Budget Implementation Act, 2007 (S.C. 2007, c. 29)

Assented to 2007-06-22

 Section 69.2 of the Act is amended by adding the following after subsection (4):

  • Marginal note:Exception

    (5) No order may be made under subsection (4) if the order would have the effect of preventing a secured creditor from realizing or otherwise dealing with financial collateral.

 Section 69.3 of the Act is amended by adding the following after subsection (2):

  • Marginal note:Exception

    (2.1) No order may be made under subsection (2) if the order would have the effect of preventing a secured creditor from realizing or otherwise dealing with financial collateral.

 Paragraph 84.1(3)(a) of the Act, as enacted by section 68 of chapter 47 of the Statutes of Canada, 2005, is replaced by the following:

  • (a) under an eligible financial contract;

 Section 84.2 of the Act, as enacted by section 68 of chapter 47 of the Statutes of Canada, 2005, is amended by adding the following after subsection (6):

  • Marginal note:Eligible financial contracts

    (7) Subsection (1) does not apply

    • (a) in respect of an eligible financial contract; or

    • (b) to prevent a member of the Canadian Payments Association from ceasing to act as a clearing agent or group clearer for an insolvent person in accordance with the Canadian Payments Act and the by-laws and rules of that Association.

  • Marginal note:Permitted actions

    (8) Despite section 69.3, the following actions are permitted in respect of an eligible financial contract that is entered into before the time of the bankruptcy, and is terminated on or after that time, but only in accordance with the provisions of that contract:

    • (a) the netting or setting off or compensation of obligations between the individual bankrupt and the other parties to the eligible financial contract; and

    • (b) any dealing with financial collateral including

      • (i) the sale or foreclosure or, in the Province of Quebec, the surrender of financial collateral, and

      • (ii) the setting off or compensation of financial collateral or the application of the proceeds or value of financial collateral.

  • Marginal note:Net termination values

    (9) If net termination values determined in accordance with an eligible financial contract referred to in subsection (8) are owed by the individual bankrupt to another party to the eligible financial contract, that other party is deemed, for the purposes of paragraphs 69(1)(a) and 69.1(1)(a), to be a creditor of the individual bankrupt with a claim provable in bankruptcy in respect of those net termination values.

 The Act is amended by adding the following after section 87:

Priority of Financial Collateral

Marginal note:Priority

88. In relation to a bankruptcy or proposal, no order may be made under this Act if the order would have the effect of subordinating financial collateral.

Marginal note:1997, c. 12, s. 78(2)

 Subsection 95(2.1) of the Act is replaced by the following:

  • Marginal note:Exception

    (2.1) Subsection (2) does not apply in respect of the following:

    • (a) a margin deposit made by a clearing member with a clearing house; or

    • (b) a transfer, charge or payment made in connection with financial collateral and in accordance with the provisions of an eligible financial contract.

Marginal note:1997, c. 12, s. 118(1)

 The definition “eligible financial contract” in section 253 of the Act is repealed.

Marginal note:2004, c. 25, s. 98(E)

 Subsection 254(4) of the Act is replaced by the following:

  • Marginal note:Termination, netting or setting off or compensation

    (4) Nothing in this Part affects the rights of a party to a contract, including an eligible financial contract, with respect to termination, netting or setting off or compensation.

R.S., c. C-3Canada Deposit Insurance Corporation Act

Marginal note:1996, c. 6, s. 41
  •  (1) Subsections 39.15(7) and (8) of the Canada Deposit Insurance Corporation Act are replaced by the following:

    • Marginal note:Financial contracts

      (7) Nothing in subsection (1) or (2) prevents the following actions from being taken in accordance with the provisions of an eligible financial contract:

      • (a) the termination of the contract;

      • (b) the netting or setting off or compensation of an amount payable under or in connection with the contract; or

      • (c) any dealing with financial collateral including

        • (i) the sale or foreclosure or, in the Province of Quebec, the surrender of financial collateral, and

        • (ii) the setting off or compensation of financial collateral or the application of the proceeds or value of financial collateral.

    • Marginal note:Regulations

      (8) The Governor in Council may make regulations prescribing

      • (a) kinds of services for the purposes of subparagraph (5)(c)(xiii); and

      • (b) kinds of agreements for the purposes of the definition “eligible financial contract” in subsection (9).

    • Marginal note:Definitions

      (9) The following definitions apply in subsections (7) and (8).

      “eligible financial contract”

      « contrat financier admissible »

      “eligible financial contract” means

      • (a) a currency or interest rate swap agreement;

      • (b) a basis swap agreement;

      • (c) a spot, future, forward or other foreign exchange agreement;

      • (d) a cap, collar or floor transaction;

      • (e) a commodity swap;

      • (f) a forward rate agreement;

      • (g) a repurchase or reverse repurchase agreement;

      • (h) a spot, future, forward or other commodity contract;

      • (i) an agreement to buy, sell, borrow or lend securities, to clear or settle securities transactions or to act as a depository for securities;

      • (j) any derivative, combination or option in respect of, or agreement similar to, an agreement or contract referred to in paragraphs (a) to (i);

      • (k) any master agreement in respect of any agreement or contract referred to in paragraphs (a) to (j);

      • (l) any master agreement in respect of a master agreement referred to in paragraph (k);

      • (m) a guarantee of the liabilities under an agreement or contract referred to in paragraphs (a) to (l); and

      • (n) any agreement of a kind prescribed by the regulations.

      “financial collateral”

      « garantie financière »

      “financial collateral” means any of the following that is subject to an interest, or in the Province of Quebec a right, that secures payment or performance of an obligation in respect of an eligible financial contract or that is subject to a title transfer credit support agreement:

      • (a) cash or cash equivalents, including negotiable instruments and demand deposits;

      • (b) securities, a securities account, a securities entitlement or a right to acquire securities; or

      • (c) a futures agreement or a futures account.

      “title transfer credit support agreement”

      « accord de transfert de titres pour obtention de crédit »

      “title transfer credit support agreement” means an agreement under which title to property has been provided for the purpose of securing the payment or performance of an obligation in respect of an eligible financial contract.

  • (2) The definition “eligible financial contract” in subsection 39.15(9) of the Act, as enacted by subsection (1), is replaced by the following:

    “eligible financial contract”

    « contrat financier admissible »

    “eligible financial contract” means an agreement of a prescribed kind;

R.S., c. C-36Companies’ Creditors Arrangement Act

  •  (1) Section 2 of the Companies’ Creditors Arrangement Act is amended by adding the following in alphabetical order:

    “eligible financial contract”

    « contrat financier admissible »

    “eligible financial contract” means

    • (a) a currency or interest rate swap agreement,

    • (b) a basis swap agreement,

    • (c) a spot, future, forward or other foreign exchange agreement,

    • (d) a cap, collar or floor transaction,

    • (e) a commodity swap,

    • (f) a forward rate agreement,

    • (g) a repurchase or reverse repurchase agreement,

    • (h) a spot, future, forward or other commodity contract,

    • (i) an agreement to buy, sell, borrow or lend securities, to clear or settle securities transactions or to act as a depository for securities,

    • (j) any derivative, combination or option in respect of, or agreement similar to, an agreement or contract referred to in paragraphs (a) to (i),

    • (k) any master agreement in respect of any agreement or contract referred to in paragraphs (a) to (j),

    • (l) any master agreement in respect of a master agreement referred to in paragraph (k),

    • (m) a guarantee of the liabilities under an agreement or contract referred to in paragraphs (a) to (l), or

    • (n) any agreement of a kind prescribed;

    “financial collateral”

    « garantie financière »

    “financial collateral” means any of the following that is subject to an interest, or in the Province of Quebec a right, that secures payment or performance of an obligation in respect of an eligible financial contract or that is subject to a title transfer credit support agreement:

    • (a) cash or cash equivalents, including negotiable instruments and demand deposits,

    • (b) securities, a securities account, a securities entitlement or a right to acquire securities, or

    • (c) a futures agreement or a futures account;

    “net termination value”

    « valeurs nettes dues à la date de résiliation »

    “net termination value” means the net amount obtained after netting or setting off or compensating the mutual obligations between the parties to an eligible financial contract in accordance with its provisions;

    “title transfer credit support agreement”

    « accord de transfert de titres pour obtention de crédit »

    “title transfer credit support agreement” means an agreement under which a debtor company has provided title to property for the purpose of securing the payment or performance of an obligation of the debtor company in respect of an eligible financial contract;

  • (2) The definition “eligible financial contract” in section 2 of the Act, as enacted by subsection (1), is replaced by the following:

    “eligible financial contract”

    « contrat financier admissible »

    “eligible financial contract” means an agreement of a prescribed kind;

 
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