Depositor Protection

Legal Floris LLC

Global asset recoveries apply to investors and creditors who feel wronged by the loss of money incurred by banks and (often unlicensed) investment firms. Even though investor compensation and depositor protection may provide for an initial recurrence to eligible creditors, not all financial institutions and alleged victims can be compensated. Claim filing services by group action can secure the position of creditors and maximize the potential for repayment. However, this only applies to serious wrongdoing, manipulation and other illicit conduct, and when regulatory intervention or financial challenges force the financial intermediary to terminate its activities. Collective civil action is beneficial for creditors who are disqualified for scheme repayment or with outstanding balances that exceed the insured limits.

International bank account holders and investors often use financial facilities in distinct countries. They therefore must address the rules and regulations in several countries. This is not always an easy task and failure to comply with foreign frameworks may trigger difficulties. Even though deposit insurance seems like a guarantee of security for every account holder, this is not always the case. There is a wide variety of easy to fulfil depositor protection schemes and very exclusive compensation programs. Regulatory arbitrage is possible but creditors must appreciate that different jurisdictions programs both have upsides and pitfalls.

In order to stabilize their operations, financial institutions in trouble need to resolve their issues and acquire liquidity. When this does not work out or when the reason for closure is regulatory and institutional, different measures are taken. Supervisors may intervene and place the bank under statutory administration until these challenges are resolved. If this takes too long, the bank eventually changes ownership or is being dissolved. The dissolution process for bank liquidation often leaves creditors with a write down of their account balance. It is therefore for account holders mission critical to pay close attention to all stages of the bank resolution process that include statutory administration, depositor protection and bank liquidation. This is mainly because collective civil action can produce results but is always a lengthy and difficult process.

001 646 513 2855 – USA
00371 678 81974 – Latvia
00357 25 057 544 – Cyprus
00352 20 301970 – Luxembourg

[email protected]
[email protected]
[email protected]
[email protected]

Registered office:
1013 Centre Rd. Suite 403-A
Wilmington, 19805
Delaware – USA

Cyprus office:
Kitiou Kyprianou street 31
3036 Limassol – Cyprus

Postal address:
PO Box 50472
3605 Limassol – Cyprus