security agreement so provides, by lease. See also [[{{PAGENAME}}#10. Voluntary Foreclosure | Section II.A.10: Voluntary Foreclosure]].  

Section 59(2) provides a priority scheme regarding application of the proceeds of sale: first, toward the reasonable expenses of seizing, repairing, etc.; second, toward the satisfaction of the obligations owed to the secured party; and last, if any surplus exists, to the  satisfaction of obligations owed to persons holding a subordinate security interest, and then toward the debtor (s 60). A person who buys an item from a disposal sale takes the good free and clear of the debtor, the secured party, and any subordinate creditors whether or not the secured party complied with the requirements of the section. In the case of a prior secured creditor’ s interest, if the goods are “consumer goods” of a value less than $1,000 and the purchaser gave value for the goods, the purchaser takes them free of the prior secured creditor’ s interest (see s 59(14)). 8.Notice of Intention to Dispose of Collateral NOTE:   The forms of notices under the PPSA depend on a number of factors, including the                 nature of the security and the terms of the security agreement. Advice concerning the                 validity of notices should be referred to a lawyer. Subject to the circumstances where notice is not required as per s 59(17) (e.g. for perishable collateral, collateral requiring disproportionately high storage costs relative to its value, etc.), the requirements for notice are outlined in ss 59(6) and (10). These  sections require that the secured party, or receiver, as the case may be, must provide at least 20 days’   notice of their intention to dispose of the collateral to parties including the debtor and any other creditor. When a secured party is considering methods of disposal, they must give notice to the following parties (see s 59(6)):i)the debtor; ii)any other person who is known by the secured party as the owner of the collateral (where that is not the debtor);