Document Type

Article

Publication Date

2015

Keywords

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

Abstract

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.

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Library of Congress Subject Headings

Risk management, Debtor and creditor, Default (Finance), Bankruptcy, United States, Risk assessment, Derivative securities, Public finance

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