FDIC Issues Opinion Clarifying Treatment of Securitizations by Financial Companies Subject to Resolution Under Title II of the Dodd-Frank Act

January 03, 2011
Creditors, equity holders, counterparties and vendors need certainty as to how a company will be resolved under Chapter 7 or 11 of the Bankruptcy Code, or under FDIC receivership rules in order for markets to function effectively. The FDIC recently provided interpretive guidance to demonstrate how it will harmonize its new receivership authority under Title II of Dodd-Frank with provisions in the Bankruptcy Code to facilitate continued securitizations by covered financial companies. This update examines the FDIC’s action, which addressed uncertainty related to covered financial company receiverships that could have adversely impacted the willingness of market participants to proceed with such securitizations.