FDIC Law, Regulations, Related Acts
4000 - Advisory Opinions
Compliance with Federal Bankruptcy Trustee's Request to Post Bond for Funds of Debtors' Estates Exceeding $100,000 Coverage
March 25, 1982
William M. Lloyd, Regional Counsel
This is in response to your telephone inquiry of March 24, 1982. As you explained, a federal bankruptcy trustee has required that your bank post a bond for any funds deposited for the benefit of the debtors' estates represented by the trustee, that exceed the $100,000 deposit insurance coverage. Your specific inquiry was whether your bank should comply with the trustee's request.
In general terms, banks are enjoined from guaranteeing or acting as surety for the obligations of third parties. See section 332.1(d) of the FDIC rules and regulations, 12 C.F.R. § 332.1(d) (1981). This regulatory provision, however, is partially superceded by federal bankruptcy law.
Pursuant to the Bankruptcy Code, 11 U.S.C. § 345, a federal bankruptcy trustee has the obligation of requiring a secured bond in favor of the United States for any deposits or investments that are not insured or guaranteed by the United States. Collateral can be of two types: it can be either (1) a corporate surety approved by the bankruptcy court; or (2) securities listed in 6 U.S.C. § 15 (1976) (any security of the United States with a par value equal to the amount of the deposit or investment).
In the case of an FDIC-insured bank, a federal trustee's deposits will be treated as any other custodial account. See section 330.10 of the FDIC rules and regulations, 12 C.F.R. § 330.10 (1981). Generally, each individual interest in a custodial account is insured up to $100,000. To obtain full insurance coverage either the bank or the depositor must maintain accurate records identifying the interest of each individual in the custodial account. It is clear, due to the nature of bankruptcy proceedings, that a bankruptcy trustee will have accurate records identifying each debtor's estate. Thus, each individual debtor represented in the custodial account will be insured up to $100,000. Under section 345 of the Bankruptcy Code, the bank would have to post bond for any amount above the $100,000 insurance coverage available for each debtor represented by the trustee.
We trust this is responsive to your inquiry. If you need further assistance, please do not hesitate to call.