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Deposit Takers Act 2023

Crisis management and resolution - Conduct of resolution - Bank may form body corporate to acquire New Zealand business

317: Vesting of property or rights subject to security interest

You could also call this:

"When a bank takes over a business, a court can transfer its property to a new company, even if someone else has a claim on it."

Illustration for Deposit Takers Act 2023

If a bank forms a new company to take over a New Zealand business, the court can make an order to transfer the business's property and rights to the new company. This can happen even if someone else has a security interest in the property or rights. You need to know that a security interest is like a mortgage, where someone lends money and uses the property as a guarantee. The court's order can override this security interest, but the security interest does not disappear.

If the court makes this order, the new company gets the property and rights, and the security interest still applies. This means the person who had the security interest can still use it to get their money back. The order is made under a part of the law called section 314, which explains how this process works.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS533892.

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rules
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316: Body corporate is also subject to resolution, or

"A company set up by a bank is also controlled by a special manager during difficult times."

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318: Proof of vesting, or

"How a new company proves it owns a business or property"

Part 7Crisis management and resolution
Conduct of resolution: Bank may form body corporate to acquire New Zealand business

317Vesting of property or rights subject to security interest

  1. An order may be made under section 314 vesting any property and rights of an overseas licensed deposit taker (A) in a body corporate (B) despite the existence, or the terms and conditions, of any security interest over the property, or over those rights, in favour of any other person.

  2. Any property or rights that are declared to vest under an order made under section 314 in B and that are subject to a security interest in favour of any other person continue to be subject to the security interest.

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