Derivatives in Bankruptcy: Safe Harbors, Dodd-Frank, and the Orderly Liquidation Authority
Recording of a 90-minute CLE webinar with Q&A
This CLE course will discuss the treatment of derivatives in bankruptcy. The panel will discuss the exemptions historically afforded derivatives before the financial crisis, the ramifications of those exemptions as shown in the Lehman and MF Global bankruptcies, and the current framework which exists after Dodd-Frank to address insolvency risks in derivatives products.
Outline
- Historical treatment of derivatives and systemic risk: Lehman and the financial crisis
- How Dodd-Frank addressed insolvency risks associated with derivatives
- Treatment of collateral under Dodd-Frank; segregation and mandatory margining
- Portability of positions and collateral
- Clearing requirements
- OLA's ability to take over and accelerate resolution SIFI assets
- Role of protocols
- Added risks from the Dodd-Frank structure
Benefits
The panel will review these and other key questions:
- What are the special rights that the bankruptcy accords to parties to financial contracts?
- What is the justification for the bankruptcy safe harbors afforded derivatives under the Bankruptcy Code?
- Did these safe harbors contribute to systemic risk to the financial system during the Great Recession?
- How does the current regulatory framework under Dodd-Frank impact the design and enforcement of derivatives contracts?
- What special capabilities are granted to the OLA under Dodd-Frank, and what new risks are presented in the context of the bankruptcy of a counterparty?
Faculty
Gary E. Kalbaugh
Deputy General Counsel and Director
ING Financial Holdings
Mr. Kalbaugh’s practice areas include derivatives and banking law. Previously, he served as executive director,... | Read More
Mr. Kalbaugh’s practice areas include derivatives and banking law. Previously, he served as executive director, counsel and chief U.S. data protection officer at WestLB, chairing WestLB’s global Dodd-Frank and Underwriting Task Forces. Mr. Kalbaugh serves on the New York City Bar Association’s committee on the regulation of futures and derivatives, chairs the CLE sub-committee and is past chair of the over-the-counter derivatives sub-committee. Mr. Kalbaugh is also a member of the New York State Bar Association’s Derivatives and Structured Products Law Committee, a founding board member of the Forum for Global Financial Regulation, and a past board member and officer of the Center for Transactional Legal Studies, the organization responsible for publishing the treatise Regulation of Foreign Banks. He is a frequent speaker and commentator on derivatives and banking law topics, and is the author of the casebook, “Derivatives Law and Regulation.” Mr. Kalbaugh is also a special professor of law at the Maurice A. Deane School of Law at Hofstra University.
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Robert M. McLaughlin
Of Counsel
Fried Frank Harris Shriver & Jacobson
Mr. McLaughlin is a corporate partner resident in Fried Frank’s New York office, where he is a member of the... | Read More
Mr. McLaughlin is a corporate partner resident in Fried Frank’s New York office, where he is a member of the Asset Management and Financial Services Practices. He is head of the Firm’s Derivatives Practice and a leading practitioner in derivative transactions of all types, including futures, over-the-counter derivatives and cleared swaps, as well as related collateral, guarantee, custody and other credit support arrangements. Mr. McLaughlin also maintains a leading practice in repurchase, securities lending and prime brokerage and other types of trading agreements, as well as structured products, synthetic equity and fund-linked investments, credit extensions, loan trading and derivatives claim trading. His clients include hedge funds, private equity funds, investment management firms, investment and commercial banks, mutual funds, individual investors, corporations and government-sponsored entities. Mr. McLaughlin regularly advises market participants on legislative and regulatory developments concerning futures, derivatives, cleared swaps, bankruptcy and insolvency safe harbors, and market structure and facilities.
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Jack J. Rose
Member
Rosenberg & Estis
Mr. Rose leads the firm’s Reorganization & Bankruptcy Department. He has three decades of experience in... | Read More
Mr. Rose leads the firm’s Reorganization & Bankruptcy Department. He has three decades of experience in bankruptcy and distressed situations having been actively involved in many of the nation’s largest bankruptcies, representing landlords, tenants, lenders, financial institutions, domestic and foreign banks, acquirers, investors, debtors and creditors. Mr. Rose’s experience with distressed real estate and real estate-owning entities in bankruptcy includes his representation of Olympia and York and VMS NHP in their chapter 11 bankruptcies. Mr. Rose also has significant experience in international and cross-border insolvencies, restructurings and workouts. He is a frequent author and lecturer on bankruptcy law topics.
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