Reimbursement of shareholders and creditors

The powers conveyed in Articles 36(11) and 46(3) of Directive 2014/59/EU (BRRD) are not unfettered discretions; the underling rationale for the provisions is to avoid an unwarranted disproportionate effect on creditors’ rights in line with Article 52 of the Charter of Fundamental Rights of the European Union and to contribute to prevention of possible breaches of the No Creditor Worse Off safeguard as early as possible. However, it may be legally difficult in some cases to directly annul an effected transaction, in which case, the ultimate obligation is that of compensating through No Creditor Worse Off payment by the resolution fund as per Article 75 of the BRRD on the basis of the results reflected in the valuation carried out in accordance with Article 74. Disclaimer: This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General Financial Stability, Financial Services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.