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Deposit Takers Act 2023

Crisis management and resolution - No creditor or shareholder worse off - Compensation notice and payments

386: Transfer of entitlement by assignment or operation of law

You could also call this:

"When someone else takes over your debt or shares, they get your compensation instead"

Illustration for Deposit Takers Act 2023

If you have a debt or shares with a company that owes you money, and this debt or shares are transferred to someone else, this section applies. You are the original person, and the person the debt or shares are transferred to is the new person. The transfer must happen before you get any compensation, and the Bank must be told about the transfer in the correct way before you get any compensation.

If this section applies, your entitlement to compensation is transferred to the new person. The new person must be treated as if they were you, to the extent that your entitlement has been transferred. This means they get the compensation instead of you.

However, this section does not apply if you and the new person have an agreement that says something different, or if there are special circumstances outlined in the regulations.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS592222.

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Part 7Crisis management and resolution
No creditor or shareholder worse off: Compensation notice and payments

386Transfer of entitlement by assignment or operation of law

  1. This section applies if—

  2. a person (A) is—
    1. a pre-resolution creditor who has or may have an entitlement to compensation under this subpart in respect of a debt owing by the affected entity; or
      1. a pre-resolution shareholder who has or may have an entitlement to compensation under this subpart in respect of shares issued by the affected entity; and
      2. the debt or the shares are transferred by assignment or by operation of law to a person (B); and
        1. the transfer occurs before the compensation is paid; and
          1. the Bank has been given notice of the transfer in the prescribed manner before the compensation is paid.

            1. If this section applies,—

            2. A’s entitlement (if any) to compensation under this subpart in respect of the transferred debt or shares is transferred to B; and
              1. B must be treated as being a pre-resolution creditor or shareholder to the extent that A’s entitlement has been transferred.

                1. However, this section does not apply—

                2. if an agreement between A and B provides otherwise; or
                  1. in the circumstances prescribed by the regulations.