XIII Taking Control of a Bank Under General or Special Insolvency Law


When viewed from a legal vantage point, the law of insolvency of banks is extraordinarily complex. General insolvency law—including both bankruptcy law and the law of reorganization by composition—is one of the most demanding fields of the law and this extends to the treatment of insolvent banks. In addition, whereas in many countries the general insolvency law is content to balance only three sets of competing interests, namely, the interests of creditors, owners, and employees, the law of bank insolvency addresses these and one more, namely, the interests of the public in a sound banking system, represented by the bank regulator. Subject to some important exceptions discussed below, the law governing the bankruptcy of banks is generally the same in a material sense as the general insolvency law that governs other enterprises. Therefore, a general reference is made to the extensive analysis of general insolvency law in the Insolvency Report of the Legal Department of the IMF; no attempt will be made to go over the same ground or to repeat its conclusions here.