Document ID: chunk:federal_register_of_legislation:C2024C00373:section:14:p2
Version: federal_register_of_legislation:C2024C00373
Segment Type: section
Provision Reference: s 14 (pt 2/4)
Character Range: 36314–39044

Securities Act 2009 or section 588FL of the Corporations Act 2001, a security interest would, but for this paragraph, vest in the grantor before the external administration begins; and
 (ii) where the security interest did not vest under one of those sections before the external administration begins, the security would be enforceable under paragraph (fa);
  the security interest does not vest under that section before the external administration begins;
 (g) none of the following is to be void or voidable in the external administration:
 (i) the netting or termination of obligations under the contract;
 (ii) a payment by the party to discharge a net obligation under the contract;
 (iii) the enforcement of security under paragraph (fa);
 (h) paragraphs (c) to (g) apply despite:
 (i) any disposal of rights that may be netted under the contract; or
 (ii) the creation of any encumbrance, or any other interest, in relation to those rights or financial property mentioned in paragraph (fa); or
 (iii) the operation of any encumbrance, or any other interest, in relation to those rights or that financial property;
  in contravention of a prohibition in the contract, or in the security mentioned in paragraph (fa).
Note: By giving express recognition to close‑out netting contracts, subsections (1) and (2) remove the basis for arguing that the contracts are void as contrary to public policy embodied in the laws dealing with insolvency.
 (3) Subsections (1) and (2) have effect in relation to a close‑out netting contract:
 (a) subject to a specified stay provision that applies to the contract; and
 (b) despite any other law (including the specified provisions).
Note 1: Section 5 defines specified provisions and specified stay provision.
Note 2: Division 2 sets out the circumstances in which non‑direction stays may cease.
 (4) A person may not rely on the application of subsection (1) or (2) to a right or obligation under a close‑out netting contract if:
 (a) the person acquired the right or obligation from another person with notice that that other person, or the other party to the contract, was at that time unable to pay their debts as and when they became due and payable; and
 (b) the person acquired the right or obligation otherwise than as a result of the operation of section 22, 35 or 36R of the Business Transfer Act.
 (5) Subsection (1) or (2) does not apply to an obligation owed by a party to a close‑out netting contract to another person if:
 (a) the party goes into external administration; and
 (b) the party acquired the obligation otherwise than as a result of the operation of section 22, 35 or 36R of the Business Transfer Act; and
 (c) subsection (6) is satisfied.
 (6) This subsection