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4000 - Advisory Opinions

Insurance Coverage for Deposits Held by a Chapter 13 Bankruptcy Trustee--12 U.S.C. § 345


June 13, 1989

Roger A. Hood, Assistant General Counsel

This is in response to your May 30, 1989 request for clarification of the extent of FDIC insurance of deposits made in an FDIC-insured bank by a chapter 13 bankruptcy trustee pursuant to 11 U.S.C. § 345. You expressed concern over the apparent inconsistency between my recent letter of October 5, 1988 and a 1985 letter authored by Regional Director Charles E. Thacker.

Mr. Thacker's letter properly describes the extent of deposit insurance for agent/nominee and custodial accounts which are governed by FDIC rules and regulations sections, 330.2(b) and (c), respectively. 12 C.F.R. § 330.2(b) and (c). However, it is the FDIC's position that deposits made in FDIC-insured banks by bankruptcy trustees pursuant to 11 U.S.C. § 345 are considered trust accounts and are, therefore, governed by section 330.10 of FDIC rules and regulations. 12 C.F.R. § 330.10. Therefore, such deposits are insurable up to $100,000 as to each bankruptcy estate having an interest in such deposits.

As indicated in my previous letter, this coverage is separate from and additional to that afforded deposits made in the same bank by the trustee in his or her individual capacity, or by any bankruptcy debtor or creditor; and the $100,000 limit for each bankruptcy estate applies whether a separate deposit is established for each estate or the funds of several estates are commingled in the same deposit, provided the deposit account records indicate the existence of the fiduciary relationship(s) and the trustee's records show the interest of each estate in the deposit.

I trust this has been responsive to your inquiry.

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