Recital (42)

The Fund can be used to support the application of the sale of business tool or of the bridge institution tool whereby a set of assets, rights, and liabilities of the institution under resolution are transferred to a recipient. In such a case, the Board might have a claim against the residual entity in its subsequent winding up under normal insolvency proceedings. That can occur where the Fund is used in connection to losses that creditors would otherwise have borne, including under the form of guarantees to assets and liabilities or coverage of the difference between the transferred assets and liabilities. To ensure that the shareholders and creditors left behind in the residual entity effectively absorb the losses of the institution under resolution and improve the possibility of repayments in insolvency to the Board, those claims of the Board against the residual entity, and claims that arise from reasonable expenses properly incurred by the Board, should benefit from the same priority ranking in insolvency as the ranking of the claims of the national resolution financing arrangements in each participating Member State, which should be higher than the priority ranking of deposits and of DGSs. Since compensation paid to shareholders and creditors from the Fund due to breaches of the no creditor worse off principle aims to compensate them for the results of resolution action, that compensation should not give rise to claims from the Board.