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safe harbor, systemic risk, derivatives, bankruptcy, creditors, financial system, path dependence, liquidity risk, default, close-out netting, Bankruptcy Code


This piece is forthcoming in the special symposium issue arising out of the 2014 American Bankruptcy Institute-University of Illinois College of Law academic symposium. U.S. bankruptcy law grants special rights and immunities to creditors in derivatives transactions, including virtually unlimited enforcement rights. This article examines whether exempting those transactions from bankruptcy’s automatic stay, including the stay of foreclosure actions against collateral, is necessary or appropriate in order to minimize systemic risk.