§5388 — Title 12 Banks and Banking | U.S. Code

Summary

When the Corporation is made receiver for a covered financial company under section 5382, or when SIPC is made trustee for a covered broker or dealer under section 5385, any bankruptcy case or any case under the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) about that company must be dismissed. The receiver or SIPC must give notice to the bankruptcy court or to SIPC, and no new bankruptcy or SIPA case can be started while the orderly liquidation is ongoing. As soon as the Corporation becomes receiver, assets that had moved to anyone else because of a bankruptcy, SIPA case, or similar state liquidation law must be returned to the covered financial company. Any bankruptcy court orders or relief entered before the receiver was appointed remain valid.

Title 12, §5388

Banks and Banking — Source: USLM XML via OLRC

(a)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)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)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