BELIZE Law and Practice Contributed by: Tim Prudhoe, Nadia Chiesa and Lemelko Missick, Stanbrook Prudhoe
2. Creditors 2.1 Types of Creditors
Receivers and administrative receivers (Sections 115– 142) are appointed either by a secured creditor under a debenture or directly by the High Court. Their role is to take possession of charged assets and apply the proceeds towards repayment of secured debts. Upon appointment, the receiver must give notice to the company, the registrar and affected creditors, as required under Section 117 of the Act. Liquidators (Sections 158–180) are responsible for winding up a company’s affairs, realising its assets and distributing proceeds among creditors and mem - bers according to statutory priorities. They may be appointed by the High Court, creditors, or members of the company. Once a liquidator is appointed, the directors’ powers and management authority cease, although they remain legally in office and must fully co-operate with and assist the liquidator as required under Sections 177–178 of the Act. In line with Sec - tion 174 (1)(b) of the Act, upon the commencement of liquidation, the directors and other officers of the company retain their position but no longer have any powers, functions or duties, except those expressly required or authorised by the liquidator or permitted under the Act. In personal insolvency matters, a bankruptcy trustee (Sections 321, 340–345) is appointed – either the offi - cial receiver or a licensed insolvency practitioner – to administer the bankrupt’s estate. The bankruptcy trus - tee collects, manages and distributes the bankrupt’s assets and reports to both the High Court and the creditors. Trustees may be appointed by the Court or elected by creditors, and they can be removed for cause or conflict of interest. Finally, creditors’ committees (Sections 436–444) con - sist of three to five members elected by creditors to oversee and consult with administrators, liquidators or trustees. These committees provide an additional layer of accountability by reviewing reports, monitor - ing the conduct of office holders and safeguarding transparency in the administration of the insolvency process.
The Act establishes a clear statutory hierarchy for the payment of creditors in both company liquidations and personal bankruptcies. Secured creditors (Sections 210–213 and 354–357) have priority over the assets subject to their security and may either realise or surrender their security. If they surrender the security, they may claim the full debt as unsecured; if they realise it and a shortfall remains, they may claim the deficiency as an unse - cured debt. Estate and administrative expenses (Sections 206 (1) (a) and 350 (1)(a)), including the costs of the insol - vency, remuneration of the liquidator or trustee, and other necessary expenses are paid next from the gen - eral estate. Preferential creditors (Sections 206 (1)(b) and 350 (1) (b)) follow. These include employee wages, certain taxes and statutory contributions, which rank ahead of floating charge holders (Section 207). Unsecured creditors (Sections 206 (1)(c) and 350 (1) (c)) share equally in remaining assets once higher- ranking debts are settled. Subordinated and deferred creditors (Sections 150 and 351) are paid only after all other debts and lia - bilities have been satisfied. This includes claims by unsecured creditors. Such subordination arises either from contractual agreement under Section 150 or from statutory deferral, as provided in Section 351 for cer - tain debts in bankruptcy. Finally, post-insolvency interest and any surplus (Sec - tions 214 and 358) are distributed to creditors propor - tionally, and any balance is returned to members or the bankrupt’s estate. 2.2 Priority Claims in Restructuring and Insolvency Proceedings The Act establishes a clear order of priority claims in restructuring and insolvency proceedings, balancing
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