Comment Text:
RIN number 3038-AE67
This comment is submitted on behalf of multiple individual commenters: Kathryn Trkla, Foley & Lardner LLP; Geoffrey Goodman, Foley & Lardner LLP; and Vincent Lazar, Jenner & Block LLP.
We are writing in our individual capacities to follow up on technical amendments that were proposed in the American Bar Association’s July 21, 2020 comment letter to the Commission’s Part 190 rulemaking proposal, and specifically those that relate to Framework II in Appendix B to Part 190 – Special Bankruptcy Distributions. The ABA comment letter suggested that certain sections of Framework II might be deleted in order to avoid confusion about the application of Framework II, which currently uses the phraseology “reduction in claims” in a potentially confusing manner because Framework 2 reduces the distributions allocated to customers as a result of sovereign risk losses, but does not reduce the claims. As an alternative to deleting these sections, technical modifications could be made to Framework II which would clarify that Framework II only applies to reallocate customer distributions (and not to reduce claims) in the event a sovereign action results in a customer property shortfall. We note that if a sovereign action is later reversed or modified, those customers whose distributions were reduced will receive increased distributions on their claims.
Attached is a proposed mark-up of Framework II which reflects potential technical modifications in lieu of the deletions suggested in the ABA comment letter. This mark-up incorporates the introductory paragraph in the Commission’s proposal, but otherwise reflects the existing text of Framework II (with a handful of stylistic modifications).
