The recent decision in Re PAL SC Realisations (2007) Ltd means that a chargeholder who formally surrenders their security and hence becomes an unsecured creditor for the value of their debt can participate in any distribution of the prescribed part. Such action will be attractive to second and subsequent floating or fixed chargeholders in cases where there is an expected shortfall as against the first chargeholder in administrations and liquidations.
In cases where you are making a distribution of the prescribed part, then in order to ensure that you do not leave yourself open to a claim for negligence by a secured creditor to whom you have not made a distribution then you should formally give notice of intended dividend by way of a distribution of the prescribed part to secured as well as unsecured creditors to ensure that you are made aware of instances where the secured creditor has surrendered their security.
