Bloomberg Law’s® Bankruptcy Law News publishes case summaries of the most recent important bankruptcy law decisions, tracks major commercial bankruptcies, and reports on developments in bankruptcy...
By Daniel Gill
The U.S. House passed legislation on April 5 that would create a new bankruptcy process for large financial institutions—those with assets of at least $50 billion.
Rep. Tom Marino (R-Pa.), chief sponsor of the Financial Institution Bankruptcy Act of 2017 ( HR 1667), stressed the bipartisan nature of the legislation before it passed on a voice vote.
He said it will help ensure stability in financial markets in the event of an insolvency of a significantly large financial institution, like Lehman Brothers, which went bankrupt in 2008 amid the global financial crisis.
The House approved similar legislation to amend the Bankruptcy Code last year, but the Senate did not act. Its prospects there this time are uncertain.
The measure proposes to work on a super-fast basis and provide for a creation of a temporary “bridge company” to receive the financial institution’s assets. Operating subsidiaries would continue to operate out of bankruptcy, reducing the amount of disruption to credit markets.
Cases would be assigned to a bankruptcy judge picked from a pre-selected pool of judges chosen for their experience, ability and willingness to handle such challenging, fast-paced cases.
House Judiciary Committee Chairman Bob Goodlatte (R-Va.) and other members of that panel stressed at a March 29 hearing that the proposal doesn’t strip banking regulators of powers the Wall Street reform law known as Dodd-Frank granted them to unwind lenders outside the bankruptcy system.
Prior to the House vote, Goodlatte said the bill would ensure that taxpayers won’t have to rescue the next failing financial firm, with the risk of loss instead being focused on shareholders and creditors.
The legislation would be a “complement” to Dodd-Frank, according to Rep. John Conyers of Michigan, the top Democrat on the Republican-led Judiciary Committee.
It would provide an alternative to a process established as part of the 2010 law enacted because of the financial crisis that gives the government authority to intervene and provide temporary funding when a U.S. bank fails.The bankruptcy legislation was brought to the floor under “suspension of the rules,” a procedure which requires a two-thirds vote for passage and allows no floor amendments.
—With assistance from Elizabeth Dexheimer and Diane Davis.
To contact the reporter on this story: Daniel Gill in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)