The reorganization or liquidation of most types of companies is governed in the United States by a single federal law—the US Bankruptcy Code (the “Bankruptcy Code”). As a result, no matter the complexity, the type of company or the industry, the same well-defined set of avoidance powers, priorities and distribution schemes apply.
In contrast, there is no single, uniform federal law governing the restructuring or liquidation of diversified US financial groups. The restructuring or liquidation of such groups can therefore be quite complex and potentially chaotic. The parent holding company and most non-financial subsidiaries are subject to the Bankruptcy Code. FDIC-insured bank or thrift subsidiaries are subject to a specialized regime contained in the Federal Deposit Insurance Act (the “FDIA”) and administered by the Federal Deposit Insurance Corporation (the “FDIC”).