On the management being taken over, the secured creditor can change the directors of borrower company if borrower is a company and appoint administrator if borrower is not a company. A notice to the effect is also published in the newspaper.

 

On publishing of such notice, the earlier directors (in case of a company) and persons holding any office of power of superintendence (if borrower is not a company) shall be deemed to have vacated their office.

 

Any contract of management, which borrower had with any director or manager of borrower holding office shall be deemed to be terminated.

 

The new directors/administrator appointed by secured creditor will take over in custody or control all the property, effects or actionable claims to which the business of the borrower is entitled.
The new directors/administrator shall alone be entitled to exercise all the powers of superintendence, direction and control of business of borrower.