c. A transfer under an ISDA management contract or credit support to a successor of the insured party or related party that has entered into a resolution procedure is effective to the extent that the laws of the identified regime authorize the transfer. Similarly, the transfers of security or other credit assistance granted by both parties are effective to the extent that a transfer would be authorized by the laws of the identified regime. In other words, the transfer restrictions in the ISDA master contract or any other applicable agreement do not apply, as long as the laws of the identified regime authorize such a transfer. This provision is intended to facilitate the transfer of the inseured parties in liquidation to high-performing takers and thus to avoid the exercise of the late rights. However, where such a transfer is made and the consideration does not enjoy the respect of the guarantee by legal protection, the other party may, in certain circumstances, make defeasance claims against the purchaser. The U.S. Protocol is also separate from the ISDA Refloated Protocol of Article 55 of the BRRD Protocol, which also provides for contractual recognition of the application of certain non-U.S. reimbursement and settlement systems, some (but not all) of which are also covered by the U.S. protocol.
Compliance with a module of the JMP protocol or BRRD protocol remains effective without modification, regardless of compliance with the US protocol. The U.S. Stay Rules resolution does not require that the covered QFCs contain certain “cross default” provisions if the QFC (i) does not explicitly provide for a standard covered QFC fee, directly or indirectly related to the fact that a member of the insured party is subject to bankruptcy, liquidation or similar proceedings; and (ii) does not explicitly prohibit the transfer of credit enhancements (for example. B guarantees or guarantees) provided by a company linked to the support of a QFC with which the party concerned is the debtor. As a result, the provisions of Section 2 of the U.S. Protocol Annex (Section 2) generally do not apply to ISDA master contracts and credit support documents that meet these conditions. ISDA master contracts would generally include the standard rights described as (i) as long as an insured party partner is listed on the calendar as a “specified entity” or “credit support provider” or if there are additional termination events relating to credit rating downgrades or similar credit triggers applicable to an insured party member. Although no member of the insured party is mentioned in the ISDA master contract or a guarantee or other credit support is granted with respect to the obligations of the insured party under the ISDA master contract, the provisions of Section 2 limit, if any, the exercise of late rights.
While Section 2 should not apply to the extent that there are no default rights applicable to a member of an insured party and no member offers an enhancement of the credit, the language of limitation is sufficiently narrow to know whether a covered party that is not itself bankrupt or in liquidation would attempt to apply Section 2 in the context of a bankruptcy or a decision that leads to a default , on the whole.