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Conservatorship vs. Receivership vs. Liquidation

Conservatorship is an attempt to save a bank from bankruptcy through management reforms or capital infusion and lasts 1 year. Receivership involves closing a bank without notice if continued operation risks depositor and creditor loss, and lasts 90 days. Liquidation occurs if rehabilitation fails and determines and pays creditor claims, with no time limit.

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Reah Crezz
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42 views1 page

Conservatorship vs. Receivership vs. Liquidation

Conservatorship is an attempt to save a bank from bankruptcy through management reforms or capital infusion and lasts 1 year. Receivership involves closing a bank without notice if continued operation risks depositor and creditor loss, and lasts 90 days. Liquidation occurs if rehabilitation fails and determines and pays creditor claims, with no time limit.

Uploaded by

Reah Crezz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

Definition

Grounds/Instances

Duration

CONSERVATORSHIP
Attempt to save the bank from
bankruptcy and ultimate liquidation;
manner of helping a bank by
effective management reforms and/or
infusion of additional capital
State of inability or unwillingness to
maintain a condition of liquidity
deemed adequate to protect the
interest of its depositors and creditors

1 year, no extensions

RECEIVERSHIP
Summary closure of the bank by the
BSP without prior notice and hearing
after a finding that continuance in
business will involve probable loss to
its depositors and creditors
Upon finding of the MB that:
(1) Unable to pay liabilities
(2) Insufficient realizable assets to
meet liabilities
(3) Cannot continue business without
involving probable loss to depositors
and creditors
(4) Willfully violated cease and desist
order under Section 37 of the NCBA
(5) Announce bank holiday
(6) Unsound and unsafe banking
principles
90 days, no extensions

LIQUIDATION
No hope in rehabilitating the bank.
At this point, it determines and pays
the claims of the banks creditors
Voluntary liquidation under Section
68 of the General Banking Law or
upon finding that bank rehabilitated
and cannot continue business after
the 90 day receivership period

No period specified under the law.


May take some time depending on
the determination and payment of
claims to creditors

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