§561 Contractual right to terminate, liquidate, accelerate, or offset under a master netting agreement and across contracts; proceedings under chapter 15

Summary

Lets parties use their written or usual rights to end, settle, speed up, or net money due under certain financial deals when a trigger like default happens. The rule covers six types of contracts: securities contracts (sec. 741(7)), commodity contracts (sec. 761(4)), forward contracts, repurchase agreements, swap agreements, and master netting agreements. A party can only do those things as far as it would be allowed under sections 555, 556, 559, or 560 for each individual contract. If the debtor is a commodity broker under subchapter IV of chapter 7, you generally cannot net or offset obligations from commodity contracts traded on a designated contract market or a registered derivatives trading facility against other claims, unless the party has positive net equity in the debtor’s commodity accounts as calculated under that subchapter. Another commodity broker may not net customer-related contracts traded on such markets against other claims. Netting is allowed, however, for cross‑margining or similar arrangements approved or submitted to the CFTC under section 5c(c)(1) or (2), or for other netting deals between a clearing organization and an approved counterparty. “Contractual right” includes rights in rules or bylaws of clearing organizations, exchanges, or in common law or ordinary business practice. In chapter 15 cases, these same rules apply, so enforcing those contract terms is not stayed or limited by the bankruptcy code or court order, and avoidance powers are limited as they are in chapter 7 or 11; enforcement is not affected by whether the debtor has U.S. assets.