In its continued effort to implement its authority to resolve "covered financial companies" under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), on March 15, 2011, the Board of Directors of the Federal Depository Insurance Corporation (the "FDIC") approved the Notice of Proposed Rulemaking Implementing Certain Orderly Liquidation Authority Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Proposed Rules"). For a detailed discussion of Title II, see the White & Case Client Alert titled Orderly Liquidation Authority, dated July 2010. The Proposed Rules build on the FDIC's interim final rule published on January 25, 2011 and provide guidance with respect to other provisions of Title II.
The Proposed Rules consist of the regulation itself along with the FDIC's commentary thereto, and are intended to address the following broad areas: (i) what constitutes a "financial company" subject to resolution under Title II by establishing criteria for determining whether a company is "predominately engaged in activities that are financial in nature or incidental thereto;" (ii) recoupment of compensation from senior executives and directors in limited circumstances; (iii) application of the FDIC's power to avoid fraudulent or preferential transfers in a Title II receivership; (iv) the priority of expenses and unsecured claims; and (v) the administrative process for initial determination of claims and the process for judicial determination of claims disallowed by the FDIC, as receiver. The FDIC is soliciting written comments, due no later than May 22, 2011, to specific questions posed by the FDIC and all aspects of the Proposed Rules.
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