The Financial Collateral Arrangements (No.2) Regulations 2003

Modification of the Insolvency Rules 1986 and the Insolvency Rules (Northern Ireland) 1991

14.  Where the collateral-provider or the collateral-taker under a financial collateral arrangement goes into liquidation or administration and the arrangement or a close out netting provision provides for, or the mechanism provided under the arrangement permits, either—

(a) the debt owed by the party in liquidation or administration under the arrangement, to be assessed or paid in a currency other than sterling; or

(b) the debt to be converted into sterling at a rate other than the official exchange rate prevailing on the date when that party went into liquidation or administration;

then rule 4.91 (liquidation), or rule 2.86 (administration) of the Insolvency Rules 1986 (1) (debt in foreign currency), or rule 4.097 of the Insolvency Rules (Northern Ireland) 1991 (2) (liquidation, debt in foreign currency), as appropriate, shall not apply unless the arrangement provides for an unreasonable exchange rate or the collateral-taker uses the mechanism provided under the arrangement to impose an unreasonable exchange rate in which case the appropriate rule shall apply.

(1)

S.I. 1986/1925, amended by S.I. 2003/ 1730, S.I. 2002/1307, S.I. 2001/763, S.I. 1999/359, S.I. 1995/586, S.I. 1993/602, S.I. 1991/495, S.I. 1989/397, S.I. 1987/1919.

(2)

S.R. 1991 No. 364.