BELIZE Law and Practice Contributed by: Tim Prudhoe, Nadia Chiesa and Lemelko Missick, Stanbrook Prudhoe
administrative needs, social protection and creditor rights. • New-money and administration liabilities (Sec - tion 96 (1)(a)): Debts or liabilities incurred by an administrator during the course of administration, such as new financing, rent or essential operational costs, rank as first-priority expenses. These claims are secured by a first-ranking charge over com - pany assets and take precedence over all other claims except fixed-charge security (Sections 96 (2)–(3)). • Practitioner fees and administration expenses: The remuneration and expenses of administrators, liquidators, trustees and receivers rank immediately after new-money claims under Section 96 (1)(b) and Sections 446–448. Administrative and estate expenses, as outlined in Sections 206 (1)(a) and 350 (1)(a), must be paid before any creditor distri - butions. • Employee and tax claims: Employee wages pen - sions, and statutory taxes are preferential debts under Sections 206 (1)(b) and 350 (1)(b). They rank after administrative expenses but ahead of floating charge holders, in accordance with Section 207. • Lease liabilities: Rent and other obligations arising under leases or contracts adopted by an adminis - trator are treated as administration expenses under Section 96 (1)(a), ensuring landlords and suppliers are paid on a priority basis. 2.3 Secured Creditors Secured creditors in Belize may create and enforce a wide range of security interests over both tangible and intangible property. The Act, together with gen - eral commercial and property law, recognises both traditional and modern forms of collateral, ensuring effective protection and enforcement mechanisms for secured lending. Secured creditors may take fixed or floating charges, mortgages, pledges or collateral arrangements over various classes of assets. A fixed charge may attach to specific property such as real estate, buildings, ves - sels, machinery, equity shares or intellectual property. A floating charge may cover circulating assets such as inventory, receivables or cash that fluctuate during the company’s operations (Section 95).
In addition, Part XII (Sections 299–340) recognises collateral and title-transfer arrangements over finan - cial instruments, securities and accounts, allowing lenders to hold or control assets as security without the need for formal transfer of ownership. Outside a restructuring or insolvency proceeding, secured creditors retain full contractual and statutory rights to enforce their security. Under Section 174 (2) of the Act, the commencement of liquidation does not affect a secured creditor’s right to take possession of, realise or otherwise deal with secured assets. Secured creditors may: • take possession and sell or auction collateral to recover debts; • appoint a receiver under a debenture or security instrument to manage or dispose of the secured property; and • apply proceeds to satisfy the secured debt, return - ing any surplus to the debtor or liquidator in accordance with Sections 212 (1) and 356 (1). If enforcement proceeds are insufficient, the creditor may claim the deficiency as an unsecured debt (Sec - Unsecured (trade) creditors in Belize retain several enforcement rights and contractual protections out - side a restructuring or insolvency proceeding. These remedies are governed by both the Act and general commercial law. As it relates to “pre-judgment attachments and execu - tion rights”, unsecured creditors may enforce debts through court proceedings and execution against a debtor’s assets. Under Section 367 (1), creditors may retain the benefit of an execution or attachment only if it is completed before bankruptcy or liquidation begins. Completion occurs when goods are seized and sold, land is taken under execution or an attached debt is received (Section 367 (5)). Suppliers may protect their position through retention of title (ROT) clauses, retaining ownership of goods until full payment. Section 84 (1)(c)(ii) recognises such tions 212 (2)(b) and 356 (2)(b)). 2.4 Unsecured Creditors
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