9. Subject to section 11, the Minister shall not be obligated to accept a claim under section 8 unless he is satisfied that the steps required by section 12 have been taken.
- SI/84-4, s. 2.
ASSIGNMENT BY BANK
10. Where, under this Order, the Minister has paid to a bank the amount of a loss sustained by a bank as a result of a guaranteed loan, the bank shall forthwith execute an assignment in a form satisfactory to the Minister of all the rights of the bank in respect of that loan and, without limiting the generality of the foregoing, shall execute an assignment of all rights and powers of the bank in respect of
(a) the loan;
(b) any judgment obtained by the bank in respect of the loan; and
(c) any security taken by the bank for the repayment of the loan.
11. (1) Where a loan has been guaranteed in part and where the Minister has instructed a bank not to realize on its securities pursuant to subparagraph 12(2)(a)(iii), the Minister shall become liable for the total loss of the bank as if the loan had been guaranteed by the Minister for the full amount thereof, and, on payment of the claim by the Minister, the bank shall execute an assignment, in a form satisfactory to the Minister, of all the rights of the bank in respect of that loan as described in section 10.
(2) Where a loan has been guaranteed in part and the bank is unable to realize on any or all of its securities, the bank may submit a claim for loss pursuant to section 8 for the estimated amount of the net loss as mutually agreed between the bank and the Minister, and the bank on payment of a valid claim shall, at the option of the Minister,
(a) execute an assignment in a form satisfactory to the Minister of all rights of the bank in respect of that loan as described in section 10; or
(b) continue to take all reasonable steps to realize on the outstanding securities.
(3) Where a loan has been guaranteed in part and funds are recovered from any source, including the disposal of assets, subsequent to the payment of a claim in respect of the guaranteed loan, such funds, less realization costs, shall be divided between the Minister and the bank in proportion to their respective shares of the net loss as agreed between the bank and the Minister.
- SI/84-4, s. 3.
12. (1) Where a borrower is in default in respect of any term or condition of a guaranteed loan, the bank shall, within 30 days thereafter, advise the Minister of the default of the borrower and, subject to sections 6 and 7, the entire amount of the balance outstanding on the loan shall, at the option of the bank and the Minister, become repayable.
(2) Where a guaranteed loan becomes repayable pursuant to subsection (1), the bank shall
(a) take such steps, whether by legal proceedings or otherwise, as it considers necessary to
(i) effect collection of the balance outstanding,
(ii) obtain additional security,
(iii) realize on any or all of the security it has taken unless it is instructed by the Minister not to do so, or
(iv) effect any compromise with, or grant any concession to, any person other than the borrower with the approval of the Minister; and
(b) within 30 days of receipt by the Minister of advice of the date the loan becomes repayable, take such additional steps for the realization or protection of the security as the Minister may reasonably require.
- SI/84-4, s. 3.
- Date modified: