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Canada Deposit Insurance Corporation Act (R.S.C., 1985, c. C-3)

Act current to 2019-08-28 and last amended on 2019-05-10. Previous Versions

Restructuring of Federal Member Institutions (continued)

Restructuring Transactions

Marginal note:Restructuring transactions

  •  (1) If an order is made under paragraph 39.13(1)(a), the Corporation may, in addition to any other of its rights and powers, carry out, or cause the federal member institution to carry out,

    • (a) a transaction or series of transactions that involves the sale of all or part of the shares or subordinated debt of the federal member institution;

    • (b) a transaction that involves the amalgamation of the federal member institution;

    • (c) a transaction or series of transactions that involves the sale or other disposition by the federal member institution of all or part of its assets or the assumption by another person of all or part of its liabilities, or both; and

    • (d) any other transaction or series of transactions the purpose of which is to restructure the business of the federal member institution.

  • Marginal note:Transactions for disposition of assets or restructuring

    (2) If an order is made under paragraph 39.13(1)(b), the Corporation, as receiver, may, in addition to any other of its rights and powers, carry out

    • (a) a transaction or series of transactions that involves the sale or other disposition of all or part of the assets of the federal member institution or the assumption by another person of all or part of its liabilities, or both; and

    • (b) any other transaction or series of transactions the purpose of which is to restructure the business of the federal member institution.

  • Marginal note:No approval required — transaction with bridge institution

    (2.1) If a transaction referred to in subsection (1) or (2) between the Corporation, as receiver for a federal member institution, and a bridge institution requires the approval of the Minister or the Superintendent under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act, that approval is not required despite those Acts.

  • Marginal note:Approval by Minister

    (2.2) If a transaction referred to in subsection (1) or (2), other than one described in subsection (2.1), requires the approval of the Superintendent under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act, that approval is not required despite those Acts but the transaction has no force or effect until the Minister approves it after consultation with the Superintendent.

  • Marginal note:Conversion

    (2.3) An order made under paragraph 39.13(1)(d) gives the Corporation the power to convert, or cause the federal member institution to convert, in whole or in part — by means of a transaction or series of transactions and in one or more steps — the institution’s shares and liabilities that are prescribed by the regulations made under subsection (10) into common shares of that institution or of any of its affiliates.

  • Marginal note:Terms and conditions

    (2.4) Subject to any regulations made under subsection (10) and any by-laws made under subsection (12), the Corporation shall set the terms and conditions of the conversion, including its timing.

  • Marginal note:Publication

    (2.5) As soon as feasible after the conversion, the Corporation shall cause a notice of it to be published in the Canada Gazette and on the federal member institution’s website.

  • Marginal note:Completion of transaction

    (3) If the Corporation considers that a transaction or series of transactions referred to in this section has been substantially completed and that no other such transactions are expected in respect of the federal member institution, it shall cause a notice to that effect to be published in the Canada Gazetteand on the institution’s website. The notice must specify the date on which the notice is to take effect.

  • Marginal note:Negative pledges inapplicable

    (4) No restriction on the rights of the federal member institution, including the right to amalgamate, to sell or otherwise dispose of any of its assets or to provide for the assumption of any of its liabilities, other than a restriction provided for in an Act of Parliament, applies so as to prevent the Corporation, the federal member institution or any other person from carrying out a transaction referred to in this section.

  • (5) [Repealed, 2016, c. 7, s. 139]

  • Marginal note:Novation

    (6) Any person who assumes a liability of the federal member institution under a transaction referred to in subsection (1) or (2) becomes liable — instead of the federal member institution — to discharge the liability, on approval of the transaction by the Minister or as soon as the person assumes the liability if the transaction does not require the Minister’s approval.

  • Marginal note:Exception

    (7) Subsection (6) does not apply to the bridge institution’s assumption of any portion of the federal member institution’s liability that is not insured by the Corporation.

  • Marginal note:Novation — trust

    (8) A trust company within the meaning of subsection 57(2) of the Trust and Loan Companies Act that is designated as a bridge institution may become a trustee in substitution for the federal member institution without formality or the consent of any beneficiary of the trust.

  • Marginal note:Effects of conversion

    (9) The conversion of shares or liabilities under subsection (2.3)

    • (a) subject to paragraphs (b) and (c), extinguishes any claim, interest or right in respect of the shares or liabilities, or part of them, that were converted;

    • (b) does not extinguish any claim to the extent that the claim is a personal claim against a person other than the Corporation, the federal member institution or a person claiming under the Corporation or the federal member institution; and

    • (c) does not prevent a secured creditor or an assignee or successor in interest of the person who was the holder of the shares or liabilities immediately before the conversion from being entitled to receive compensation under section 39.23.

  • Marginal note:Regulations

    (10) The Governor in Council may make regulations respecting conversion for the purposes of this section.

  • Marginal note:Regulations — application

    (11) Regulations made under subsection (10) may, if they so provide, apply in respect of shares and liabilities

    • (a) that were issued or that originated before the day on which the first regulation made under that subsection comes into force if, on or after that day, they are amended or, in the case of liabilities, their term is extended; or

    • (b) that are issued or that originate on or after that day.

  • Marginal note:By-laws

    (12) The Corporation may make by-laws respecting conversion for the purposes of this section, including by-laws that prescribe, for the purposes of subsection (2.3), the interim instruments into which shares and liabilities may be converted before they are converted into common shares.

  • Marginal note:Inconsistency

    (13) In the event of any inconsistency between the regulations made under subsection (10) and the by-laws made under subsection (12), the regulations prevail to the extent of the inconsistency.

  • 1992, c. 26, s. 11
  • 1996, c. 6, s. 41
  • 2009, c. 2, s. 247
  • 2016, c. 7, s. 139

Marginal note:Terms and conditions of transactions

  •  (1) If the Corporation as receiver for a federal member institution carries out a transaction with a bridge institution, the Corporation shall establish the terms and conditions of the transaction, including

    • (a) which assets the bridge institution shall acquire and the consideration to be paid for the assets acquired; and

    • (b) which liabilities the bridge institution shall assume and the consideration to be paid for the liabilities assumed.

  • Marginal note:Reasonable consideration

    (2) The consideration referred to in paragraph (1)(a) shall be reasonable in the circumstances.

  • (3) [Repealed, 2016, c. 7, s. 140]

  • 2009, c. 2, s. 248
  • 2016, c. 7, s. 140

Marginal note:Deposit liabilities assumed

  •  (1) A bridge institution shall assume a federal member institution’s deposit liabilities that are both insured by the Corporation and posted in the federal member institution’s records as of the date and time specified in the order referred to in paragraph 39.13(1)(c).

  • Marginal note:Interest

    (1.1) Any interest accrued on the deposit liabilities referred to in subsection (1) is assumed by the bridge institution.

  • Marginal note:Deeming deposits or withdrawals not entered

    (1.2) Any deposit or withdrawal that is made on or before that date and time but is not posted in the records of the federal member institution as of that date and time, and any deposit or withdrawal made after that date and time, are deemed to be deposited with or withdrawn from, as the case may be, the bridge institution.

  • Marginal note:Interest

    (1.3) Any interest accruing on the deposits referred to in subsection (1.2) is owed by the bridge institution.

  • Marginal note:Subrogation

    (2) If the bridge institution assumes any portion of a federal member institution’s liability that is not insured by the Corporation, the bridge institution is subrogated to all the rights and interests of the creditor against the federal member institution in relation to the entire liability and may maintain an action in respect of those rights and interests in its own name or in the name of the creditor.

  • Marginal note:Creditor’s rights and interests

    (3) As soon as the bridge institution receives an amount equal to the liabilities that are not insured by the Corporation that it assumed, the rights and interests in respect of the balance remaining revert to the creditor.

  • 2009, c. 2, s. 248
  • 2010, c. 12, s. 1891
 
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