6.7 Remedies for debenture holders

In case of unsecured debenture;

1. a) The debenture holder can bring an action to enforce the debenture and obtain judgement to levy execution on the property of the company.
2. b) He may present a petition for compulsory winding up of the company.
3. c) If winding up is in progress he can prove during winding up for the amount due to him for which no security was given.
4. d) He may rank with the ordinary creditors although he will be treated as a special creditor.

In case of secured debentures

1. a) Action for recovery of the debt.
2. b) Sale of property in case of a fixed charge over property, a debenture holder has implied power of sale under the law of property.
3. c) Taking possession of the property.
4. d) Winding up-a second creditor can petition for the winding up of the company where the debenture gives him express power to do so.
5. e) Appointment of a receiver, appointed for floating charge debenture holders. The receiver may sell the assets and use the proceeds to repay the debenture holders.
6. f) After selling the assets, the receiver applies the proceeds as follows;

– To pay all taxes and rates relating to the property.

– Set aside his commission.

– Pay accrued interest on the loan.

– Pay the principal debt.

– Account for the balances.