It may be that, as between the grantor and the secured creditor, the secured creditor has agreed to treat the proceeds as encumbered assets.

Rights and obligations of the grantor and the secured creditor

To the extent that the value of the encumbered asset is insufficient to satisfy the secured creditor's claim, the secured creditor may participate as an ordinary unsecured creditor.

If the secured creditor and the depositary institution are the same person, the law should provide that the secured creditor automatically has control upon the creation of the security right.

Under the third method of obtaining control, as between the issuer guarantor or nominated person paying the proceeds and the secured creditor, the secured creditor is the beneficiary of the independent undertaking.

Since, at the time of eventual distribution, the extent to which the secured creditor will receive priority will be limited by the value of the encumbered asset, that depreciation can prejudice the secured creditor.

(b) Provide a temporal event for ordering priority among secured creditors and between a secured creditor and other classes of competing claimants.

(a) The existing secured creditor was given the opportunity to be heard by the court

(ii) Possessory security right means a security right in tangibles that are in the actual possession of the secured creditor or of another person (other than the debtor or other grantor) holding the asset for the secured creditor.

(jj) Non possessory security right means a security right in (i) tangibles that are not in the actual possession of the secured creditor or another person holding the tangibles for the benefit of the secured creditor, or (ii) intangibles.

The law should also permit discharge of a registration by agreement of the secured creditor and the grantor.

It only gives the secured creditor control for purposes of the effectiveness of its rights against third parties.

If the value exceeds the claim, the secured creditor will not be harmed by the diminution of value until that value becomes insufficient to pay the secured claim.

Note to the Working Group Under the definition of control in the terminology section, the secured creditor has control of an independent undertaking where (i) the issuer guarantor or nominated person paying the proceeds is the secured creditor (ii) the issuer guarantor or nominated person paying the proceeds has acknowledged the security right in the proceeds from the drawing under an independent undertaking or (iii) the secured creditor is the beneficiary.

During the proceedings, the secured creditor could also receive the contractual rate of interest on the secured portion of the claim to compensate for delay imposed by the proceedings.

(a) The secured creditor with a security interest in those cash proceeds consents to such use or disposal or

The law should provide that the delivery of possession of the assets to be encumbered is to the secured creditor or a third person (other than the grantor or an agent or employee of the grantor) that holds the assets on behalf of the secured creditor.

However a secured creditor may take possession of tangible encumbered assets without the consent of the person in possession of them only in accordance with the law of the State in which those assets are located at the time the secured creditor takes possession of them.

If the secured creditor is the depositary bank, the depositary bank's security right has priority over any other security right.

The law should provide that the security agreement must, at a minimum, identify the secured creditor and the grantor, and reasonably describe the secured obligation and the assets to be encumbered.

(i) Another secured creditor with a security right in the same encumbered asset (whether as an original encumbered asset or proceeds)

The law should provide that a security right in a negotiable instrument that has been made effective against third parties by a method other than possession of the instrument by the secured creditor is subordinate to the rights of a buyer, another secured creditor or other transferee in a consensual transaction who either

It should be noted that insolvency laws providing for consolidation do not affect the rights of secured creditors, other than possibly the holders of intra group securities (where the secured creditor is a group company).

(ii) The secured creditor will be protected against diminution of the value of the encumbered asset in which it has a security interest.

(b) The secured creditor was given notice of the proposed use or disposal and an opportunity to be heard by the court and

Any such agreement does not affect the relationship between the issuer guarantor or nominated person paying the proceeds and the beneficiary (the secured creditor).

If the value of the product or mass is lower than the value of the goods, the secured creditors share the loss proportionately (e.g. if the value of the cake is 8, each secured creditor gets 4).

The law should provide that a secured creditor with a security right in fixtures in immovables that has been made effective against third parties under real property law has priority over a secured creditor with a security right in those fixtures that has been made effective against third parties by one of the methods referred to in recommendation 55.

This amount remains fixed throughout the proceedings and, upon distribution following liquidation, the secured creditor receives a first priority claim to the extent of that amount.

(a) Extends to all monetary and non monetary obligations owed to the secured creditor up to a maximum monetary amount set forth in the registered notice , including principal, costs, interest and fees, to the extent secured by the security right and

The law should provide that the depositary bank's right to set off against the bank account obligations owed to the depositary bank by the grantor has priority over the security right of another secured creditor other than a secured creditor who has acquired control of the bank account by becoming the customer of the depositary bank with respect to the bank account.

However, where the security right at issue is granted not by the debtor but by a third party (e.g. on the basis of some contractual arrangement with the debtor), the term debtor refers to the third party grantor, since only in that third party grantor's insolvency is the secured creditor a secured creditor with a proprietary right in the encumbered assets.

The law should provide that a secured creditor with a security right that is not effective against third parties has towards third parties no right other than as an unsecured creditor priority over unsecured creditors unless the unsecured creditor has taken steps to reduce its claim to a judgement or the grantor has become insolvent .

Thus, it was suggested that paragraph (3) (b) should require information to be provided as to whether a secured creditor jeopardized its security by filing the claim.

(c) Transfer of control to the secured creditor if the encumbered assets are certain intangible obligations, other than receivables, owing to the grantor by a third person a bank account

One approach is for the valuation, at least in the first instance, to be determined through agreement by the parties (being the debtor, or insolvency representative, and the secured creditor).

(b) The value of the encumbered asset is diminishing as a result of the commencement of insolvency proceedings and the secured creditor is not protected against that diminution of value and

In some legal systems a secured creditor who files a claim in the insolvency proceeding is deemed to have waived the security or some of the privileges attached to the credit.

(51) The insolvency law should specify that a secured creditor may request the court to grant relief from the measures applicable on commencement of insolvency proceedings on grounds that may include that

The insolvency law should specify that, upon application to the court, a secured creditor should be entitled to protection of the value of the asset in which it has a security interest.

Possession by a third person constitutes sufficient dispossession only if the third person is not an agent or employee of the grantor and holds possession for or on behalf of the secured creditor.

(a) Enable a potential secured creditor to determine, in an efficient manner and with a high degree of certainty prior to extending credit, the priority that the security rights would have over competing claimants and

(f) Grantor means a person that creates a security right in one or more of its assets in favour of a secured creditor to secure either its own obligation or that of another person (see debtor).

It was noted that, in some legal systems, a secured creditor who filed a claim in an insolvency proceeding might be deemed to have waived the security or some of the privileges attached to the credit.

Breach secured.