Large complex financial organizations (LCFOs) are exposed to multiple problems when they become
insolvent. They operate in countries with different approaches to bankruptcy and, within the U.S., multiple
insolvency administrators. The special financial instruments that comprise a substantial portion of
LCFO assets are exempted from the usual “time out” that permits the orderly resolution of creditor
claims. This situation is complicated by the opacity of LCFOs’ positions, which may make them difficult
to sell or unwind in times of financial crisis. This article discusses these issues and their origins.