Companies Act 2014 section 699

Provisions consequent on section 698 regarding secured creditors: deemed surrender of security, etc.

Section 699 deals with the consequences for secured creditors who vote at creditors' meetings without properly valuing their security, including when a creditor is deemed to have surrendered their security and the liquidator's right to require that security be given up.

• A secured creditor who votes on the full amount of their debt at a creditors' meeting without valuing their security is deemed to have surrendered that security, unless the court accepts the omission was due to inadvertence.
• The liquidator has 28 days from the date a proof or statement was used for voting purposes to require the creditor to give up their security in exchange for payment of the estimated value stated in that proof or statement.
• Before being required to give up their security, the creditor may correct the valuation by submitting a new proof to the liquidator and deducting the revised value from the debt owed to them.
• These provisions protect the general body of creditors by ensuring secured creditors do not gain an unfair voting advantage while also retaining the full benefit of their security.