Q&As

Do the Financial Collateral Arrangements (No 2) Regulations 2003 (the Financial Collateral Regulations) automatically apply to a debenture or security agreement? If the Financial Collateral Regulations are not written into the terms of the debenture but the conditions are satisfied such that the security constitutes a financial arrangement, would the collateral taker benefit from the Financial Collateral Regulations? In the alternative, would it be possible to disapply the Financial Collateral Regulations?

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Published on LexisPSL on 01/06/2021

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • Do the Financial Collateral Arrangements (No 2) Regulations 2003 (the Financial Collateral Regulations) automatically apply to a debenture or security agreement? If the Financial Collateral Regulations are not written into the terms of the debenture but the conditions are satisfied such that the security constitutes a financial arrangement, would the collateral taker benefit from the Financial Collateral Regulations? In the alternative, would it be possible to disapply the Financial Collateral Regulations?

Do the Financial Collateral Arrangements (No 2) Regulations 2003 (the Financial Collateral Regulations) automatically apply to a debenture or security agreement? If the Financial Collateral Regulations are not written into the terms of the debenture but the conditions are satisfied such that the security constitutes a financial arrangement, would the collateral taker benefit from the Financial Collateral Regulations? In the alternative, would it be possible to disapply the Financial Collateral Regulations?

The Financial Collateral Arrangements (No 2) Regulations 2003 (Financial Collateral Regulations), SI 2003/3226, automatically apply to any Financial Collateral Arrangement between two non-natural parties (ie entities other than individuals) as set out in Practice Note: Key provisions of the financial collateral regulations. Note that the EU directive under which the Financial Collateral Regulations, SI 2003/3226, were made provides that the security provider and taker must be a public authority, a central bank or other international bank, financial institution or central counterparty, settlement agent, clearing house or similar institution. The Financial Collateral Regulations, SI 2003/3226, do not contain this element and this has led to doubts about whether they were validly made. For further reading on the legislative solution to this, see:

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