Article (Six): Enforceability of a Multibranch Netting Agreement against a Bankrupt Local Branch
No: 1/46
Date(g): 16/2/2025 | Date(h): 18/8/1446
Status: In-Force
(a)
Limitation on the Non-bankrupt Party’s right to receive payment
(1)
The liability of a Bankrupt Local Branch to a Non-Bankrupt Party under a Multibranch Netting Agreement shall be calculated as of the date of the termination of the Qualified Financial Contracts to which the Multibranch Netting Agreement applies in accordance with its terms and shall be limited to the lesser of:
1-
the Global Net Payment Obligation; and
2-
the Local Net Payment Obligation.
(2)
The liability of the Bankrupt Local Branch under paragraph (1) shall be reduced but not below zero by:
1-
any amount otherwise paid to or received by the Non-Bankrupt Party in respect of the Global Net Payment Obligation pursuant to such Multibranch Netting Agreement which if added to the liability of the Bankrupt Local Branch under paragraph (1) would exceed the Global Net Payment Obligation.
2-
the fair market value of, or the amount of any proceeds of, Collateral that secures or supports the obligations of the Foreign Multibranch Party under the Multibranch Netting Agreement and has been applied by the Non-Bankrupt Party to satisfy the obligations of the Foreign Multibranch party pursuant to the Multibranch Netting Agreement.
(b)
Limitation on the Foreign Multibranch Party's rights to receive payment
(1)
The liability of the Non-Bankrupt Party to the Bankrupt Local Branch under a Multibranch Netting Agreement shall be assessed and calculated as of the date of termination of the Qualified Financial Contracts to which the Multibranch Netting Agreement applies in accordance with its provisions and terms and shall be limited to the lesser of:
1-
the Global Net Payment Entitlement.
2-
the Local Net Payment Entitlement.
(2)
The liability of the Non-Bankrupt Party under paragraph (1) shall be reduced but not below zero by any amount otherwise paid to or received by:
1-
the Local Bankruptcy Trustee on behalf of the Bankrupt Local Branch.
2-
any Foreign Bankruptcy Trustee on behalf of the Foreign Multibranch Party.
in respect of the Global Net Payment Entitlement under the Multibranch Netting Agreement which, if added to the liability of Non-Bankrupt Party under paragraph (1), would exceed the Global Net Payment Entitlement.
(3)
The liability of a Non-Bankrupt Party under paragraph (1) shall also be reduced, but not below zero, by the fair market value of, or the amount of any proceeds of, Collateral that secures or supports the obligations of the Non-Bankrupt Party under the Multibranch Netting Agreement and has been applied by the Foreign Multibranch Party or any Bankruptcy Trustee acting on its behalf to satisfy the obligations of the Non-Bankrupt Party under the Multibranch Netting Agreement to the Foreign Multibranch Party.
