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Feb 22, 2016

BRRD: Contractual Recognition of Bail-in and Resolution Stays

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The EU Bank Recovery and Resolution Directive gives resolution authorities in Europe wide-ranging powers to manage failing financial institutions. These include powers to write down debts owed to creditors, convert debt to equity or impose temporary stays on termination rights. Cross-border recognition of such powers is built into the European legislative framework. However, there is no international law for the recognition of the exercise of foreign governmental powers. Various legislative measures and regulatory steps have been taken to address this potential impediment to the resolution of a regulated entity, including requiring regulated entities to provide for a clause in non-EU law governed contracts by which their creditors agree to and recognize the bail-in or temporary stay powers of the relevant resolution authority. This memorandum considers the practical and legal implications of bail-in and stay clauses for regulated entities, their contractual counterparties, clients and buy-side participants.

View full memo, BRRD: Bail-in Clauses and Temporary Resolution Stays

Authors and Contributors

Barnabas Reynolds

Partner

Financial Institutions Advisory & Financial Regulatory

+44 20 7655 5528

+44 20 7655 5528

London

Thomas Donegan

Partner

Financial Institutions Advisory & Financial Regulatory

+44 20 7655 5566

+44 20 7655 5566

London

Hervé Letréguilly

Partner

Capital Markets

+33 1 53 89 71 30

+33 1 53 89 71 30

Paris

Tobia Croff

Partner

Capital Markets

+39 02 0064 1509

+39 02 0064 1509

Milan

Kolja Stehl

Counsel

Financial Institutions Advisory & Financial Regulatory

+44 20 7655 5864

+44 20 7655 5864

London

Ellerina Teo

Senior Associate

Financial Institutions Advisory & Financial Regulatory

+44 20 7655 5070

+44 20 7655 5070

London

Oliver Linch

Associate

Financial Institutions Advisory & Financial Regulatory

+44 20 7655 5715

+44 20 7655 5715

London