The Federal Deposit Insurance Corporation (“FDIC”) is proposing significant amendments to its rule requiring covered insured depository institutions (“CIDIs”) to prepare and file resolution plans, indicated by a recent report published by Jones Day.
CIDIs are financial institutions with assets over $50 billion. These institutions are required by law to prepare a “living will” or resolution plan, detailing how they would undergo a rapid and orderly resolution under the Bankruptcy Code in the unfortunate event of their failure.
The amendments proposed by the FDIC signify a fundamental change in the way CIDIs are expected to prepare and file these resolution plans. However, the specific characteristics of these proposed amendments are not clear at this stage.
The legal professionals dealing with CIDIs would need to monitor these proposed changes closely, given their potential impact on their clients. It remains to be seen whether these proposed amendments will create more onerous requirements or unexpected challenges for the CIDIs.
Further details and implications of this proposal will be covered as and when they are available.