(a) The Board may issue an
internal debt conversion order if:
(1) The Board has determined that the covered
IHC is in default or danger of default; and
(2) Any of the following circumstances
apply:
(i) A foreign banking organization that
directly or indirectly controls the covered IHC or any subsidiary
of the top-tier foreign banking organization has been placed into
resolution proceedings (including the application of statutory resolution
powers) in its home country;
(ii) The home country supervisor of
the top-tier foreign banking organization has consented or not promptly
objected after notification by the Board to the conversion or exchange
of the eligible internal debt securities of the covered IHC; or
(iii) The Board has
made a written recommendation to the Secretary of the Treasury pursuant
to 12 U.S.C. 5383(a) regarding the covered IHC.
(b) For purposes of paragraph (a) of this section,
the Board will consider:
(1) A covered IHC in default or danger
of default if
(i) A case has been, or likely will
promptly be, commenced with respect to the covered IHC under the Bankruptcy
Code (11 U.S.C. 101 et seq.);
(ii) The covered IHC has incurred, or
is likely to incur, losses that will deplete all or substantially
all of its capital, and there is no reasonable prospect for the covered
IHC to avoid such depletion;
(iii) The assets of the covered IHC
are, or are likely to be, less than its obligations to creditors and
others; or
(iv) The
covered IHC is, or is likely to be, unable to pay its obligations
(other than those subject to a bona fide dispute) in the normal
course of business; and
(2) An objection by the home country supervisor
to the conversion or exchange of the eligible internal debt securities
to be prompt if the Board receives the objection no later than 24
hours after the Board requests such consent or non-objection from
the home country supervisor.
