12 U.S.C. § 5388 — Dismissal and exclusion of other actions

Page 1880 TITLE 12—BANKS AND BANKING § 5386 78aaa et seq.), as if the appointment of the Corporation as receiver had not occurred, and with a filing date as of the date on which the Corporation is appointed as receiver. The Cor- poration shall satisfy customer claims, to the extent that a customer would have received more securities or cash with respect to the al- location of customer property had the covered financial company been subject to a pro- ceeding under the Securities Investor Protec- tion Act (15 U.S.C. 78aaa et seq.) without the appointment of the Corporation as receiver, and with a filing date as of the date on which the Corporation is appointed as receiver. (g) Priorities (1) Customer property As trustee for a covered broker or dealer, SIPC shall allocate customer property and de- liver customer name securities in accordance with section 8(c) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff–2(c)). (2) Other claims All claims other than those described in paragraph (1) (including any unpaid claim by a customer for the allowed net equity claim of such customer from customer property) shall be paid in accordance with the priorities in section 5390(b) of this title. (h) Rulemaking The Commission and the Corporation, after consultation with SIPC, shall jointly issue rules to implement this section. (Pub. L. 111–203, title II, § 205, July 21, 2010, 124 Stat. 1456.) Editorial Notes REFERENCES IN TEXT The Securities Investor Protection Act of 1970, re- ferred to in text, 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 sec- tion 78aaa of Title 15 and Tables. This subchapter, referred to in text, was in the origi- nal ‘‘this title’’, meaning title II of Pub. L. 111–203, July 21, 2010, 124 Stat. 1442, which is classified principally to this subchapter. For complete classification of title II to the Code, see 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. § 5386. Mandatory terms and conditions for all orderly liquidation actions In taking action under this subchapter, the Corporation shall— (1) determine that such action is necessary for purposes of the financial stability of the United States, and not for the purpose of pre- serving the covered financial company; (2) ensure that the shareholders of a covered financial company do not receive payment until after all other claims and the Fund are fully paid; (3) ensure that unsecured creditors bear losses in accordance with the priority of claim provisions in section 5390 of this title; (4) ensure that management responsible for the failed condition of the covered financial company is removed (if such management has not already been removed at the time at which the Corporation is appointed receiver); (5) ensure that the members of the board of directors (or body performing similar func- tions) responsible for the failed condition of the covered financial company are removed, if such members have not already been removed at the time the Corporation is appointed as re- ceiver; and (6) not take an equity interest in or become a shareholder of any covered financial com- pany or any covered subsidiary. (Pub. L. 111–203, title II, § 206, July 21, 2010, 124 Stat. 1459.) Editorial Notes REFERENCES IN TEXT This subchapter, referred to in text, was in the origi- nal ‘‘this title’’, meaning title II of Pub. L. 111–203, July 21, 2010, 124 Stat. 1442, which is classified principally to this subchapter. For complete classification of title II to the Code, see 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. § 5387. Directors not liable for acquiescing in ap- pointment of receiver The members of the board of directors (or body performing similar functions) of a covered financial company shall not be liable to the shareholders or creditors thereof for acquiescing in or consenting in good faith to the appoint- ment of the Corporation as receiver for the cov- ered financial company under section 5383 of this title. (Pub. L. 111–203, title II, § 207, July 21, 2010, 124 Stat. 1459.) 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 (a) In general Effective as of the date of the appointment of the Corporation as receiver for the covered fi- nancial company under section 5382 of this title or the appointment of SIPC as trustee for a cov- ered broker or dealer under section 5385 of this title, as applicable, any case or proceeding com- menced with respect to the covered financial company under the Bankruptcy Code or the Se- curities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) shall be dismissed, upon no- tice to the bankruptcy court (with respect to a Page 1881 TITLE 12—BANKS AND BANKING § 5390 case commenced under the Bankruptcy Code), and upon notice to SIPC (with respect to a cov- ered broker or dealer) and no such case or pro- ceeding 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 fi- nancial company as a result of any case or pro- ceeding 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 bank- ruptcy 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. (Pub. L. 111–203, title II, § 208, July 21, 2010, 124 Stat. 1459.) Editorial Notes REFERENCES IN TEXT The Securities Investor Protection Act of 1970, re- ferred 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. § 5389. Rulemaking; non-conflicting law The Corporation shall, in consultation with the Council, prescribe such rules or regulations as the Corporation considers necessary or appro- priate to implement this subchapter, including rules and regulations with respect to the rights, interests, and priorities of creditors, counterparties, security entitlement holders, or other persons with respect to any covered finan- cial company or any assets or other property of or held by such covered financial company, and address the potential for conflicts of interest be- tween or among individual receiverships estab- lished under this subchapter or under the Fed- eral Deposit Insurance Act [12 U.S.C. 1811 et seq.]. To the extent possible, the Corporation shall seek to harmonize applicable rules and reg- ulations promulgated under this section with the insolvency laws that would otherwise apply to a covered financial company. (Pub. L. 111–203, title II, § 209, July 21, 2010, 124 Stat. 1460.) Editorial Notes REFERENCES IN TEXT This subchapter, referred to in text, was in the origi- nal ‘‘this title’’, meaning title II of Pub. L. 111–203, July 21, 2010, 124 Stat. 1442, which is classified principally to this subchapter. For complete classification of title II to the Code, see Tables. The Federal Deposit Insurance Act, referred to in text, is act Sept. 21, 1950, ch. 967, § 2, 64 Stat. 873, which is classified generally to chapter 16 (§ 1811 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 1811 of this title 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. § 5390. Powers and duties of the Corporation (a) Powers and authorities (1) General powers (A) Successor to covered financial company The Corporation shall, upon appointment as receiver for a covered financial company under this subchapter, succeed to— (i) all rights, titles, powers, and privi- leges of the covered financial company and its assets, and of any stockholder, mem- ber, officer, or director of such company; and (ii) title to the books, records, and assets of any previous receiver or other legal cus- todian of such covered financial company. (B) Operation of the covered financial com- pany during the period of orderly liq- uidation The Corporation, as receiver for a covered financial company, may— (i) take over the assets of and operate the covered financial company with all of the powers of the members or share- holders, the directors, and the officers of the covered financial company, and con- duct all business of the covered financial company; (ii) collect all obligations and money owed to the covered financial company; (iii) perform all functions of the covered financial company, in the name of the cov- ered financial company; (iv) manage the assets and property of the covered financial company, consistent with maximization of the value of the as- sets in the context of the orderly liquida- tion; and (v) provide by contract for assistance in fulfilling any function, activity, action, or duty of the Corporation as receiver. (C) Functions of covered financial company officers, directors, and shareholders The Corporation may provide for the exer- cise of any function by any member or stockholder, director, or officer of any cov- ered financial company for which the Cor- poration has been appointed as receiver under this subchapter.