Vol. 30, No. 2, 2006

A Comparison of U.S. Corporate and Bank Insolvency Resolution
Last Updated: 04/27/06

Firms may become financially insolvent. When they do, legal processes are required to efficiently and equitably
resolve the claims of creditors and other stakeholders.
In the U.S., unlike most other countries, two distinct
legal processes exist for resolving the failures or
bankruptcy of commercial banks and most other corporations.
1 Underlying these two regimes are different
assumptions, goals, and strategies for resolution. In
contrast, in most countries, resolution of bank insolvencies
is guided by the general corporate bankruptcy
code, although in some of these countries special
provisions for banks are carved out.