Claims Against Failed Banks Must Go Through the FDIC’s Administrative Claims Process

By: Scott J. Kennelly & Adam B. Brandon

As described in a previous post , the Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) requires that anyone with a claim against a failed bank must file a claim with the FDIC within 90 days of being notified (either by mail or by newspaper publication) of the FDIC’s administrative claims process.  Claims that must go through the administrative process include claims for payment from the assets of failed banks, actions seeking a determination of rights with respect to the assets of failed banks, and claims relating to alleged acts or omissions of failed banks.

A party’s failure to utilize the administrative claims process divests a court of subject matter jurisdiction to even consider that claim.  That is, a lawsuit by a creditor in such an instance cannot be adjudicated upon by any court.  FIRREA deprives courts of jurisdiction over claims for payments from, or seeking a determination of rights with respect to, the assets of a failed bank in the absence of strict compliance with, and the exhaustion of, the statutorily mandated administrative claims process.  See 12 U.S.C. § 1821(d)(13)(D).  The policy underlying this strict rule is to allow the FDIC to efficiently deal with potential claims and to sell the assets of the failed bank in an orderly manner.