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2 Conn. Law. 8 (1991-1992)
FDIC's Power to Stay Proceedings, The

handle is hein.barjournals/conlyr0002 and id is 138 raw text is: The FDIC'S POWER to Stay Proceedings by Myles H. Alderman, Jr. To the dismay of most of us, the number of financial institutions under the control of a receiver or conservator for the Federal Deposit Insurance Corporation (FDIC) or the Resolution Trust Corporation (RTC) continues to increase. As the FDIC and RTC replace local banks as the parties in interest in ongoing proceedings, many attorneys are grap- pling with the new challenge of understanding and working with some of the unique powers of those federal agencies. One such power that affects all cases, whether in state or federal courts, is the FDIC's right to stay proceedings pursuant to 12 U.S.C. §1821(d)(12). Section 1821(d)(12) provides that: (A) In General After the appointment of a conservator or receiver for an insured depository institution, the conservator or receiver may request a stay for a period not to exceed (i) 45 days, in the case of any conservator; and (ii) 90 days, in the case of any receiver, in any judicial action or proceeding to which such institution is or becomes a party. (B) Grant of Stay by all Courts Required Upon receipt of a request by any conservator or receiver pursuant to subparagraph (A) for a stay of any judicial action or proceeding in any court with jurisdiction ofsuch action or proceeding, the court shall grant such stay as to all parties. Is this stay mandatory? If it is, to which proceedings does it apply? A. Mandatory or Discretionary Currently there is a split of authority as to whether this stay is mandatory. The majority view, however, is that this stay is not mandatory. One district court in Texas held that the language of §1821(d)(12) is unambiguously mandatory, and that courts must grant the stay whenever it is requested by a conservator or receiver for the FDIC or RTC. Prince George Joint Venture v. Sunbelt Savings, F,.S.B., 744 F. Supp. 133 (N.D. Tex. 1990). The majority of courts, however, have analyzed the legislative histoty and determined that the purpose of §1821(d)(12) is to give a federal receiver, whether FDIC or RTC enough time to orient itself to the litiga- tion. Hunter's Run v. Arapahoo County Public Trustee, 741 F. Supp. 207 R Connecticut Lawyer February 1992

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