Treasury Report Calls for Very Limited Use of Orderly Liquidation Authority and Supports a New Bankruptcy Code for Complex Financial Institutions

Responding to a Presidential Memorandum calling for a review of the Orderly Liquidation Authority (OLA) contained in Title II of the Dodd-Frank Act and the application of the Bankruptcy Code to large financial institutions, the Treasury Department has issued a report that recommends (i) using an OLA receivership only in exceptional circumstances; (ii) reforming OLA to further restrict disparate treatment of similarly situated creditors, to enhance protection for taxpayer funds, and strengthen judicial review; and (iii) enacting a new Chapter 14 of the Bankruptcy Code that would provide a specialized structure for resolving large, interconnected financial firms.

Read more »