Canada Deposit Insurance Corporation Act

Marginal note:Stay of proceedings

• 39.15 (1) Where an order is made under subsection 39.13(1),

  • (a) no action or other civil proceeding before a judicial or quasi-judicial body and no arbitration may be commenced or continued against the federal member institution or in respect of its assets other than a proceeding under the Winding-up and Restructuring Act commenced by the Corporation or the Attorney General of Canada;

  • (b) no attachment, garnishment, execution or other method of enforcement of a judgment or order against the federal member institution or its assets may take place or continue;

  • (c) no creditor of the federal member institution has any remedy against the federal member institution or its assets;

  • (d) no creditor has any right of set-off against the federal member institution, which, for greater certainty, does not include the consolidation of accounts maintained in the normal course for the purpose of providing clearing and settlement services or the services referred to in paragraph (5)(c);

  • (e) no person may terminate or amend any agreement with the federal member institution or claim an accelerated payment, or forfeiture of the term, under any such agreement with the federal member institution by reason only of

    • (i) the federal member institution’s insolvency,

    • (ii) a default, before the order was made, by the federal member institution in the performance of its obligations under the agreement,

    • (iii) the making of the order, or

    • (iv) the agreement being assigned to or assumed by the bridge institution; and

  • (f) no person may terminate the federal member institution’s membership in an organization by reason only of

    • (i) the default by the federal member institution in the performance of its obligations under the rules of the organization,

    • (ii) the making of the order, or

    • (iii) the federal member institution’s membership being transferred to the bridge institution.

• Marginal note:Agreements overridden

  (2) Where an order is made under subsection 39.13(1), any stipulation in an agreement is of no force or effect if it

  • (a) has the effect of providing for, or permitting, anything that, in substance, is contrary to paragraph (1)(e) or 39.13(3)(b); or

  • (b) provides, in substance, that the federal member institution ceases to have the rights — or, in the case of a bridge institution, does not have the rights — to use or deal with assets that the federal member institution or bridge institution would otherwise have, on

    • (i) the federal member institution’s insolvency,

    • (ii) the default by the federal member institution in the performance of its obligations,

    • (iii) the making of the order, or

    • (iv) the agreement being assigned to or assumed by the bridge institutions.

• Marginal note:Organization’s rules — no force or effect

  (2.1) If an order is made under subsection 39.13(1), any stipulation in the rules of an organization is of no force or effect if it

  • (a) has the effect of providing for or permitting anything that, in substance, is contrary to paragraph (1)(f) or 39.13(3)(b); or

  • (b) provides, in substance, that the federal member institution ceases to have the rights — or, in the case of the bridge institution, does not have the rights — of a member of the organization, that the federal member institution or the bridge institution would otherwise have, on

    • (i) the federal member institution’s insolvency,

    • (ii) the default by the federal member institution in the performance of its obligations,

    • (iii) the making of the order, or

    • (iv) the federal member institution’s membership being transferred to the bridge institution.

• Marginal note:Clearing arrangements

  (3) Subsections (1) and (2) do not apply so as to prevent a member of the Canadian Payments Association from acting or ceasing to act as a clearing agent for a federal member institution in accordance with the Canadian Payments Act and the by-laws and rules of that Association.

• Marginal note:Clearing agent

  (3.1) A member of the Canadian Payments Association that acts as a clearing agent for a federal member institution at the time an order directing the incorporation of a bridge institution is made with respect to the federal member institution shall act as a clearing agent for the bridge institution, if the Corporation undertakes to

  • (a) unconditionally guarantee the federal member institution’s obligations to the clearing agent as clearing agent; or

  • (b) ensure that the federal member institution’s obligations to the clearing agent as clearing agent are assumed by the bridge institution.

• Marginal note:Rights subject to set-off

  (4) A federal member institution in respect of which an order is made under subsection 39.13(1) may not enforce against a person a right to receive an amount against which the person, but for paragraph (1)(d), would have a right of set-off.

• Marginal note:Further supplies and advances

  (5) Nothing in subsection (1) or (2) shall be construed

  • (a) as prohibiting a person from requiring payments to be made in cash for goods, services, use of leased or licensed property or other valuable consideration provided after the making of the order;

  • (b) as requiring the advance to a federal member institution in respect of which an order is made under subsection 39.13(1) of money or credit after the making of the order; or

  • (c) as requiring the provision to a federal member institution in respect of which an order is made under subsection 39.13(1) of any of the following services where to do so would be likely, in the reasonable opinion of the person providing the service, to result in that person advancing money or credit to the federal member institution after the making of the order or to give rise, after the making of the order, to a claim of that person against the federal member institution, namely,

    • (i) cash management services,

    • (ii) services related to the redemption of debt instruments,

    • (iii) services related to the issuance of letters of credit or guarantees,

    • (iv) cheque certification services,

    • (v) currency supply services,

    • (vi) funds transfer services and remittance order services,

    • (vii) securities delivery and settlement services,

    • (viii) charge, credit, debit and payment card services,

    • (ix) automated banking and teller machine services,

    • (x) electronic funds transfer at point of sale services,

    • (xi) consignment cheque services,

    • (xii) other services similar to those referred to in subparagraphs (i) to (xi),

    • (xiii) any service of a kind prescribed by the regulations, and

    • (xiv) a guarantee of liabilities in respect of any of the services referred to in subparagraphs (i) to (xiii).

• Marginal note:Security agreements

  (6) Paragraphs (1)(b) to (e) and subsection (2) do not apply in respect of a remedy under, or a stipulation of, a security agreement creating a security interest in assets of a federal member institution if

  • (a) an obligation secured by the security agreement is to the Bank of Canada or the Corporation; or

  • (b) the Superintendent, on the application of the federal member institution, exempted the security agreement from the application of those paragraphs and that subsection before the making of an order under subsection 39.13(1) and, in the case of an order directing the incorporation of a bridge institution, the Corporation does not undertake to ensure that the obligations secured by the security interest will be assumed by the bridge institution and does not undertake to unconditionally guarantee payment of the obligations secured by the security interest.

• 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:Corporation’s undertaking — eligible financial contracts

  (7.1) If an order directing the incorporation of a bridge institution is made, the actions referred to in subsection (7) may not be taken by reason only that the order or an order appointing the Corporation as receiver is made in respect of the federal member institution or that the eligible financial contract is assigned to the bridge institution if the Corporation undertakes to

  • (a) unconditionally guarantee the payment of any amount due or that may become due — in accordance with the provisions of the eligible financial contract — by the federal member institution; or

  • (b) ensure that all obligations arising from the eligible financial contract will be assumed by the bridge institution.

• Marginal note:Assignment of eligible financial contracts

  (7.2) The Corporation may assign to a bridge institution eligible financial contracts — including any claim under such contracts — that are between a federal member institution and an entity or any of the following entities provided that the Corporation assigns all of those eligible financial contracts to the bridge institution:

  • (a) another entity that is controlled — directly or indirectly — by the entity;

  • (b) another entity that controls — directly or indirectly — the entity; or

  • (c) another entity that is controlled — directly or indirectly — by the entity referred to in paragraph (b).

• Marginal note:Assignment to bridge institution

  (7.3) If the eligible financial contracts are assigned to a bridge institution,

  • (a) the undertaking referred to in subsection (7.1) that is provided applies to all the eligible financial contracts that are assigned; and

  • (b) the federal member institution’s interest or, in Quebec, right in property that secures its obligations under an eligible financial contract that is assigned is transferred to the bridge institution.

• 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 this section.

  eligible financial contract

  contrat financier admissible

  eligible financial contract means an agreement of a prescribed kind. (contrat financier admissible)

  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. (garantie financière)

  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. (accord de transfert de titres pour obtention de crédit)