Resolution Planning in the United States

The resolution planning process in the United States is still evolving. A resolution plan is a plan for liquidating, reorganizing, recapitalizing or otherwise resolving a systemically important financial institution (“SIFI”) that has reached the point of insolvency, non-viability or failure. It is different from a recovery plan, which is a set of planned actions designed to prevent a financial institution from becoming insolvent or otherwise failing. Resolution planning is the last stage along the full continuum of contingency planning from risk management to recovery planning to resolution planning that is sometimes referred to as a “living will.”

Section 165(d) under Title I of the Dodd-Frank Wall Street Recovery and Consumer Protection Act (the “Dodd-Frank Act”) requires all bank holding companies and foreign banking organizations with assets of $50 billion or more, as well as any nonbank financial institution that has been designated as systemically important, to prepare and regularly update a resolution plan.

This paper explains the legal requirements implemented in the United States including a detailed analysis of the single-point-of-entry (SPOE) resolution model.