By Justin Winerman, James Mazza, Van Durrer, Ron Meisler, and Shana Elberg (Skadden, Arps, Slate, Meagher & Flom LLP)
In the wake of the recent banking turmoil and given that there are often operational entanglements (e.g., intercompany agreements and shared services) between a bank and its parent holding company, it is important for bank holding company boards and management, distressed debt investors, including those with potential claims against the parents of failed banks, and regulators to understand the distinct rules and issues in bank holding company bankruptcies. In particular, several provisions in the Bankruptcy Code grant federal regulatory agencies like the FDIC significant advantages relative to other creditors. This article examines some of the unique provisions of the Bankruptcy Code relating to bank holding company bankruptcies.
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