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Deposit Takers Act 2023

Crisis management and resolution - Moratorium and restriction on resolution trigger

294: Restriction on resolution trigger does not limit or prevent certain things in relation to derivatives, etc, after stay

You could also call this:

"The government helping a bank in trouble doesn't stop you doing certain things with your bank agreements."

Illustration for Deposit Takers Act 2023

If a bank is in trouble, the government can step in to help it. You might have agreements with the bank, like a loan or investment. The law says that even if the government steps in, you can still do certain things with your agreements. You can deny you owe the bank money, or ask them to pay you back quickly. You can also end your agreement with the bank or use any security you have to get your money back. The government can tell the bank when you can do these things, or it might be after a certain time has passed, called the default time, which is the day after the bank's problems are made public.

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293: Moratorium does not limit or prevent certain things in relation to derivatives, etc, or

"A moratorium doesn't stop you doing certain things with special agreements, like derivatives."

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Part 7Crisis management and resolution
Moratorium and restriction on resolution trigger

294Restriction on resolution trigger does not limit or prevent certain things in relation to derivatives, etc, after stay

  1. Section 287 does not limit or prevent an agreement, or a party to an agreement, from doing any of the things referred to in subsection (2) in relation to a derivative, a relevant security interest, or a specified instrument if the thing is done after—

  2. the default time, unless paragraph (b) applies (see subsection (4)); or
    1. an earlier or a later time specified by the Bank in a notice issued under section 295.

      1. The things are as follows:

      2. denying any liability or obligation under the agreement:
        1. accelerating or requiring the payment or performance of a liability or an obligation:
          1. terminating or closing out any transaction relating to the agreement:
            1. enforcing any security interest under the agreement.

              1. However, in the case of a relevant security interest, subsection (1) applies only if, before the agreement or party does the thing referred to in subsection (2), the collateral is delivered, transferred, held, registered, or otherwise designated so as to be in the possession or under the control of—

              2. the enforcing counterparty; or
                1. another person (who is not the grantor) on behalf of the enforcing counterparty, under the terms of an arrangement evidenced in writing.

                  1. In this section and section 295, default time means the close of the day after the date on which the licensed deposit taker enters resolution.

                  2. Section 62B of the Corporations (Investigation and Management) Act 1989 applies with all necessary modifications for the purposes of subsection (3) (and those modifications include treating references to section 42(10)(b) of that Act as references to subsection (3) of this section).

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