Section 2-35 Preferential claim over the cover pool, joint debt recovery etc

In the event of bankruptcy, negotiation of debt under the Bankruptcy Act, winding up of the mortgage credit institution or public administration, holders of covered bonds and counterparties to derivative contracts as mentioned in section 2-28 first paragraph e) shall have an exclusive, equal and proportional preferential claim over the cover pool assigned to them. Such preferential claim over the cover pool shall rank ahead of priority as mentioned in the Act relating to Creditors’ Rights to Satisfaction of Claims (Satisfaction of Claims Act, No. 59 of 8 June 1984) sections 9-2 to 9-4. In regard to bankruptcy, the provisions of the Mortgages and Pledges Act section 6-4 on a statutory security interest for the bankruptcy estate shall apply correspondingly to the estate’s claim over the cover pool. The estate’s statutory security interest in each individual cover pool shall in such cases comprise a maximum of 700 times the court fee.

The preferential claim shall also apply to funds which are subsequently remitted in accordance with terms of contract applying to assets included in the cover pool. Such funds shall be registered on a continual basis under the rules of section 2-33.

In the event of bankruptcy, negotiation of debt under the Bankruptcy Act, winding up of the mortgage credit institution or public administration, holders of covered bonds and counterparties to derivative contracts as mentioned in section 2-28 first paragraph e) shall be entitled to timely payment from assets encompassed by their preferential claim for the duration of the bankruptcy or administration proceedings, provided the cover pool is essentially in compliance with the statutory requirements. Should it not be possible to make contractual payments using funds from the cover pool, and an imminent change in the liquidity situation is unlikely, the bankruptcy estate shall set a date on which payments shall be halted. The bankruptcy estate shall inform holders of preferential claims of the halt to payments at the earliest opportunity.

Should the cover pool deliver more than is needed to meet the claims of the bondholders or derivative counterparties, the surplus shall be added to the gross estate.

The King may in regulations lay down further rules on the implementation of bankruptcy proceedings, public administration, negotiation of debt or winding up of mortgage credit institutions coming under this chapter, including rules to restrict the opportunity of the bankruptcy estate, debt restructure committee, administration board or liquidation board to dispose over loans and other assets included in the cover pool when this can be done without impairing other creditors’ ability to enforce a claim. Such regulations may depart from the rules of legislation governing bankruptcy, public administration of financial institutions, negotiation of debt and execution.