Document Type
Article
Publication Date
2005
Abstract
Bank insolvency regimes vary widely. First, many countries maintain separate bank insolvency rules from those that govern insolvency of other firms or individuals. Other countries have no special regime and rely on their general insolvency law for bank closure. Second, some countries rely on an administrative process for bank closure in which the bank supervisor, bank insurer, or other agency has the power to appoint the conservator or receiver, and, in some instances, may appoint itself to the job. Other countries rely on a judicial process in which the bank supervisor (or bank managers or creditors) must apply to the court for the appointment of a conservator or receiver. A comparison of the United States and United Kingdom bank insolvency regimes reflects many of the different approaches used throughout the world. The U.K. system relies on general insolvency law for the closure of banks. The system is judicial in that a court decides whether a bank is insolvent and insolvency is the only basis for closing the bank. In contrast, the U.S. system for bank closure is administrative and derives from banking law. Bank supervisors determine insolvency, and under some circumstances may close even a solvent bank.
Recommended Citation
Heidi Mandanis Schooner, Bank Insolvency Regimes in the United States and the United Kingdom, 18 TRANSNAT’L LAW. 385 (2005).
