Section 14 Timely payment etc

The bankruptcy administrator shall ensure proper management of the cover pool to secure the assets in the cover pool. The bankruptcy administrator shall also ensure that the provisions concerning the composition of the cover pool and the provisions concerning liquidity, currency and interest rate risk are complied with on a continuous basis.

The bankruptcy administrator and creditors’ committee shall ensure that holders of covered bonds receive agreed and timely payment from assets encompassed by their preferential claim as provided in the Financial Institutions Act section 2-35 third paragraph.

Bankruptcy or negotiation of debt or public administration of a mortgage credit institution shall not in itself be sufficient cause for termination or similar remedy by holders of covered bonds. Neither may actions as mentioned in the Financial Institutions Act section 2-30 be undertaken or carried out. In the case of forced recovery this also applies after the expiry of the period stated in Bankruptcy Act section 117 third paragraph, cf. section 17 second paragraph. This does not prevent derivative contracts as mentioned in the Financial Institutions Act section 2-28 first paragraph e), which meet the requirements of section 8 of these regulations, from continuing to run in accordance with their terms so that agreed set-off of cash flows in the same currency and with the same maturity date can be undertaken between the parties in the same cover pool. Neither, in relation to derivative contracts as mentioned in section 8, does this prevent the bankruptcy administrator and creditors’ committee from agreeing with a derivative counterparty to replace one or more ongoing derivative contracts with one or more new such contracts, so long as the asset coverage requirement under the Financial Institutions Act section 2-31 and the liquidity requirement under section 2-32 are met.

The bankruptcy administrator and creditors’ committee may take any action considered necessary to redeem preferential claims over the cover pool, including selling assets and issuing new bonds and derivative contracts conferring a preferential claim. The bankruptcy administrator and creditors’ committee shall as soon as possible inform holders of covered bonds of decisions assumed to be of material significance to them.