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Swaps May Lose Special Bankruptcy Status

In the bankruptcy of a large bank, new protocols would eliminate swaps' exemption from the stay on creditors' collections efforts.

By Jesse Hamilton and Silla Brush | Updated on October 03, 2014

Firms holding swaps contracts with a bank filing for U.S. bankruptcy protection would have to wait at least 24 hours before demanding collateral under new practices that may be adopted by the industry this month.

The revision could make it easier for banks to satisfy government requirements for the “living wills” they must produce to show how they’d unwind their businesses in an orderly fashion if they veered toward collapse.

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