IBA Compliance Connection

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We received a call from a potential customer who said that we are on the list of authorized institutions for holding debtor-in-possession (DIP) accounts. Where can we find the list to confirm? If we are indeed on the list, are we obligated to open this account? We would prefer not to.

Jun 26, 2017

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The list of authorized depositories for southern and central Illinois is available only on request. We obtained the list by calling the local U.S. Bankruptcy Trustee’s office number, which is (317) 226-6101. The list of authorized depositories for northern Illinois is available online at this URL: https://www.justice.gov/ust-regions-r11/file/chicago_authorized_depositories.pdf/download.

We do not believe that a bank would be obligated to open a DIP account merely because the bank appears on the list of authorized depositories. We are not aware if any provisions in the Bankruptcy Code or the related rules and operating guidelines that would impose such an obligation. In fact, the Region 10 list that we obtained includes a note stating that “not all depositories on this list will service all debtors . . . please confirm with the depository that it will service your account . . . .” Also, the sample agreements for authorized depositories provided by the Department of Justice (DOJ) do not obligate depositories to open DIP accounts (we recommend confirming by checking your bank’s signed depository agreement, which might differ from the DOJ’s sample agreements).

Additionally, the DOJ’s sample agreements permit authorized depositories to terminate the agreement by providing written notice of termination, which should result in your bank’s removal from the list (but again, we recommend checking your bank’s signed depository agreement to confirm this point).

For resources related to our guidance, please see:

Region 10 Authorized Bank List (Feb. 2017) (“NOTE: Not all Depositories on this list will service all debtors or locations; prior to opening a new Debtor-in-Possession account, please confirm with the depository that it will service your account as a Debtor-in-Possession account.”)

U.S. Department of Justice, U.S. Trustee Program Policy and Practices Manual, Banking and Bonding, Section 7-1.2, printed page 2 (“AUTHORIZED DEPOSITORIES. The United States Trustee must establish within each district a list of authorized depository institutions that have signed the Uniform Depository Agreement. Depositories approved in one district are not automatically approved in another district.”)

U.S. Trustee Program, Uniform Depository Agreement Form for Debtor in Possession Accounts (“10. This Agreement may be terminated by either party upon thirty days’ written notice of cancellation to the other party.”)

U.S. Trustee Program, Uniform Depository Agreement Form for Trustee and Debtor in Possession Accounts (“20. This Agreement may be terminated by either party upon thirty (30) days’ written notice of cancellation to the other party.”)