WINDING UP
can apply to the Court under s. 252 to exercise the power con-
ferred by s. 210 to fix a time within which creditors must
prove their debts or be excluded from any distribution made
before their debts are proved.

The position of secured creditors requires some explana-
tion. By s. 262 of the Act, the provisions of the bankruptcy
law as to secured creditors are applied to insolvent companies
in winding up. The result is that a secured creditor of an
insolvent company in liquidation may adopt one of four
courses: (1) he may rely on his security and not prove at all;
although, of course, should his security on realisation prove
to exceed the amount of his debt, he must hand over the
surplus to the liquidator; (2) he may realise his security, and
if it shows a deficit, he may prove for the balance; (3) he may
give up his security to the liquidator and prove for the whole
debt; (4) he may assess the value of his security, and, after
deducting the assessed value, prove for the balance of his debt.
If he adopts the last course, the liquidator can redeem at the
assessed value; or if he is dissatisfied with the assessed value,
require -the property to be sold [Bankruptcy Act, 1914, 2nd
schedule, para. r3]. A creditor can, however, amend his
valuation and proof under para. 13 of that schedule on show-
ing to the satisfaction of the liquidator, or the Court, that the
valuation and proof were made bond fide on a mistaken
estimate, or that the security has increased or diminished in
value since its previous valuation.

An important duty of the liquidator arises in connection
with secured creditors. The bulk of secured creditors of a
company are ordinarily debenture holders, that is to say,
creditors of the company whose debts are secured in most
instances by a mortgage or charge upon the whole under-
taking of the company, including, generally, its uncalled
capital. The liquidator must ascertain whether the deben-
tures were validly issued, and whether they are duly registered
in cases where registration is required, remembering that,
should the security turn out to be invalid, the unsecured
creditors will receive the benefit of it with the debenture
holders, who in such a case would be themselves, really,
ansecured creditors. The question of what is the best policy
for the liquidator to adopt, where the whole of the company’s
assets are mortgaged to debenture holders, is often one of
extreme difficulty, and sometimes it happens that a Scheme
of Arrangement under s. 153 (see p. 222) is the best solution.
[t is also within the province of the liquidator to investigate
the validity or otherwise of any security held by any secured
creditor, other than debenture holders. In this connection.

Secured
Creditors.