a). Section 62(1) of the Borrowers and Lenders Act, 2020 (Act 1052) empowers a lender, upon default by the borrower, to realize the collateral without obtaining a court order, subject to compliance with the provisions of the Act and rules issued by the Bank of Ghana. This provision aims to expedite the recovery process for lenders while ensuring fairness and transparency in secured transactions. Rule 15 of Bank of Ghana Notice No. BG/GOV/SEC/2021/07 outlines the specific procedural steps to implement this effectively, distinguishing between perishable and non-perishable collateral to protect the value of assets.

The steps a lender must take are as follows:

1. Issue a Notice of Default to the Borrower: Before initiating realization, the lender must deliver a notice of default to the borrower in accordance with Section 60(4) of Act 1052. This notice should specify the nature of the default, the amount due, and a reasonable period (typically 30 days) for the borrower to remedy the default. Evidence of delivery and receipt must be retained.
2. Register Intention to Realize with the Collateral Registry:
   • For non-perishable collateral: The lender must register a notice of intention to realize the collateral with the Collateral Registry 30 days after the borrower receives the notice of default.
   • For perishable collateral: The registration can occur immediately after the borrower’s receipt of the notice of default to prevent loss of value.
3. Submission of Required Documents to the Registrar: To obtain a Memorandum of No Objection from the Registrar, the lender must submit:
   • Proof that the security interest in the collateral is registered on the Collateral Registry.
   • The pre-agreement disclosure statement.
   • The credit agreement and supporting documents that match the registered information.
   • Evidence of delivery and receipt of the notice of default.
   • Proof of compliance with the Stamp Duty Act, 2005 (Act 689) for the credit agreement or security documents.
   • Any other documents required by the Registrar as evidence.
4. Obtain Memorandum of No Objection: Upon verification of the submitted documents and compliance, the Registrar issues a Memorandum of No Objection, which authorizes the lender to proceed with realization without court intervention.
5. Realize the Collateral: Once authorized, the lender can sell or otherwise dispose of the collateral in a commercially reasonable manner, such as through public auction, private sale, or retention (if permitted under the agreement), ensuring the process maximizes value and is transparent.

These steps ensure regulatory oversight by the Bank of Ghana, protect borrower rights, and align with best practices in secured lending. In practice, lenders like GCB Bank or Ecobank Ghana often engage legal counsel to handle registry interactions and document submissions to avoid delays or challenges.

b). Section 70(1) of Act 1052 provides a priority order for distributing the proceeds from the sale of realized collateral, ensuring that expenses and secured obligations are satisfied first, with any surplus returned to the borrower. This promotes fairness and encourages responsible lending.

The distribution occurs in the following order:

1. Payment of Reasonable Expenses: Cover costs incurred in preserving, realizing, and selling the collateral, such as storage, valuation, auction fees, and legal expenses.
2. Satisfaction of Prior Security Interests: Pay off any superior or prior registered security interests in the collateral, based on the order of registration in the Collateral Registry.
3. Discharge of the Secured Obligation: Apply proceeds to settle the outstanding debt owed to the realizing lender, including principal, interest, and penalties.
4. Payment to Subordinate Secured Parties: Distribute to holders of junior or subordinate security interests in the collateral, if any.
5. Surplus to the Borrower or Entitled Person: Any remaining proceeds are paid to the borrower or any other person entitled to them (e.g., guarantors or subsequent claimants).

In real-world applications, such as during the post-2019 banking cleanup in Ghana, lenders must maintain detailed records of distributions to comply with BoG audits and avoid disputes. Failure to follow this order can lead to legal challenges under the Act.