156 
section 343(b)(1) or 343(c)(2), except in connection 
with the management of the cover pool under section 
343(d)(1)(E). 
(d) OTHER REQUIREMENTS.— 
(1) BOOKS AND RECORDS OF ISSUER.—Each 
issuer of covered bonds shall clearly mark its books 
and records to identify the assets that comprise the 
cover pool securing the covered bonds. 
(2) SCHEDULE OF ELIGIBLE ASSETS AND SUB-
STITUTE
ASSETS.—Each issuer of covered bonds 
shall deliver to the applicable indenture trustee and 
the applicable independent asset monitor, on at least 
a monthly basis, a schedule that identifies all eligible 
assets and substitute assets in the cover pool secur-
ing the covered bonds. 
(3) SINGLE ELIGIBLE ASSET CLASS.—No cover 
pool described in section 341(3)(A) may include eli-
gible assets from more than 1 eligible asset class. No 
cover pool described in section 341(3)(B) may in-
clude covered bonds backed by more than 1 eligible 
asset class. 
SEC. 343. RESOLUTION UPON DEFAULT OR INSOLVENCY. 
(a) UNCURED DEFAULT DEFINED.—For purposes of 
this section, the term ‘‘uncured default’’ means a default 
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157 
on a covered bond that has not been cured within the time, 
if any, specified in the related transaction documents. 
(b) DEFAULT ON COVERED BONDS PRIOR TO CON-
SERVATORSHIP, RECEIVERSHIP, LIQUIDATION, OR BANK-
RUPTCY.— 
(1) CREATION OF SEPARATE ESTATE.—If an 
uncured default occurs on a covered bond before the 
issuer of the covered bond enters conservatorship, 
receivership, liquidation, or bankruptcy, an estate 
shall be immediately and automatically created by 
operation of law and shall exist and be administered 
separate and apart from the issuer or any subse-
quent conservatorship, receivership, liquidating agen-
cy, or estate in bankruptcy for the issuer or any 
other assets of the issuer. A separate estate shall be 
created for each affected covered bond program. 
(2) ASSETS AND LIABILITIES OF ESTATE.—Any 
estate created under paragraph (1) shall be com-
prised 
of 
the 
cover 
pool 
(including 
over- 
collateralization in the cover pool) that secures the 
covered bond. The cover pool shall be immediately 
and automatically released to and held by the estate 
free and clear of any right, title, interest, or claim 
of the issuer or any conservator, receiver, liquidating 
agent, or trustee in bankruptcy for the issuer or any 
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158 
other assets of the issuer. Assets disqualified under 
section 342(c)(1)(D) shall not be released to the es-
tate. The estate shall be fully liable on the covered 
bond and all other covered bonds and related obliga-
tions of the issuer (including obligations under re-
lated derivative transactions) that are secured by a 
perfected security interest in or other perfected lien 
on the cover pool when the estate is created. The es-
tate shall not be liable on any obligation of the 
issuer that is not secured by a perfected security in-
terest in or other perfected lien on the cover pool 
when the estate is created. No conservator, receiver, 
liquidating agent, or trustee in bankruptcy for the 
issuer may charge or assess the estate for any claim 
of the conservator, receiver, liquidating agent, or 
trustee in bankruptcy or the conservatorship, receiv-
ership, liquidating agency, or estate in bankruptcy 
and may not obtain or perfect a security interest in 
or other lien on the cover pool to secure such a 
claim. 
(3) RETENTION OF CLAIMS.—Any holder of a 
covered bond or related obligation for which an es-
tate has become liable under paragraph (2) shall re-
tain a claim against the issuer for any deficiency 
with respect to the covered bond or related obliga-
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159 
tion. If the issuer enters conservatorship, receiver-
ship, liquidation, or bankruptcy, any contingent 
claim for such a deficiency shall be allowed as a 
provable claim in the conservatorship, receivership, 
liquidating agency, or bankruptcy case. The contin-
gent claim shall be estimated by the conservator, re-
ceiver, liquidating agent, or bankruptcy court for 
purposes of allowing the claim as a provable claim 
if awaiting the fixing of the contingent claim would 
unduly delay the resolution of the conservatorship, 
receivership, liquidating agency, or bankruptcy case. 
(4) RESIDUAL INTEREST.— 
(A) ISSUANCE OF RESIDUAL INTEREST.— 
Upon the creation of an estate under paragraph 
(1), a residual interest in the estate shall be im-
mediately and automatically issued by operation 
of law to the issuer. 
(B) NATURE
OF
RESIDUAL
INTEREST.— 
The residual interest under subparagraph (A) 
shall— 
(i) be an exempted security as de-
scribed in section 344; 
(ii) represent the right to any surplus 
from the cover pool after the covered bonds 
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160 
and all other liabilities of the estate have 
been fully and irrevocably paid; and 
(iii) be evidenced by a certificate exe-
cuted by the trustee of the estate. 
(5) OBLIGATIONS OF ISSUER.— 
(A) IN GENERAL.—After the creation of an 
estate under paragraph (1), the issuer shall— 
(i) transfer to or at the direction of 
the trustee for the estate all property of 
the estate that is in the possession or 
under the control of the issuer, including 
all tangible or electronic books, records, 
files, and other documents or materials re-
lating to the assets and liabilities of the es-
tate; and 
(ii) at the election of the trustee or a 
servicer or administrator for the estate, 
continue servicing the applicable cover pool 
for 120 days after the creation of the es-
tate in return for a fair-market-value fee, 
as determined by the trustee in consulta-
tion with the applicable covered bond regu-
lator, that shall be payable from the estate 
as an administrative expense. 
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161 
(B) 
OBLIGATIONS
ABSOLUTE.—Neither 
the issuer, whether acting as debtor in posses-
sion or in any other capacity, nor any conser-
vator, receiver, liquidating agent, or trustee in 
bankruptcy for the issuer or any other assets of 
the issuer may disaffirm, repudiate, or reject 
the obligation to turn over property or to con-
tinue servicing the cover pool as provided in 
subparagraph (A). 
(c) DEFAULT
ON COVERED BONDS UPON CON-
SERVATORSHIP, RECEIVERSHIP, LIQUIDATION, OR BANK-
RUPTCY.— 
(1) CORPORATION
CONSERVATORSHIP
OR
RE-
CEIVERSHIP.— 
(A) IN GENERAL.—If the Corporation is 
appointed as conservator or receiver for an 
issuer of covered bonds before an uncured de-
fault results in the creation of an estate under 
subsection (b), the Corporation as conservator 
or receiver shall have an exclusive right, during 
the 1-year period beginning on the date of the 
appointment, to transfer any cover pool owned 
by the issuer in its entirety, together with all 
covered bonds and related obligations that are 
secured by a perfected security interest in or 
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163 
plicable indenture trustee, and the applica-
ble covered bondholders of a written notice 
from the Corporation as conservator or re-
ceiver electing to cease further perform-
ance under the applicable covered bond 
program. 
(C) ASSUMPTION BY TRANSFEREE.—If the 
Corporation as conservator or receiver transfers 
a covered bond program to another eligible 
issuer within the 1-year period as provided in 
subparagraph (A), the transferee shall take 
ownership of the applicable cover pool and shall 
become fully liable on all covered bonds and re-
lated obligations of the issuer that are secured 
by a perfected security interest in or other per-
fected lien on the cover pool. 
(2) OTHER CIRCUMSTANCES.—An estate shall 
be immediately and automatically created by oper-
ation of law and shall exist and be administered sep-
arate and apart from an issuer of covered bonds and 
any conservatorship, receivership, liquidating agency, 
or estate in bankruptcy for the issuer or any other 
assets of the issuer, if— 
(A) a conservator, receiver, liquidating 
agent, or trustee in bankruptcy, other than the 
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164 
Corporation, is appointed for the issuer before 
an uncured default results in the creation of an 
estate under subsection (b); or 
(B) in the case of the appointment of the 
Corporation as conservator or receiver as de-
scribed in paragraph (1)(A), the Corporation as 
conservator or receiver— 
(i) does not complete the transfer of 
the applicable covered bond program to an-
other eligible issuer within the 1-year pe-
riod as provided in paragraph (1)(A); 
(ii) delivers to the Secretary, the ap-
plicable covered bond regulator, the appli-
cable indenture trustee, and the applicable 
covered bondholders a written notice elect-
ing to cease further performance under the 
applicable covered bond program; or 
(iii) fails to fully and timely satisfy all 
monetary and nonmonetary obligations of 
the issuer under the covered bonds and the 
related transaction documents or to fully 
and timely cure all defaults by the issuer 
(other than its conservatorship or receiver-
ship) under the applicable covered bond 
program. 
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165 
A separate estate shall be created for each affected 
covered bond program. 
(3) ASSETS AND LIABILITIES OF ESTATE.—Any 
estate created under paragraph (2) shall be com-
prised 
of 
the 
cover 
pool 
(including 
over- 
collateralization in the cover pool) that secures the 
covered bonds. The cover pool shall be immediately 
and automatically released to and held by the estate 
free and clear of any right, title, interest, or claim 
of the issuer or any conservator, receiver, liquidating 
agent, or trustee in bankruptcy for the issuer or any 
other assets of the issuer. The estate shall be fully 
liable on the covered bonds and all other covered 
bonds and related obligations of the issuer (including 
obligations under related derivative transactions) 
that are secured by a perfected security interest in 
or other perfected lien on the cover pool when the 
estate is created. The estate shall not be liable on 
any obligation of the issuer that is not secured by 
a perfected security interest in or other perfected 
lien on the cover pool when the estate is created. No 
conservator, receiver, liquidating agent, or trustee in 
bankruptcy for the issuer may charge or assess the 
estate for any claim of the conservator, receiver, liq-
uidating agent, or trustee in bankruptcy or the con-
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166 
servatorship, receivership, liquidating agency, or es-
tate in bankruptcy and may not obtain or perfect a 
security interest in or other lien on the cover pool 
to secure such a claim. 
(4) CONTINGENT CLAIM.—Any contingent claim 
against an issuer for a deficiency with respect to a 
covered bond or related obligation for which an es-
tate has become liable under paragraph (3) shall be 
allowed as a provable claim in the conservatorship, 
receivership, liquidating agency, or bankruptcy case 
for the issuer. The contingent claim shall be esti-
mated by the conservator, receiver, liquidating 
agent, or bankruptcy court for purposes of allowing 
the claim as a provable claim if awaiting the fixing 
of the contingent claim would unduly delay the reso-
lution of the conservatorship, receivership, liqui-
dating agency, or bankruptcy case. 
(5) RESIDUAL INTEREST.— 
(A) ISSUANCE OF RESIDUAL INTEREST.— 
Upon the creation of an estate under paragraph 
(2), and regardless of whether any contingent 
claim described in paragraph (4) becomes fixed 
or is estimated, a residual interest in the estate 
shall be immediately and automatically issued 
by operation of law to the conservator, receiver, 
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167 
liquidating agent, or trustee in bankruptcy for 
the issuer. 
(B) NATURE
OF
RESIDUAL
INTEREST.— 
The residual interest under subparagraph (A) 
shall— 
(i) be an exempted security as de-
scribed in section 344; 
(ii) represent the right to any surplus 
from the cover pool after the covered bonds 
and all other liabilities of the estate have 
been fully and irrevocably paid; and 
(iii) be evidenced by a certificate exe-
cuted by the trustee of the estate. 
(6) OBLIGATIONS OF ISSUER.— 
(A) IN GENERAL.—After the creation of an 
estate under paragraph (2), the issuer and its 
conservator, receiver, liquidating agent, or 
trustee in bankruptcy shall— 
(i) transfer to or at the direction of 
the trustee for the estate all property of 
the estate that is in the possession or 
under the control of the issuer or its con-
servator, receiver, liquidating agent, or 
trustee in bankruptcy, including all tan-
gible or electronic books, records, files, and 
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168 
other documents or materials relating to 
the assets and liabilities of the estate; and 
(ii) at the election of the trustee or a 
servicer or administrator for the estate, 
continue servicing the applicable cover pool 
for 120 days after the creation of the es-
tate in return for a fair-market-value fee, 
as determined by the trustee in consulta-
tion with the applicable covered bond regu-
lator, that shall be payable from the estate 
as an administrative expense. 
(B) 
OBLIGATIONS
ABSOLUTE.—Neither 
the issuer, whether acting as debtor in posses-
sion or in any other capacity, nor any conser-
vator, receiver, liquidating agent, or trustee in 
bankruptcy for the issuer or any other assets of 
the issuer may disaffirm, repudiate, or reject 
the obligation to turn over property or to con-
tinue servicing the cover pool as provided in 
subparagraph (A). 
(d) ADMINISTRATION
AND RESOLUTION
OF ES-
TATES.— 
(1) 
TRUSTEE, 
SERVICER, 
AND
ADMINIS-
TRATOR.— 
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