Journal of Legal Research

Journal of Legal Research

Special Resolution Regimes for Insolvent Banks and Financial Institutions: Legal Nature, Institutional Competence, and Judicial Review

Document Type : Original Article

Authors
1 PhD student in private law, Faculty of Law, Gorgan Branch, Islamic Azad University, Gorgan, Iran.
2 Assistant Professor, Department of Law, Shahrood Branch, Islamic Azad University, Shahrood, Iran.
3 Assistant Professor, Department of Law, Payam Noor University, Tehran, Iran
Abstract
In contemporary legal systems, the insolvency and bankruptcy of banks and financial institutions are, in many instances, excluded from the scope of the general rules governing the bankruptcy of merchants, companies, and other legal persons, and are instead subjected to special regulatory regimes. Within these exceptional frameworks, supervisory authorities, deposit insurance institutions, and competent courts play a central role in deciding whether insolvent banks and financial institutions should undergo resolution and restructuring rather than liquidation. The intervention of these authorities is justified by broader concerns relating to public order, financial stability, protection of depositors and other stakeholders, and the preservation of public confidence in the banking system. In the Iranian monetary and banking system, the effectiveness of a bank resolution strategy likewise depends upon granting adequate powers to the Islamic State, the Central Bank acting on its behalf, and the Deposit Guarantee Fund, enabling them to adopt and implement exceptional regulatory measures capable of simultaneously achieving these objectives without necessarily requiring the consent of creditors. Employing a descriptive-analytical methodology and a comparative perspective toward both domestic practice and the manner in which the Iranian government and the Central Bank have responded to recent financial crises, this article examines the legal nature of the bank resolution regime, identifies the competent authorities responsible for its implementation, analyzes the procedures governing its execution, and clarifies the extent to which interested parties may challenge decisions concerning the adoption and implementation of such measures. The article further proposes recommendations aimed at improving the design, enactment, and implementation of an effective bank resolution framework within the Iranian legal system.
Keywords

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