12 U.S.C. § 5388: Dismissal and exclusion of…

Summary

When the Corporation is named receiver under section 5382 or SIPC is named trustee under section 5385, any bankruptcy case under the Bankruptcy Code or any case under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) about that covered financial company must be dismissed after giving notice to the bankruptcy court (for Bankruptcy Code cases) or to SIPC (for covered brokers or dealers). No new such case can be started while the orderly liquidation is ongoing. Effective on the appointment date of the Corporation as receiver, assets that moved to anyone else because of a Bankruptcy Code, SIPA, or similar state liquidation case must be returned to the covered financial company. However, any bankruptcy court order or other relief given before the appointment stays valid and keeps the same effect.

Title 12, §5388

Banks and Banking, Source: USLM XML via OLRC

(a)In general

Effective as of the date of the appointment of the Corporation as receiver for the covered financial company under section 5382 of this title or the appointment of SIPC as trustee for a covered broker or dealer under section 5385 of this title, as applicable, any case or proceeding commenced with respect to the covered financial company under the Bankruptcy Code or the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) shall be dismissed, upon notice to the bankruptcy court (with respect to a case commenced under the Bankruptcy Code), and upon notice to SIPC (with respect to a covered broker or dealer) and no such case or proceeding may be commenced with respect to a covered financial company at any time while the orderly liquidation is pending.

(b)Revesting of assets

Effective as of the date of appointment of the Corporation as receiver, the assets of a covered financial company shall, to the extent they have vested in any entity other than the covered financial company as a result of any case or proceeding commenced with respect to the covered financial company under the Bankruptcy Code, the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.), or any similar provision of State liquidation or insolvency law applicable to the covered financial company, revest in the covered financial company.

(c)Limitation

Notwithstanding subsections (a) and (b), any order entered or other relief granted by a bankruptcy court prior to the date of appointment of the Corporation as receiver shall continue with the same validity as if an orderly liquidation had not been commenced.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Securities Investor Protection Act of 1970, referred to in subsecs. (a) and (b), is Pub. L. 91–598, Dec. 30, 1970, 84 Stat. 1636, which is classified generally to chapter 2B–1 (§ 78aaa et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 78aaa of Title 15 and Tables.

Statutory Notes and Related Subsidiaries

Effective Date

Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title.

§5388 Dismissal and Exclusion of Other Actions