---
kind: "section"
citation: "12 U.S.C. § 5384"
title: "12"
title_heading: "Banks and Banking"
number: "5384"
heading: "Orderly liquidation of covered financial companies"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/5384"
units:
  - "Chapter 53 — Wall Street Reform and Consumer Protection"
  - "Subchapter II — Orderly Liquidation Authority"
---

# §5384. Orderly liquidation of covered financial companies

- (a) **Purpose of orderly liquidation authority—** It is the purpose of this subchapter to provide the necessary authority to liquidate failing [financial companies](/usc/12/5341.md?p=2) that pose a significant risk to the financial stability of the United States in a manner that mitigates such risk and minimizes moral hazard. The authority provided in this subchapter shall be exercised in the manner that best fulfills such purpose, so that—
  - (1) creditors and shareholders will bear the losses of the [financial company](/usc/12/5341.md?p=2);
  - (2) management responsible for the condition of the [financial company](/usc/12/5341.md?p=2) will not be retained; and
  - (3) the [Corporation](/usc/12/5301.md?p=7) and other appropriate agencies will take all steps necessary and appropriate to assure that all parties, [including](/usc/12/5301.md?p=18-A) management, [directors](/usc/12/5341.md?p=1), and third parties, having responsibility for the condition of the [financial company](/usc/12/5341.md?p=2) bear losses consistent with their responsibility, [including](/usc/12/5301.md?p=18-A) actions for damages, restitution, and recoupment of compensation and other gains not compatible with such responsibility.
- (b) **Corporation as receiver—** Upon the appointment of the [Corporation](/usc/12/5301.md?p=7) under [section 5382 of this title](/usc/12/5382.md), the [Corporation](/usc/12/5301.md?p=7) shall act as the receiver for the [covered financial company](/usc/12/5381.md?p=a-8), with all of the rights and obligations set forth in this subchapter.
- (c) **Consultation—** The [Corporation](/usc/12/5301.md?p=7), as receiver—
  - (1) shall consult with the [primary financial regulatory agency](/usc/12/5301.md?p=12) or agencies of the [covered financial company](/usc/12/5381.md?p=a-8) and its [covered subsidiaries](/usc/12/5381.md?p=a-9) for purposes of ensuring an orderly liquidation of the [covered financial company](/usc/12/5381.md?p=a-8);
  - (2) may consult with, or under subsection (a)(1)(B)(v) or (a)(1)(L) of [section 5390 of this title](/usc/12/5390.md), acquire the services of, any outside experts, as appropriate to inform and aid the [Corporation](/usc/12/5301.md?p=7) in the orderly liquidation process;
  - (3) shall consult with the [primary financial regulatory agency](/usc/12/5301.md?p=12) or agencies of any [subsidiaries](/usc/12/5301.md?p=18-A) of the [covered financial company](/usc/12/5381.md?p=a-8) that are not [covered subsidiaries](/usc/12/5381.md?p=a-9), and coordinate with such regulators regarding the treatment of such solvent [subsidiaries](/usc/12/5301.md?p=18-A) and the separate resolution of any such insolvent [subsidiaries](/usc/12/5301.md?p=18-A) under other governmental authority, as appropriate; and
  - (4) shall consult with the [Commission](/usc/12/5301.md?p=5) and the Securities Investor Protection [Corporation](/usc/12/5301.md?p=7) in the case of any [covered financial company](/usc/12/5381.md?p=a-8) for which the [Corporation](/usc/12/5301.md?p=7) has been appointed as receiver that is a broker or dealer registered with the [Commission](/usc/12/5301.md?p=5) under [section 78o(b)](/usc/15/78o.md?p=b) of title 15 and is a member of the Securities Investor Protection [Corporation](/usc/12/5301.md?p=7), for the purpose of determining whether to transfer to a [bridge financial company](/usc/12/5381.md?p=a-3) organized by the [Corporation](/usc/12/5301.md?p=7) as receiver, without consent of any [customer](/usc/12/5381.md?p=a-10), [customer](/usc/12/5381.md?p=a-10) accounts of the [covered financial company](/usc/12/5381.md?p=a-8).
- (d) **Funding for orderly liquidation—** Upon its appointment as receiver for a [covered financial company](/usc/12/5381.md?p=a-8), and thereafter as the [Corporation](/usc/12/5301.md?p=7) may, in its discretion, determine to be necessary or appropriate, the [Corporation](/usc/12/5301.md?p=7) may make available to the receivership, subject to the conditions set forth in [section 5386 of this title](/usc/12/5386.md) and subject to the plan described in [section 5390(n)(9) of this title](/usc/12/5390.md?p=n-9), [funds](/usc/12/5381.md?p=a-12) for the orderly liquidation of the [covered financial company](/usc/12/5381.md?p=a-8). All [funds](/usc/12/5381.md?p=a-12) provided by the [Corporation](/usc/12/5301.md?p=7) under this subsection shall have a priority of [claims](/usc/12/5381.md?p=a-4) under subparagraph (A) or (B) of [section 5390(b)(1) of this title](/usc/12/5390.md?p=b-1), as applicable, [including](/usc/12/5301.md?p=18-A) [funds](/usc/12/5381.md?p=a-12) used for—
  - (1) making loans to, or purchasing any debt obligation of, the [covered financial company](/usc/12/5381.md?p=a-8) or any [covered subsidiary](/usc/12/5381.md?p=a-9);
  - (2) purchasing or guaranteeing against loss the assets of the [covered financial company](/usc/12/5381.md?p=a-8) or any [covered subsidiary](/usc/12/5381.md?p=a-9), directly or through an entity established by the [Corporation](/usc/12/5301.md?p=7) for such purpose;
  - (3) assuming or guaranteeing the obligations of the [covered financial company](/usc/12/5381.md?p=a-8) or any [covered subsidiary](/usc/12/5381.md?p=a-9) to 1 or more third parties;
  - (4) taking a lien on any or all assets of the [covered financial company](/usc/12/5381.md?p=a-8) or any [covered subsidiary](/usc/12/5381.md?p=a-9), [including](/usc/12/5301.md?p=18-A) a first priority lien on all unencumbered assets of the [covered financial company](/usc/12/5381.md?p=a-8) or any [covered subsidiary](/usc/12/5381.md?p=a-9) to secure repayment of any transactions conducted under this subsection, except that, if the [covered financial company](/usc/12/5381.md?p=a-8) or [covered subsidiary](/usc/12/5381.md?p=a-9) is an [insurance company](/usc/12/5381.md?p=a-13) or a [subsidiary](/usc/12/5301.md?p=18-A) of an [insurance company](/usc/12/5381.md?p=a-13), the [Corporation](/usc/12/5301.md?p=7)—
    - (A) shall promptly notify the [State](/usc/12/5301.md?p=16) insurance authority for the [insurance company](/usc/12/5381.md?p=a-13) of the intention to take such lien; and
    - (B) may only take such lien—
      - (i) to secure repayment of [funds](/usc/12/5381.md?p=a-12) made available to such [covered financial company](/usc/12/5381.md?p=a-8) or [covered subsidiary](/usc/12/5381.md?p=a-9); and
      - (ii) if the [Corporation](/usc/12/5301.md?p=7) determines, after consultation with the [State](/usc/12/5301.md?p=16) insurance authority, that such lien will not unduly impede or delay the liquidation or rehabilitation of the [insurance company](/usc/12/5381.md?p=a-13), or the recovery by its policyholders;
  - (5) selling or transferring all, or any part, of such acquired assets, liabilities, or obligations of the [covered financial company](/usc/12/5381.md?p=a-8) or any [covered subsidiary](/usc/12/5381.md?p=a-9); and
  - (6) making payments pursuant to subsections (b)(4), (d)(4), and (h)(5)(E) of [section 5390 of this title](/usc/12/5390.md).

## Source credit

(Pub. L. 111–203, title II, § 204, July 21, 2010, 124 Stat. 1454; Pub. L. 114–113, div. O, title VII, § 706(b)(2), Dec. 18, 2015, 129 Stat. 3029.)

## Notes

### Editorial Notes

### References in Text

This subchapter, referred to in subsecs. (a) and (b), was in the original “this title”, meaning title II of Pub. L. 111–203, July 21, 2010, 124 Stat. 1442, which is classified principally to this subchapter. For complete classification of title II to the Code, see Tables.

### Amendments

2015—Subsec. (d)(4). Pub. L. 114–113 inserted “, except that, if the covered financial company or covered subsidiary is an insurance company or a subsidiary of an insurance company, the Corporation—” and subpars. (A) and (B) before semicolon at end.

### Statutory Notes and Related Subsidiaries

### Effective Date

Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title.