Treasury Issues Report on Dodd-Frank Orderly Liquidation Authority: Treasury Issues Report Recommending Adoption of Reforms to Dodd-Frank Orderly Liquidation Authority and a New Chapter 14 of the Bankruptcy Code for Significantly Systemic Financial Companies

Sullivan & Cromwell LLP - February 25, 2018
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On February 21, the U.S. Department of the Treasury issued a comprehensive and thoughtful report recommending the adoption of a number of reforms to the Orderly Liquidation Authority (OLA) established by Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and a new Chapter 14 of the U.S. Bankruptcy Code to address the resolution of systemically significant financial companies.  The Report was issued pursuant to President Trump’s Memorandum to the Secretary of the Treasury, released April 21, 2017, which directed the Treasury to review OLA and provide recommendations for improvement in accordance with the Administration’s Core Principles for Financial Regulation and to determine whether the Bankruptcy Code should be reformed to better enable resolution of financial companies.   Significantly, Treasury recommends retaining OLA, with the reforms it recommends, although Treasury characterizes OLA as “an emergency tool for use under only extraordinary circumstances.”