Lisa Tancredi Writes ABI Journal Article on Section 345(b) Approaches

Womble Bond Dickinson Partner Lisa Tancredi has written a new article for the May 2025 issue of the American Bankruptcy Institute Journal titled “Uncuffing the Debtor: Developing Approaches to § 345(b).

Section 345(b) of the Bankruptcy Code strikes a delicate balance between protecting estate assets and ensuring operational liquidity during reorganizations. This provision requires deposit and investment accounts to be either insured by the FDIC, collateralized, or bonded, to safeguard debtor funds from bank failures. However, FDIC insurance is limited to $250,000, which pales in comparison to the exponentially larger asset sizes of modern bankruptcy cases.

Trustees must ensure compliance by requiring bonds or security deposits unless the court waives the requirement for cause. The U.S. Trustee maintains lists of approved banking institutions that meet these statutory requirements, but not all banks are included, adding to the complexities faced by parties navigating § 345(b).

Click here to read the full article in the ABI Journal (subscription required).