Recovery of funds in a bank failure covers the following elements: external insurance, liquidation and claim of liability. Each stage allows the banks customer to claim certain specific damages.
External insurance: protection of customer deposits up to the insured limit
Banks in the European Union, the USA and Australia are covered under a mandatory depositors protection scheme. This depositors protection scheme is an external insurance and covers bank deposits up to 100.000 Euro (EU Deposit Guarantee Scheme), 250.000 USD (USA Federal Deposit Insurance Corporation) and 250.000 AUD (Australian Financial Claims Scheme).
Liquidation: calculation of assets and liabilities for deposits that are not insured
The liquidation stage of a bank failure allows customers whose deposits or investments not covered by the external insurance to file their claim. Additionally, creditors with a legitimate claim can receive compensation in this phase of the bank failure.
The legitimacy of a claim is the result of a contractual agreement with the banking institution, derived from the law or a verdict from a judge in court.
Claim of liability: additional and direct related losses and damages
The claim of liability is the absolute end of the long term battle towards financial compensation. When the external insurance and liquidation don’t cover your total deposit or investment, you can file a claim of liability at the end of the bank failure. The traditional paths must be exhausted before one can successfully file a claim of liability.
Also, this is the stage were remaining damages can be claimed. Often, the claim is issued with the indemnity or liability insurer of the bank, its management or the shareholders. The stronger the claim and the better you are able to support your calculation based on absolute facts, the higher your chances of success.
How to file your claim…
Not every bank failure is the same but in general there are certain rules to follow. To protect customer interest and avoid pay out of secured funds to people who should not qualify, the beneficial owner of the account must present himself in person. No exceptions. In some countries, the administrator of the Deposit Guarantee Scheme is accompanied by the district attorney who immediately can arrest the claimant when fraud is suspected or the funds on the account were generated via criminal activities.
Since a company is a seperate legal entity, the beneficial owner of the company acts as a ‘proxy’ on behalf of the company. The proxy can only be someone who is known in the administrative records of the failed bank and is known on the company documents, e.g. the certificate of incumbency or the register of members, shareholders and directors.
The rules to file a claim are strict but fair. They are designed to protect the interest of legitimate bank customers. These rules cannot and will not be adjusted to individual causes.
If you want to discuss your case and would like to know how you can qualify for our No Cure No Pay services, please leave your contact information in the form below. One of our employees will contact you shortly after.