In the U.S., the insolvency resolution of most corporations is governed by the federal
bankruptcy code and is administered by special bankruptcy courts. Most large corporate
bankruptcies are resolved under Chapter 11 reorganization proceedings. However,
commercial bank insolvencies are governed by the Federal Deposit Insurance Act and are
administered by the FDIC. These two resolution processes.corporate bankruptcy and
bank receiverships.differ in a number of significant ways, including the type of
proceeding (judicial versus administrative); the rights of managers, stockholders and
creditors in the proceedings; the explicit and implicit goals of the resolution; the
prioritization of creditors. claims; the costs of administration; and the timeliness of
creditor payments. These differences derive from perceptions that .banks are special..
This paper elucidates these differences, explores the effectiveness of the procedural
differences in achieving the stated goals, and considers the potential economic
consequences of the different structures.