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24 September 2004
Under the decree, the definition of 'financial collateral arrangements' includes pledge agreements, credit assignment agreements and any agreements - including repurchase agreements - under which full ownership of financial collateral (ie, cash or financial instruments) is transferred for the purpose of securing financial obligations, provided that at least one of the relevant parties is:
Pursuant to the decree, upon the occurrence of an event of default or any similar event agreed upon between the parties, the collateral holder is entitled to enforce the financial collateral by sale or appropriation, with respect to financial instruments, or by set-off, with respect to cash, even when the debtor is subject to winding-up or reorganization proceedings. Further, close-out netting provisions shall take effect irrespective of whether the debtor is subject to winding-up or reorganization proceedings.
The creditor may also dispose of the financial collateral, in accordance with the provisions of the relevant agreement, provided that the original collateral is replaced by equivalent collateral before the expiry date of the secured financial obligation.
The decree applies provided that the following requirements are met: (i) the financial collateral agreement is executed in writing; and (ii) collateral is given effectively and evidence of such collateral exists.
For further information on this topic please contact Livio Esposizione or Paolo Garbolino at Studio Legale Tonucci by telephone (+39 06 36 22 71) or by fax (+39 06 323 5161) or by email (email@example.com).
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