Netting and financial collateral related problems in case law

Author

Chief Asst. Prof. Ivan Mangachev, PhD

Annotation

Lately in case law appeared some problems as regards to netting and financial collateral. In this summary the author aims at providing answers to the following questions: 1. Is it possible for a creditor in insolvency proceedings to refer to the settlement finality and the netting protection under Article 78e, para 8 of the Payment Services and Systems Act? 2. Shall a creditor return in the bankruptcy estate receivables, which have been regularly paid by the debtor, however secured by financial collateral? 3. Is it possible to secure by financial collateral debts which are not directly related to settlement finality system? What shall be the scope of the so-called “other assets” under letter ”b” of Article 9, para 3, item 2 of the  Law on Financial Collateral Arrangements ? In order to answer the above-mentioned questions, the author gives explanation of the legal definitions of netting, on the one hand, and the role of the financial collateral and the financial liabilities related to them, on the other hand.

Keywords

netting, financial collateral, insolvency proceedings, insolvency, settlement, settlement finality, bankruptcy estate, Law on Financial Collateral Arrangements, Payment Services and Systems Act, financial liabilities, debtor, creditor

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