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Economic Perspectives, Vol. 30, 2nd, No. 2, 2006
A Comparison of U.S. Corporate and Bank Insolvency Resolution

Firms may become financially insolvent. When they do, legal processes are required to efficiently and equitably resolve the claims of creditors and other stakeholders. In the U.S., unlike most other countries, two distinct legal processes exist for resolving the failures or bankruptcy of commercial banks and most other corporations. 1 Underlying these two regimes are different assumptions, goals, and strategies for resolution. In contrast, in most countries, resolution of bank insolvencies is guided by the general corporate bankruptcy code, although in some of these countries special provisions for banks are carved out.

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