The legislation gives Bangladesh Bank broad powers to deal with a bank that is failing or likely to fail. They include suspending business, restricting shareholder rights, removing and replacing the board, appointing an administrator, transferring all or part of the bank's business to another bank or a bridge bank, arranging mergers and, as a last resort, liquidation. Depositors receive priority if a bank is closed, and compensation is available where shareholders or creditors are left worse off than in liquidation. How these powers are used depends on the orders issued in each case, so the specific order needs careful review.

Depositors receive specific protection. The legislation gives depositors priority if a bank is closed, and the deposit protection scheme covers eligible deposits up to the insured limit. In mergers and transfers, deposits are usually moved to the acquiring or bridge bank, often with temporary limits on withdrawals while the transition is managed. Large corporate deposits above the insured limit carry more risk, particularly where the bank is liquidated rather than transferred. We advise corporate depositors on the status of their funds, on any withdrawal restrictions, and on the steps they can take to protect and recover balances.

It depends on the measure taken and the instrument. If the bank's business is transferred to another bank or a bridge bank, outstanding letters of credit and guarantees may move with it and remain payable. If the bank is placed under restrictions, payment may be delayed or require approval. A confirmation by another bank, particularly a foreign one, gives independent protection. Beneficiaries should present documents and make demands strictly in accordance with the instrument and keep evidence of compliance. We advise beneficiaries, applicants and confirming banks on presentation, payment and recourse during bank resolution.

Contractual and legal rights of set-off may still be available, but they can be affected by stays, transfer orders and the specific provisions of the bank resolution legislation. The answer depends on the timing of the claims, whether the mutual obligations have been transferred to different entities, and the wording of the contracts. Islamic finance arrangements may raise further issues. Acting too early or too late can both cause problems. We review the documents and the resolution orders and advise on whether, when and how to exercise set-off or netting, and how to document the position.

Generally, the loan and its security transfer to the acquiring bank or bridge bank, and the borrower's obligations continue on the same terms unless varied. The new lender may review facilities, reassess risk and seek changes, but it cannot simply ignore the contract. Undrawn commitments and working capital lines may be harder to rely on during bank resolution, so borrowers should plan for possible withdrawal of facilities. We advise borrowers on their rights and obligations after transfer, negotiate continued or replacement facilities, and defend recovery suits or default listings that do not follow the proper procedure.

Resolution decisions are made under statutory powers, and the legislation is designed to allow Bangladesh Bank to act quickly, with limited scope for interference. Challenges may still be possible where a decision is outside the statute, procedurally flawed or made in bad faith, usually by writ petition in the High Court Division. Courts are likely to be cautious about disrupting a resolution that protects depositors and financial stability. Compensation claims under the statute may be a more practical route for many affected parties. We assess the strength of any challenge and the alternatives before proceedings are started.

Foreign creditors face the same statutory powers as local creditors, but their documents are often governed by foreign law and their recovery strategy may involve assets abroad. A transfer or merger in Bangladesh may or may not be recognised in another jurisdiction, and actions abroad can affect the position here. Exposure under nostro balances, trade lines, letters of credit and loans needs to be assessed together. We work with the client's home counsel to coordinate bank resolution strategy across jurisdictions, advise on Bangladeshi law aspects of recognition and claims, and engage with administrators and Bangladesh Bank.

Yes, in appropriate cases. The bank resolution legislation provides for penalties and personal liability for certain violations, and the Bank Company Act 1991, company law, anti-corruption and money laundering laws provide further routes against directors, controlling shareholders and managers who caused losses through misconduct. Recoveries depend on evidence, tracing assets at home and abroad and coordinating with authorities, which can take time. We advise administrators, acquiring banks and creditors on claims against those responsible, and act for individuals defending such claims where there is no conflict of interest in doing so, including in parallel criminal proceedings.