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Companies Act 1993

Voluntary administration - Rights of secured creditor, owner, or lessor

239ABMA: Enforcement of security interest over collateral for qualifying derivative

You could also call this:

“Rules for enforcing security over collateral in certain financial agreements during voluntary administration”

This law is about enforcing a security interest over collateral for a qualifying derivative when a company is in voluntary administration. You need to know that it allows certain people to enforce this security interest, even though other parts of the law might normally stop them.

For this to happen, the derivative must be between two qualifying counterparties, or between a qualifying counterparty and an overseas person. Also, before the enforcement happens, the collateral must be given to the secured creditor or someone acting for them.

The people who can enforce this security interest are the secured creditor and any receivers or similar people appointed to handle the security interest.

Some of the terms used in this law, like “qualifying derivative” and “qualifying counterparty”, have special meanings that are explained in another part of the law called the Banking (Prudential Supervision) Act 1989.

There are also some rules about how to interpret this law, which come from another section of the Banking Act. These rules help explain how to apply this law in different situations.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS253248.

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Part 15A Voluntary administration
Rights of secured creditor, owner, or lessor

239ABMAEnforcement of security interest over collateral for qualifying derivative

  1. Nothing in sections 239ABC, 239ABD, 239ABE, and 239ABG limits or prevents any person referred to in subsection (2) from enforcing a security interest over collateral to the extent that the security interest secures payment or performance of an obligation under or in relation to a qualifying derivative if—

  2. the counterparties to the derivative are—
    1. 2 qualifying counterparties; or
      1. a qualifying counterparty and an overseas person; and
      2. before enforcement, the collateral is transferred or otherwise dealt with so as to be in the possession or under the control of—
        1. the secured creditor; or
          1. another person (who is not the company that granted the security interest) on behalf of the secured creditor, under the terms of an arrangement evidenced in writing.

          2. The persons are—

          3. the secured creditor:
            1. a receiver or person appointed as mentioned in paragraph (a), (b), or (d) of the definition of enforce in section 239ABK as that definition applies in relation to the security interest, or any of the security interests (even if appointed after the decision period).

              1. Terms and expressions defined in section 122A of the Banking (Prudential Supervision) Act 1989 and used in subsection (1) have in that subsection the same meanings as in that section.

              2. Section 122B of the Banking (Prudential Supervision) Act 1989 applies with all necessary modifications for the purposes of subsection (1)(b), and those modifications include—

              3. treating references to section 122(9A)(b) of that Act as references to subsection (1)(b) of this section; and
                1. treating references to the enforcing counterparty as references to the secured creditor; and
                  1. treating references to the grantor as references to the company that granted the security interest.

                    Notes
                    • Section 239ABMA: inserted, on , by section 10 of the Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 (2019 No 46).
                    • Section 239ABMA(3): amended, on , by section 300(1) of the Reserve Bank of New Zealand Act 2021 (2021 No 31).
                    • Section 239ABMA(4): amended, on , by section 300(1) of the Reserve Bank of New Zealand Act 2021 (2021 No 31).