Dive Brief:
- In the aftermath of recent bank failures, Wolters Kluwer has released a package of tools and strategies corporate counsel can utilize if a bank used by their business collapses.
- The Bank Failures Toolkit from Wolters Kluwer Legal & Regulatory U.S. is available on the company’s Vital Law and Vital Law for Corporate Counsel platforms.
- The toolkit provides checklists regarding due diligence, risk exposure, transitions to a new bank and communications. It also provides a guide to bank failures, as well as a litigation and investigations tracker.
Dive Insight:
The release of Wolters Kluwer’s Bank Failures Toolkit follows the collapses last month of Silicon Valley Bank and Signature Bank, developments that prompted legal teams to take action to help support their companies.
Beyond the publicized bank failures, Wolters Kluwer also pointed to a recent academic study indicating there are 186 other banks that could be at risk if uninsured deposit withdrawals cause even small bank runs.
The Wolters Kluwer toolkit is designed to help companies take proactive steps to minimize and mitigate the potential risks from additional bank collapses, as such failures can complicate business continuity and operations.
For example, the bank failures transition checklist offers recommended action steps if a company needs to move accounts from a closed bank to an FDIC-managed successor bank.
Additionally, the Wolters Kluwer risk exposure checklist is designed to help legal teams identify risk with respect to existing obligations such as payroll, escrow and lines of credit.
“It is essential that corporate and outside legal counsel have measures in place to ensure that the transition of accounts from a failed bank to an FDIC-managed successor bank goes as smoothly as possible and to ensure the least amount of disruption to their own client’s business operations,” said John Pachkowski, senior legal analyst at Wolters Kluwer Legal & Regulatory U.S, in a press release.
Meanwhile, the toolkit’s litigation and investigations tracker aims to help corporate counsel stay up to date on the latest legal and regulatory developments regarding bank failures. There has already been a flurry of such activity in recent weeks.
For example, a proposed class action alleges SVB Financial Group and top executives failed to disclose to investors how rising interest rates would leave Silicon Valley Bank, the firm’s banking unit, “particularly susceptible to a bank run.”
Another investor lawsuit against Signature Bank accuses it and executives of violating federal securities laws by making misleading statements about the company’s business and operations just prior to its collapse.
“Understanding the basis for these claims will be important for all affected parties to determine whether participation in this ongoing litigation is both permitted and warranted,” said the website for the Wolters Kluwer litigation and investigations tracker.
Meanwhile, several different federal authorities have initiated investigations into the causes of the recent bank failures, with the SVB collapse drawing the most scrutiny. The agencies involved include the Department of Justice, the Securities and Exchange Commission and the Federal Reserve.