Reconsidering the Plight of the Five Foolish Maidens: Should the Unsecured Creditor Stake a Claim in Real Security?
Journal of Contemporary Roman-Dutch Law, Vol. 74, p. 347, 2011
25 Pages Posted: 6 Mar 2012
Date Written: August 6, 2011
The article focuses on the function and role of real security within bankruptcy by taking the South African distribution rules in insolvency as the point of departure to examine some aspects of the functioning of secured claims in a bankruptcy system. The purpose of the first part of the article is to provide a background against which the practical effect of the relative rankings of creditors as secured, unsecured priority and concurrent creditors respectively may be dealt with. The explorative research question is whether the secured creditor should under all circumstances enjoy extensive coverage of his or her claim and, more importantly, whether and under what circumstances an argument can be put forward for unsecured creditors to share in at least a percentage of the proceeds of a security. It is also a point of departure that there are existing exceptions where some creditors do receive special treatment despite the fact that they do not have a right of real security in their favor.
Keywords: bankruptcy, real security
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