Question ID
2018_3698
Legal act
Directive 2014/59/EU (BRRD)
Topic
Resolution tools and powers
Article
42
Paragraph
6
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
n.a.
Type of submitter
Competent authority
Subject matter
Clarification regarding the consideration in Article 42(6)
Question

Can you please clarify Article 42(6) of Directive 2014/59/EU (BRRD); regarding that the consideration can have a nominal or negative value? Does effect of this mean that the asset management vehicle (AMV) must owe a debt to the institution under resolution?

Background on the question

Article 42(6) of Directive 2014/59/EU (BRRD) provides that “When applying the asset separation tool, resolution authorities shall determine the consideration for which assets, rights and liabilities are transferred to the asset management vehicle in accordance with the principles established in Article 36 and in accordance with the Union State aid framework. This paragraph does not prevent the consideration having nominal or negative value.” We note that there is no rule about what happens with the proceeds from the sale of the AMV (except for the rule in Article 37(7)(c), that the resolution authority or any financing arrangement must pay the resolution expenses as a ‘preferred creditor’) etc. thus once a resolution authority pays any loans to the AMV (e.g. from the financing arrangement), Member States are free to keep that money, use it to repay expenses of resolution or return it to the institution under resolution or anything else they wish?

Submission date
Rejected publishing date
Rationale for rejection

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Status
Rejected question