The frictions between Bank Resolution and Insolvency Law

40 Pages Posted: 15 Mar 2024 Last revised: 16 May 2024

Date Written: March 15, 2024

Abstract

This article highlights and summarizes the main frictions between Bank Resolution and general Insolvency Law, which are rooted in the different objectives of each legal framework and the different interests that they aim to protect. Paradoxically, despite these frictions, resolution authorities in the EU must apply the national Insolvency Law, which is still not harmonized at European level. And they must do so not only in the event of resolution but also in ex-post and ex-ante situations, with respect to key issues that are either incompletely or too broadly regulated under the BRRD (grounds for resolution, creditors’ protection and creditor hierarchy). In the absence of specific rules, this article aims to shed light on the main interpretative tensions between the rules that are applicable in resolution and the corresponding rules of insolvency.

Keywords: Bank Resolution, Insolvency Law, harmonization, creditors’ protection, creditors’ hierarchy, the Best Interest creditors test, No creditor worse-off

JEL Classification: K23; K30

Suggested Citation

Pulgar Ezquerra, Juana, The frictions between Bank Resolution and Insolvency Law (March 15, 2024). European Banking Institute Working Paper Series no. 167, Available at SSRN: https://ssrn.com/abstract=4759966 or http://dx.doi.org/10.2139/ssrn.4759966

Juana Pulgar Ezquerra (Contact Author)

Universidad Complutense de Madrid (UCM) ( email )

Carretera de Humera s/n
Madrid, Madrid 28223
Spain

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