Check a swap or master-netting close-out on a bankruptcy filing
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- The tool lists the contract type the lawyer names, the close-out trigger, and whether the party is described as a swap participant, a financial participant, or a master-netting-agreement participant. It does not decide that the contract is a swap agreement or that the clause is effective.
- What the lawyer must review
- 11 U.S.C. §§ 560, 561, and 362(b)(17) and (b)(27). Section 560 provides that the exercise of a contractual right of any swap participant or financial participant to cause the liquidation, termination, or acceleration of one or more swap agreements because of a condition of the kind specified in section 365(e)(1), or to offset or net out termination values or payment amounts arising under that liquidation, termination, or acceleration, shall not be stayed, avoided, or otherwise limited by the Bankruptcy Code or by order of a court or administrative agency. Section 561(a), subject to subsection (b), states a parallel rule for a contractual right to terminate, liquidate, accelerate, or offset under one or more master netting agreements and the contracts they cover. Section 561(b)(1) limits that exercise to the extent the party could exercise such a right under section 555, 556, 559, or 560 for each individual contract. Section 561(b)(2) limits netting where the debtor is a commodity broker. Section 362(b)(17) excepts the exercise by a swap participant or financial participant of the contractual rights described in that paragraph. Section 362(b)(27) excepts the exercise by a master-netting-agreement participant to the extent the participant is eligible to exercise such rights under paragraph (6), (7), or (17) for each contract covered by the master netting agreement. The opened text also states that the exercise of rights not subject to the stay under paragraph (6), (7), (17), or (27) of subsection (b) shall not be stayed by any order of a court or administrative agency. The lawyer decides whether a safe harbor applies.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Potential support includes preparing preliminary structure or wording. Confirm the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Trace every relied-on figure to its source, confirm dates and assumptions, and independently recalculate totals or derived amounts.
- Check the current court or regulator requirements, prescribed form and attachments for the intended document and filing.
- Review operative clauses in the complete document, including definitions, cross-references, schedules and inconsistencies with the instructions.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.