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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:

"What happens to your agreements with a bank in trouble, after a stay"

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If a bank is in trouble, it can enter resolution. You might be involved in an agreement with the bank. Section 287 does not stop you or the bank from doing certain things after a stay. These things include refusing to pay or perform under the agreement, or ending the agreement. You can do these things after the default time or a time set by the Bank. The default time is the day after the bank enters resolution. There are rules about when you can take action with a security interest. You can take action if the collateral is in the possession of the right person. The Bank can give notice of an earlier or later time to take action. This notice is given under section 295. Other laws also apply to this situation, such as section 62B of the Corporations (Investigation and Management) Act 1989 and section 42(10)(b) of that Act.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS608608.

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

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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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