Secured Party’s Rights and Remedies - IM CSD Provision

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2018 ISDA Credit Support Deed (IM) (English law)
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Paragraph 8(a) in a Nutshell™

Use at your own risk, campers!
8(a) Secured Party’s Rights and Remedies
(i) General:
(A) The Obligations are deemed to be due and payable on the date of this Deed.
(B) Section 103 (restricting the power of sale) and section 93 (restricting the right of consolidation) of the Act no not apply.
(ii) Secured Party’s Rights. If there is a Secured Party Rights Event, then, unless the Chargor has paid all its Obligations in full, the Secured Party may, without notice to the Chargor, immediately exercise all powers of Secured Party under this Deed or that are available generally to a secured creditor and it may: Posted Credit Support (IM):
(A) to sell any non-cash Posted Credit Support (IM) on such terms as it thinks fit;
(B) to apply any cash Posted Credit Support (IM) towards the discharge of any of the Chargor’s Obligations as it thinks fit;
(C) where Posted Credit Support (IM) is “financial collateral” under a “security financial collateral arrangement” (under the Financial Collateral Arrangements (No. 2) Regulations 2003) (the “Regulations”), appropriate any of it in satisfaction of the Obligations as it thinks fit; and
(D) to take any moneys payable to the Chargor under any of the Posted Credit Support (IM);
and indoing so the Secured Party may convert any currencies or effect transactions in currencies as and when it thinks fit.
(iii) Power of Attorney. The Chargor, to secure its performance of the Obligations, appoints the Secured Party as its attorney to do everything which the Chargor could do, under this Deed, such as:
(A) executing any transfer or sale of Posted Credit Support (IM);
(B) to exercise the Chargor’s rights over the Posted Credit Support (IM);
(C) to claim any moneys due or arising from the Posted Credit Support (IM);
(D) to endorse any financial instruments as required under the Posted Credit Support (IM); and
(E) to take any action the Secured Party considers advisable to protect or enforce its security.

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(iv) Protection of Purchaser.
(A) No purchaser or other person dealing with the Secured Party or a Receiver or with its attorney or agent shall be concerned to enquire (1) whether any power exercised or purported to be exercised by the Secured Party has become exercisable, (2) whether any Obligation remains due, (3) as to the propriety or regularity of any of the actions of the Secured Party or (4) as to the application of any money paid to the Secured Party.
(B) In the absence of bad faith on the part of such purchaser or other person, such dealings shall be deemed, so far as regards the safety and protection of such purchaser or other person, to be within the powers conferred by this Deed and to be valid accordingly. The remedy of the Chargor in respect of any impropriety or irregularity whatever in the exercise of such powers shall be in damages only.
(v) Valuation of Appropriated Collateral. Subject to Paragraph 13, where any Posted Credit Support (IM) is appropriated, the value of the appropriated Posted Credit Support (IM) will be the Appropriation Value of such Posted Credit Support (IM) as of, or as soon as reasonably practicable after, the date on which such Posted Credit Support (IM) is appropriated.
(vi) Appointment of Receiver.
(A) Except as provided below, the Secured Party may appoint any one or more persons to be a Receiver of all or any part of the Security Assets if:
(1) the security granted under this Deed has become enforceable; or
(2) the Chargor so requests the Secured Party in writing at any time.
(B) Any appointment under Paragraph 8(a)(vi)(A) above may be by deed, under seal or in writing under its hand.
(C) Any restriction imposed by law on the right of a mortgagee to appoint a Receiver (including under section 109(1) of the Act) does not apply to this Deed.
(vii) Removal of Receiver and Remuneration.
(A) The Secured Party may by writing under its hand remove any Receiver appointed by it and may, whenever it thinks fit, appoint a new Receiver in the place of any Receiver whose appointment may for any reason have terminated.
(B) The Secured Party may fix the remuneration of any Receiver appointed by it and any maximum rate imposed by law (including under section 109(6) of the Act) will not apply.
(viii) Agent of the Chargor.
(A) A Receiver will be deemed to be the agent of the Chargor for all purposes and, accordingly, will be deemed to be in the same position as a Receiver duly appointed by a mortgagee under the Act. The Chargor is solely responsible for the contracts, engagements, acts, omissions, defaults and losses of a Receiver and for liabilities incurred by a Receiver.
(B) No Secured Party will incur any liability (either to the Chargor or to any other person) by reason of the appointment of a Receiver or for any other reason.
(ix) Relationship with Secured Party. To the fullest extent allowed by law, any right, power or discretion conferred by this Deed (either expressly or impliedly) or by law on a Receiver may after the security granted under this Deed becomes enforceable be exercised by the Secured Party in relation to any Security Asset without first appointing a Receiver or notwithstanding the appointment of a Receiver.
(x) Powers of Receiver.
(A) General
(1) A Receiver has all the rights, powers and discretions set out below in this sub-paragraph in addition to those conferred on it by any law. This includes all the rights, powers and discretions conferred on a receiver (or a receiver and manager) under the Act and the Insolvency Act 1986.
(2) If there is more than one Receiver holding office at the same time, each Receiver may (unless the document appointing him states otherwise) exercise all the powers conferred on a Receiver under this Deed individually and to the exclusion of any other Receiver.
(B) Possession: A Receiver may take immediate possession of, get in and collect any Security Asset and may subsequently relinquish such possession.
(C) Sale of assets
(1) A Receiver may sell, exchange, convert into money and realise any Security Asset by public auction or private contract and generally in any manner and on any terms which he thinks fit.
(2) The consideration for any such transaction may consist of cash, debentures or other obligations, shares, stock or other valuable consideration and any such consideration may be payable in a lump sum or by instalments spread over any period which he thinks fit.
(D) Receipts: A Receiver may give a valid receipt for any moneys and execute any assurance or thing which may be necessary or desirable for realising any Security Asset.
(E) Delegation: A Receiver may delegate his powers in accordance with this Deed.
(F) Other powers: A Receiver may:
(1) do all other acts and things which he may consider desirable or necessary for realising any Security Asset or incidental or conducive to any of the rights, powers or discretions conferred on a Receiver under or by virtue of this Deed or law;
(2) exercise in relation to any Security Asset all the powers, authorities and things which he would be capable of exercising if he were the absolute beneficial owner of that Security Asset; and
(3) use the name of the Chargor for any of the above purposes.

Full text of Paragraph 8(a)

8(a) Secured Party’s Rights and Remedies
(i) General.
(A) For the purposes of all powers implied by statute, the Obligations are deemed to have become due and payable on the date of this Deed.
(B) Section 103 (restricting the power of sale) and section 93 (restricting the right of consolidation) of the Act shall not apply to this Deed.
(ii) Secured Party’s Rights. If at any time a Secured Party Rights Event has occurred and is continuing, then, unless the Chargor has paid in full all of its Obligations, the Secured Party shall, without prior notice to the Chargor, be entitled to put into force and to exercise immediately or as and when it may see fit any and every power possessed by the Secured Party by virtue of this Deed or available to a secured creditor and in particular (but without limitation) the Secured Party shall have power in respect of Posted Credit Support (IM):
(A) to sell all or any of the Posted Credit Support (IM) (other than Posted Credit Support (IM) in the form of cash) in any manner permitted by law upon such terms as the Secured Party shall in its absolute discretion determine;
(B) to apply all or any of the Posted Credit Support (IM) in the form of cash in or towards the payment or discharge of any amounts payable by the Chargor with respect to any Obligation in such order as the Secured Party sees fit;
(C) to the extent that the assets charged under this Deed constitute "financial collateral" and this Deed and the obligations of the Chargor under this Deed constitute a "security financial collateral arrangement" (in each case for the purpose of and as defined in the Financial Collateral Arrangements (No. 2) Regulations 2003) (the “Regulations”), to appropriate all or any part of that financial collateral in or towards the satisfaction of the Obligations in such order as the Secured Party sees fit; and
(D) to collect, recover or compromise and to give a good discharge for any moneys payable to the Chargor in respect of any of the Posted Credit Support (IM);
and for the purposes of this Paragraph 8(a) the Secured Party shall be entitled to make any currency conversions or effect any transaction in currencies which it thinks fit, and to do so at such times and rates as it thinks proper.
(iii) Power of Attorney. The Chargor, by way of security and solely for the purpose of more fully securing the performance of the Obligations, irrevocably appoints the Secured Party the attorney of the Chargor on its behalf and in the name of the Chargor or the Secured Party (as the attorney may decide) to do all acts, and execute all documents which the Chargor could itself execute, in relation to any of the Posted Credit Support (IM) or in connection with any of the matters provided for in this Deed, including (but without limitation):
(A) to execute any transfer, bill of sale or other assurance in respect of the Posted Credit Support (IM);
(B) to exercise all the rights and powers of the Chargor in respect of the Posted Credit Support (IM);
(C) to ask, require, demand, receive, compound and give a good discharge for any and all moneys and claims for moneys due and to become due under or arising out of any of the Posted Credit Support (IM);
(D) to endorse any cheques or other instruments or orders in connection with any of the Posted Credit Support (IM); and
(E) to make any claims or to take any action or to institute any proceedings which the Secured Party considers to be necessary or advisable to protect or enforce the security interest created by this Deed.
(iv) Protection of Purchaser.
(A) No purchaser or other person dealing with the Secured Party or a Receiver or with its attorney or agent shall be concerned to enquire (1) whether any power exercised or purported to be exercised by the Secured Party has become exercisable, (2) whether any Obligation remains due, (3) as to the propriety or regularity of any of the actions of the Secured Party or (4) as to the application of any money paid to the Secured Party.
(B) In the absence of bad faith on the part of such purchaser or other person, such dealings shall be deemed, so far as regards the safety and protection of such purchaser or other person, to be within the powers conferred by this Deed and to be valid accordingly. The remedy of the Chargor in respect of any impropriety or irregularity whatever in the exercise of such powers shall be in damages only.
(v) Valuation of Appropriated Collateral. Subject to Paragraph 13, where any Posted Credit Support (IM) is appropriated, the value of the appropriated Posted Credit Support (IM) will be the Appropriation Value of such Posted Credit Support (IM) as of, or as soon as reasonably practicable after, the date on which such Posted Credit Support (IM) is appropriated.
(vi) Appointment of Receiver.
(A) Except as provided below, the Secured Party may appoint any one or more persons to be a Receiver of all or any part of the Security Assets if:
(1) the security granted under this Deed has become enforceable; or
(2) the Chargor so requests the Secured Party in writing at any time.
(B) Any appointment under Paragraph 8(a)(vi)(A) above may be by deed, under seal or in writing under its hand.
(C) Any restriction imposed by law on the right of a mortgagee to appoint a Receiver (including under section 109(1) of the Act) does not apply to this Deed.
(vii) Removal of Receiver and Remuneration.
(A) The Secured Party may by writing under its hand remove any Receiver appointed by it and may, whenever it thinks fit, appoint a new Receiver in the place of any Receiver whose appointment may for any reason have terminated.
(B) The Secured Party may fix the remuneration of any Receiver appointed by it and any maximum rate imposed by law (including under section 109(6) of the Act) will not apply.
(viii) Agent of the Chargor.
(A) A Receiver will be deemed to be the agent of the Chargor for all purposes and, accordingly, will be deemed to be in the same position as a Receiver duly appointed by a mortgagee under the Act. The Chargor is solely responsible for the contracts, engagements, acts, omissions, defaults and losses of a Receiver and for liabilities incurred by a Receiver.
(B) No Secured Party will incur any liability (either to the Chargor or to any other person) by reason of the appointment of a Receiver or for any other reason.
(ix) Relationship with Secured Party. To the fullest extent allowed by law, any right, power or discretion conferred by this Deed (either expressly or impliedly) or by law on a Receiver may after the security granted under this Deed becomes enforceable be exercised by the Secured Party in relation to any Security Asset without first appointing a Receiver or notwithstanding the appointment of a Receiver.
(x) Powers of Receiver.
(A) General
(1) A Receiver has all the rights, powers and discretions set out below in this sub-paragraph in addition to those conferred on it by any law. This includes all the rights, powers and discretions conferred on a receiver (or a receiver and manager) under the Act and the Insolvency Act 1986.
(2) If there is more than one Receiver holding office at the same time, each Receiver may (unless the document appointing him states otherwise) exercise all the powers conferred on a Receiver under this Deed individually and to the exclusion of any other Receiver.
(B) Possession: A Receiver may take immediate possession of, get in and collect any Security Asset and may subsequently relinquish such possession.
(C) Sale of assets
(1) A Receiver may sell, exchange, convert into money and realise any Security Asset by public auction or private contract and generally in any manner and on any terms which he thinks fit.
(2) The consideration for any such transaction may consist of cash, debentures or other obligations, shares, stock or other valuable consideration and any such consideration may be payable in a lump sum or by instalments spread over any period which he thinks fit.
(D) Receipts: A Receiver may give a valid receipt for any moneys and execute any assurance or thing which may be necessary or desirable for realising any Security Asset.
(E) Delegation: A Receiver may delegate his powers in accordance with this Deed.
(F) Other powers: A Receiver may:
(1) do all other acts and things which he may consider desirable or necessary for realising any Security Asset or incidental or conducive to any of the rights, powers or discretions conferred on a Receiver under or by virtue of this Deed or law;
(2) exercise in relation to any Security Asset all the powers, authorities and things which he would be capable of exercising if he were the absolute beneficial owner of that Security Asset; and
(3) use the name of the Chargor for any of the above purposes.

Related agreements and comparisons

Related Agreements
Click here for the text of Section NA in the 2016 ISDA VM CSA
Comparisons
Template:Csddiff 8(a)

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Content and comparisons

Template:M comp disc 2018 CSD 8(a)

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Summary

“If there is a Secured Party Rights Event ...” sounds casual, nonchalant, easy-to-navigate sort of a question, doesn’t it. Hold on to that thought as you stumble into the purgatorial torture chamber — no, no; that is not an oxymoron: the precise instrument of torture that ISDA’s crack drafting squad™ favours most is a form of grey, entropic monotony, that cold, incessant drip on your forehead that you would expect in purgatory and not the ninth circle of hell — that is the ’squad’s definition of “Secured Party Rights Event”. Above the door to that chambre d’ennuyeux is inscribed: “abandon hope, all ye who enter here”.

Oh, how you will regret that you ever asked.

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See also

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References

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