§561 Contractual Right to Terminate, Liquidate, Accelerate, or Offset Under a Master Netting Agreement and Across Contracts; Proceedings Under Chapter 15

Summary

Lets people use contract terms to end, settle, speed up, or offset payments and values under certain financial deals. That includes securities, commodity, forward, repurchase, swap, and master netting agreements. Those contract rights generally cannot be stopped, undone, or limited by bankruptcy rules or court orders. You can only exercise them as far as other bankruptcy rules allow for each individual contract. Special rules apply if the bankrupt party is a commodity broker. In that case, you usually cannot net or offset obligations from contracts traded on regulated contract markets or registered derivatives facilities against other claims unless you have positive net equity in the debtor’s commodity accounts. Other commodity brokers also may not net customer-related contracts of the debtor against other claims. Approved cross‑margining or other CFTC‑approved netting arrangements are allowed. “Contractual right” covers rights written in rules or bylaws of clearinghouses, exchanges, and similar bodies, and rights under common law or normal business practice. These rules also apply in cross‑border bankruptcy cases and are limited the same way as in bankruptcy under chapter 7 or 11.