NY Banking L § 618-A (2021)
2021 New York Laws BNK - Banking Article 13 - Merger; Voluntary Dissolution; Superintendent's Taking Possession; Reorganization; Liquidation 618-A - Repudiation of Contracts.

§ 618-a. Repudiation of contracts.  1. Except as otherwise provided in this  section,  when  the  superintendent  has  taken  possession of the business and property in this state of a  banking  organization,  unless the federal regulator or insurer is appointed as receiver or liquidator, the  superintendent  may  assume or repudiate any contract, including an unexpired lease, of the banking organization: (a) to which such  banking organization   is   a   party,   (b)   the   performance  of  which  the superintendent, in the superintendent's  discretion,  determines  to  be burdensome,   and  (c)  the  repudiation  of  which  the  superintendent determines, in the superintendent's discretion, will promote the orderly administration  of  the  banking  organization's  affairs.   After   the expiration  of  ninety  days from the date that the superintendent takes possession of the banking organization, any party to a contract with the banking organization being liquidated may demand  in  writing  that  the superintendent  assume or repudiate such contract. If the superintendent has not assumed or repudiated the contract within fifteen calendar  days from  the  date  of  receipt  of  the  demand by the superintendent, the affected party may bring an action in the supreme court in the  judicial district  in  which  the principal office of the banking organization is located to obtain  an  order  requiring  the  superintendent  to  decide whether to assume or repudiate that contract.  If the superintendent has not  assumed  or repudiated a contract by one month before the last date for filing claims against  the  banking  organization  being  liquidated pursuant  to  section  six hundred twenty of this article, such contract shall be deemed repudiated. Notwithstanding the foregoing, with  respect to an unexpired lease of the banking organization for the rental of real property  under  which  the  banking  organization  was a lessee, if the superintendent   remains   in   possession   of   the   leasehold,   the superintendent  shall  not be required to assume or repudiate such lease and may continue in possession of such leasehold for  the  remainder  of the  term  of  the  lease  in  accordance  with  the terms of the lease; provided, however, that should the superintendent  later  repudiate  the lease  before the end of the lease term, any amounts that may be due the lessor due to such repudiation shall  be  calculated  according  to  the provisions  of  paragraph  (a)  of  subdivision  three  of this section. Notwithstanding any other provision contained in  this  subdivision,  in liquidating  a  branch  or  agency of a foreign banking corporation, the superintendent shall not assume or  repudiate  any  qualified  financial contract  that  the  branch or agency entered into which is subject to a multi-branch netting agreement or arrangement that provides for  netting present or future payment obligations or payment entitlements (including termination   or   close-out  values  relating  to  the  obligations  or entitlements) among  the  parties  to  the  contract  and  agreement  or arrangement  and  the  superintendent shall not be required to assume or repudiate any other qualified financial  contract  that  the  branch  or agency entered into; provided, however, that upon any repudiation of any qualified  financial  contract  or the termination or liquidation of any qualified financial contract in accordance with its terms, the liability of the superintendent under such qualified financial contract  shall  be determined in accordance with subdivision two of this section.   2.  (a)  Except  as  otherwise  provided  in  this  section,  upon the repudiation or termination of any contract pursuant to  subdivision  one of this section, the liability of the superintendent shall be limited to the  actual  direct compensatory damages of the parties to the contract, determined as of the date the  superintendent  took  possession  of  the banking  organization.  The  superintendent  shall not be liable for any future wages other than severance payments (to the extent such  payments are reasonable), or for payments for future services, costs of cover, or  any  consequential,  punitive  or  exemplary  damages,  damages for lost profits or lost opportunity or damages for pain and suffering.  (b) Except as otherwise provided in this section, the liability of the superintendent upon the repudiation of any qualified financial contract, or  in  connection  with the termination or liquidation of any qualified financial contract in  accordance  with  the  terms  thereof,  shall  be limited  as  provided  in paragraph (a) of this subdivision, except that compensatory damages shall be deemed to include  normal  and  reasonable costs  of  cover  or other reasonable measures of damages utilized among participants in the market  for  qualified  financial  contract  claims, calculated  as of the date of repudiation or the date of the termination of such qualified financial contract in accordance with its terms.  Upon the  repudiation  of  any  qualified financial contract or in connection with the termination or liquidation of any qualified financial  contract in  accordance  with  the  terms thereof, if the superintendent shall be entitled to damages, such damages shall be paid over by the party to the superintendent upon  written  demand  pursuant  to  subdivision  two  of section  six  hundred  fifteen  of  this  article,  notwithstanding  any provision in any such contract that purports to effect a  forfeiture  of such damages.  (c)  In the case of the liquidation of a branch or agency of a foreign banking corporation by the superintendent,  with  respect  to  qualified financial  contracts  subject to netting agreements or arrangements that provide for netting present or future  payment  obligations  or  payment entitlements  (including termination or close-out values relating to the obligations or entitlements) among the  parties  to  the  contracts  and agreements  or  arrangements, the liability of the superintendent to any party to any such qualified financial contract upon  repudiation  or  in connection  with  the  termination  or  liquidation  of  such  qualified financial contract in  accordance  with  the  terms  thereof,  shall  be calculated  as of the date of repudiation or the date of the termination of such qualified financial contract in accordance with  its  terms  and shall  be limited to the lesser of (i) the global net payment obligation and (ii) the branch/agency net payment obligation. The liability of  the superintendent  under  this  paragraph  shall  be  reduced by any amount otherwise paid to or received by the party in respect of the global  net payment  obligation  pursuant to such qualified financial contract which if added to the liability of the  superintendent  under  this  paragraph would  exceed  the  global  net payment obligation. The liability of the superintendent under this paragraph to a party to a qualified  financial contract also shall be reduced by the fair market value or the amount of any  proceeds of collateral that secures and has been applied to satisfy the obligations of the foreign  banking  corporation  pursuant  to  such qualified  financial  contract  to  the party. In the event that netting under the applicable netting  agreement  or  arrangement  results  in  a branch/agency  net payment entitlement, notwithstanding any provision in any  such  contract  that  purports  to  effect  a  forfeiture  of  such entitlement,  the  superintendent may make written demand upon the party to such contract under subdivision two of section six hundred fifteen of this article for an amount not to exceed the lesser of  (x)  the  global net   payment   entitlement   and  (y)  the  branch/agency  net  payment entitlement. The liability of the party under this  paragraph  shall  be reduced   by   any   amount   otherwise  paid  to  or  received  by  the superintendent or any  other  liquidator  or  receiver  of  the  foreign banking  corporation  in  respect  of the global net payment entitlement pursuant to such qualified financial contract  which  if  added  to  the liability  of the party under this paragraph would exceed the global net payment entitlement. The liability of the party under this paragraph  to  the  superintendent  pursuant  to such qualified financial contract also shall be reduced by the fair market value or the amount of any  proceeds of  collateral  that  secures  and  has  been  applied  to  satisfy  the obligations  of  the party pursuant to such qualified financial contract to the foreign banking corporation.  (d) A party to a qualified financial contract with a  foreign  banking corporation,  the  branch  or  agency  of  which  the  superintendent is liquidating,  which  party  has  a  perfected   security   interest   in collateral,  or  other  valid  lien  or  security interest in collateral enforceable against third parties pursuant  to  a  security  arrangement related  to  such  qualified  financial  contract,  may  retain all such collateral and upon repudiation of that qualified financial contract, or in connection with the termination  or  liquidation  of  that  qualified financial  contract  in  accordance  with  its terms thereof, apply such collateral in satisfaction of any  claims  secured  by  the  collateral, provided  that  the  total  amount so applied to such claims shall in no event exceed the global net payment obligation, if any.  (e) The  following  terms  shall  have  the  following  meanings:  (i) "qualified  financial contract" means any securities contract, commodity contract,  forward  contract  (including  spot   and   forward   foreign exchange),   repurchase  agreement,  swap  agreement,  and  any  similar agreement, any option to enter into any such  agreement,  including  any combination  of  the  foregoing,  and  any  master  agreement  for  such agreements  (such  master  agreement,  together  with  all   supplements thereto, shall be treated as one qualified financial contract), provided that  such  contract,  option or agreement, or combination of contracts, options or agreements is reflected in the books, accounts or records  of the  banking  organization  or  a party provides documentary evidence of such agreement; the superintendent may define by  regulation  securities contract, commodity contract, forward contract, repurchase agreement and swap  agreement,  and  may  by  regulation  or order determine any other agreement to be a qualified financial  contract  for  purposes  of  this paragraph;  (ii)  "global  net  payment obligation" means the amount, if any, owed by a foreign banking corporation as a whole to a  party  after giving  effect  to  the  netting  provisions  of  a  qualified financial contract with respect to all transactions subject to netting under  such qualified  financial  contract;  (iii)  "global net payment entitlement" means the amount, if any, owed by a party (or that would be owed if  the relevant   agreements  provided  for  payments  to  either  party,  upon termination thereof under  any  and  all  circumstances)  to  a  foreign banking  corporation  as  a  whole  after  giving  effect to the netting provisions of  a  qualified  financial  contract  with  respect  to  all transactions subject to netting under such qualified financial contract; (iv)  "branch/agency  net  payment  obligation"  means with respect to a qualified financial contact the amount, if any,  that  would  have  been owed  by  the  foreign banking corporation to a party after netting only those transactions entered into by the branch or agency and  such  party under  such  qualified  financial  contract;  and (v) "branch/agency net payment  entitlement"  means  with  respect  to  a  qualified  financial contract the amount, if any, that would have been owed by a party to the foreign  banking  corporation  after  netting  only  those  transactions entered into by the branch or agency and such party under such qualified financial contract. The superintendent shall have authority to prescribe such regulations relating to qualified financial contracts  and  netting thereof as the superintendent shall deem appropriate.   3.  (a)  If  the  superintendent  repudiates  a  lease  of the banking organization for the rental of real or personal property under which the banking organization was a lessee, the lessor under such lease shall  be  entitled  to  file  a claim with the superintendent for whichever is the least amount  of:  (i)  the  amount  designated  as  liquidated  damages contained  in  the  agreement  between  the banking organization and the lessor,  (ii)  an amount equal to one year's rent under the terms of the repudiated lease, or (iii) an amount equal to the rent for the remaining term of the lease.  (b)  If  the  superintendent  repudiates  a  lease  of   the   banking organization  for  the  rental  of real property under which the banking organization was a lessor, and the lessee was not in default at the time of repudiation, the lessee under such repudiated lease  may  either  (i) treat  the  lease  as  terminated  by  such  repudiation  and vacate the premises, or (ii) remain in possession of the leasehold interest for the balance of the term of the lease, and for any renewal  or  extension  of such   term   that  is  enforceable  by  such  lessee  under  applicable non-insolvency law, unless the lessee defaults under the  terms  of  the lease  after  the  date  of  such  repudiation. If the lessee remains in possession of the leasehold interest, the lessee shall continue  to  pay to  the superintendent the contractual rent pursuant to the terms of the lease after the date of the repudiation of such lease,  and  may  offset against  such  rent  payment  any  damages  which  may accrue due to the nonperformance of any obligation of the banking organization  under  the lease  after  the  date  of repudiation. The superintendent shall not be liable to the lessee for any damages arising after such date as a result of the repudiation other than the amount of  any  offset  allowed  under this   subdivision.   Nothing   stated   herein   shall   prohibit   the superintendent from entering into a new contract with the lessee for the rental of the leasehold which was the subject of the repudiated lease.   4. Except as otherwise provided, notwithstanding any provision  in  an unexpired  lease  or other contract, or in applicable law, a contract or unexpired lease of the banking organization may  not  be  terminated  or modified  by  any  party  other  than  the  superintendent  without  the concurrence of the superintendent, and any  right  or  obligation  under such  contract  or  lease may not be terminated or modified, at any time after the superintendent's taking of possession, solely  pursuant  to  a provision  in  such  contract  or  lease  that  is  conditioned  on  the superintendent's taking of  possession,  or  the  insolvency,  financial condition or liquidation of the banking organization.   5.  Nothing  in  this  section  shall affect the right of a party to a contract of a foreign banking corporation to seek  performance  of  such contract  or  damages  thereon  in  any  other  jurisdiction,  provided, however, that the superintendent shall not be liable for the performance of such contract or damages thereon in any other jurisdiction.   6. The rights granted herein are  in  addition  to  any  other  rights available to the superintendent under common law or any other law.