Title 11, BankruptcyRelease 119-102
§560 Contractual Right to Liquidate, Terminate, or Accelerate a Swap Agreement
Title 11 › CHAPTER 5 — CREDITORS, THE DEBTOR, AND THE ESTATE › SUBCHAPTER III — THE ESTATE › § 560
Summary
People or firms in swap deals can use their contract rights to close out, end, or speed up one or more swap agreements when a condition listed in section 365(e)(1) happens. They can also combine or offset any final payments from those closings. Bankruptcy law and any court or agency order in a bankruptcy case cannot stop, undo, or limit those actions. "Contractual right" means rights in rules or bylaws of clearinghouses, exchanges, trading venues, or board resolutions, and rights that come from common law, trade practice, or normal business practice, whether written or not.
Full Legal Text
Title 11, §560
Bankruptcy, Source: USLM XML via OLRC
The exercise of any contractual right of any swap participant or financial participant to cause the liquidation, termination, or acceleration of one or more swap agreements because of a condition of the kind specified in section 365(e)(1) of this title or to offset or net out any termination values or payment amounts arising under or in connection with the termination, liquidation, or acceleration of one or more swap agreements shall not be stayed, avoided, or otherwise limited by operation of any provision of this title or by order of a court or administrative agency in any proceeding under this title. As used in this section, the term “contractual right” includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board thereof and a right, whether or not evidenced in writing, arising under common law, under law merchant, or by reason of normal business practice.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The Commodity Exchange Act, referred to in text, is act Sept. 21, 1922, ch. 369, 42 Stat. 998, which is classified generally to chapter 1 (§ 1 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 1 of Title 7 and Tables. The Federal Deposit Insurance Corporation Improvement Act of 1991, referred to in text, is Pub. L. 102–242, Dec. 19, 1991, 105 Stat. 2236. For complete classification of this Act to the Code, see
Short Title
of 1991 Amendment note set out under section 1811 of Title 12, Banks and Banking, and Tables.
Amendments
2005—Pub. L. 109–8, § 907(o)(10), inserted “or financial participant” after “swap participant” in first sentence. Pub. L. 109–8, § 907(j)(1), in section catchline, substituted “Contractual right to liquidate, terminate, or accelerate a swap agreement” for “Contractual right to terminate a swap agreement”, in first sentence, substituted “liquidation, termination, or acceleration of one or more swap agreements” for “termination of a swap agreement” and “in connection with the termination, liquidation, or acceleration of one or more swap agreements” for “in connection with any swap agreement”, and in second sentence, substituted “As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board thereof and a right,” for “As used in this section, the term ‘contractual right’ includes a right,”.
Statutory Notes and Related Subsidiaries
Effective Date
of 2005 AmendmentAmendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such
Effective Date
, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title.
Reference
Citations & Metadata
Citation
11 U.S.C. § 560
Title 11, Bankruptcy
Last Updated
Aug 21, 2026
Release point: 119-102