Section 524. Rights and duties of secured creditors

(1) A secured creditor may—

(a) realise a property subject to a charge, if entitled to do so;

(b) value the property subject to the charge and claim in the winding up as an unsecured creditor for the balance due, if any; or

(c) surrender the charge to the liquidator for the general benefit of creditors and claim in the winding up as an unsecured creditor for the whole debt.

(2) A secured creditor may exercise the power referred to in paragraph (1)(a) whether or not the secured creditor has exercised the power referred to in paragraph (1)(b).

(3) A secured creditor who realises a property subject to a charge under paragraph (1)(a)—

(a) may, unless the liquidator has accepted a valuation and claim by the secured creditor under subsection (7),claim as an unsecured creditor for any balance due after deducting the net amount realised;

(b) shall account to the liquidator for any surplus remaining from the net amount realised after the satisfaction of the debt, including interest payable but which shall not exceed six months, in respect of that debt up to the time of its satisfaction, and after making any proper payments to the holder of any other charge over the property subject to the charge.

(4) If a secured creditor values the security and claims as an unsecured creditor for the balance due under paragraphs (1)(a) and (b), if any, the valuation and any claim shall be made in the manner to be determined by the Registrar and—

(a) contain full particulars of the valuation and any claim;

(b) contain full particulars of the charge including the date

(c) identify any documents that substantiate the claim and the charge.

(5) The liquidator may require the production of any document referred to in paragraph (4)(c).

(6) Where a claim is made by a secured creditor under subsection(4), the liquidator shall—

(a) accept the valuation and claim; or

(b) reject the valuation and claim in whole or in part, but—

(i) where a valuation and claim is rejected in whole or in part, the creditor may make a revised valuation and claim within fourteen days of receiving notice of the rejection; and

(ii) the liquidator may, if he subsequently considers that a valuation and claim was wrongly rejected in whole or in part, revoke or amend that decision.

(7) Where the liquidator—

(a) accepts a valuation and claim under paragraph (6)(a);

(b) accepts a revised valuation and claim under subparagraph (6)(b)(i); or

(c) accepts a valuation and claim on revoking or amending a decision to reject a claim under subparagraph (6)(b)(ii),

the liquidator may, unless the secured creditor has realised the property, at any time, redeem the security on payment of the assessed value.

(8) The liquidator may at any time, by notice in writing, require a secured creditor, within twenty-one days from the receipt of the notice, to—

(a) elect which of the powers referred to in subsection (1) the creditor wishes to exercise; and

(b) if the creditor elects to exercise the power referred to in paragraph (1)(b) or (c), exercise the power within that period.

(9) A secured creditor on whom notice has been served under subsection (8) who fails to comply with the notice is to be taken as having surrendered the charge to the liquidator under paragraph (1)(c) for the general benefit of creditors, and may claim in the liquidation as an unsecured creditor for the whole debt.

(10) A secured creditor who has surrendered a charge under paragraph (1)(c) or who is taken as having surrendered a charge under subsection (9) may, with the leave of the Court or the liquidator and subject to such terms and conditions as the Court or the liquidator thinks fit, at any time before the liquidator has realised the property charged—

(a) withdraw the surrender and rely on the charge; or

(b) submit a new claim under this section.

(11) Every person who—

(a) makes, or authorize the making of, a claim under subsection (4) that is false or misleading in a material particular knowing it to be false or misleading; or

(b) omits, or authorize the omission, from a claim under that subsection of any matter knowing that the omission makes the claim false or misleading in a material particular,

commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding five years or to both.