On October 16, the FDIC published a final rule regarding the enforcement of subsidiary and affiliate contracts by the FDIC as receiver for failed financial companies. The rule implements authority granted to the FDIC by the Dodd-Frank Act that permits the FDIC, as receiver for a financial company whose failure would pose a significant risk to financial stability, to enforce certain contracts of subsidiaries and affiliates of the covered company. The rule covers contracts that purport to terminate, accelerate, or provide for other remedies based on the insolvency, financial condition, or receivership of the covered company, so long as the FDIC complies with statutory requirements. The rule takes effect November 15, 2012, applies broadly to all contracts, and makes clear that the FDIC’s authority as receiver effectively preserves contractual relationships of subsidiaries and affiliates during the liquidation process. In response to industry comments, the final rule clarifies certain aspects of the rule as proposed.
