WU Ying-Chieh, Security Trusts : On Excercising Secured Debts in Bankruptcy and Rehabilitation Procedures, Construction law, Vol.10(2024,6), pp.37-62.
<Abstract>
This article deals with the following issue: In security trusts, who is entitled to exercise (i) the right to foreclose outside bankruptcy and (i) the rehabilitation security right in settlor’s(i.e., the detor) bankruptcy and debtor rehabiliation procedures? Is it the trustee or the beneficiary(i.e., the creditor)? The present author argues that, unlessotherwise provided or agreed, those rights in principle belong to the debtor. However, the law should accord to the trustee the right to represent the beneficiary (i.e., the creditor) as an agent, and exercise the right to forclose outside bankruptcy and the rehabilitation security right. The grounds for this are as follows: First, the Debtor Rehabilitation and Bankruptcy Act requires that those rights be exercised by the debtor; second, the appendant nature of security rights remains despite them being transformed into a beneficial interest under a trust; third, considering the purpose and nature of the security trust and parties’ intentions, it is highly likely that the beneficiary would have allowed the security trustee to exercise those rights as her agent. It is the clarification of these grounds to which this work is devoted.
<Keywords>
Security Trusts, Foreclosure, Secured Rehabilitation Debts, Attendant Nature, Bankruptcy, Rehabilitation Procedure
WU Ying-Chieh, Security Trusts : On Excercising Secured Debts in Bankruptcy and Rehabilitation Procedures, Construction law, Vol.10(2024,6), pp.37-62.
<Abstract>
This article deals with the following issue: In security trusts, who is entitled to exercise (i) the right to foreclose outside bankruptcy and (i) the rehabilitation security right in settlor’s(i.e., the detor) bankruptcy and debtor rehabiliation procedures? Is it the trustee or the beneficiary(i.e., the creditor)? The present author argues that, unlessotherwise provided or agreed, those rights in principle belong to the debtor. However, the law should accord to the trustee the right to represent the beneficiary (i.e., the creditor) as an agent, and exercise the right to forclose outside bankruptcy and the rehabilitation security right. The grounds for this are as follows: First, the Debtor Rehabilitation and Bankruptcy Act requires that those rights be exercised by the debtor; second, the appendant nature of security rights remains despite them being transformed into a beneficial interest under a trust; third, considering the purpose and nature of the security trust and parties’ intentions, it is highly likely that the beneficiary would have allowed the security trustee to exercise those rights as her agent. It is the clarification of these grounds to which this work is devoted.
<Keywords>
Security Trusts, Foreclosure, Secured Rehabilitation Debts, Attendant Nature, Bankruptcy, Rehabilitation Procedure