“How to liquidate a non-systemic bank?” - The second Advisory Board lecture takes place
On 5 November 2025, Queen Mary – UNIDROIT Institute for Transnational Commercial Law hosted the second lecture in its Advisory Board Lecture Series. The lecture titled “The liquidation of banks and the birth of a new international standard” has been delivered by Professor Ignacio Tirado, Secretary General of UNIDROIT.
Ms Clare Merrifield, Senior Legal Counsel at the Bank of England provided valuable comments and the event was chaired by Professor Rosa Lastra.
The event began by detailing the collaborative history between the Centre for Commercial Law Studies at Queen Mary and UNIDROIT, emphasising the importance of this ongoing partnership. The UNIDROIT Legislative Guide on the liquidation of non-systemic banks was presented as a product of this partnership, as well as the outcome of a wider international effort to close an important legislative gap left unfilled following the Global Financial Crisis. It was noted that the work on the Guide uniquely brought together banking, money and insolvency law experts from around the world.
After outlining the rationale and context for the Guide, Professor Tirado highlighted the Guide’s flexibility. Noting no country legislates in a vacuum, he explained how the Guide accommodates both common and civil law as well as both single-track and dual-track (i.e. differentiating in practice between resolution and liquidation) systems. He explained that, while the Guide pursues a range of objectives, its principal aims are to minimise costs to taxpayers, ensure financial stability by protecting depositors and maximise the value of the insolvent institution.
Professor Tirado then delved deeper into the recommendations made in the Guide. He first stressed that, although the spectrum of models for bank liquidation is a broad one, a truly robust model should permit adequate involvement of administrative authorities given their special knowledge, skills and connections. He also pointed out that, if courts need to get involved, their involvement should not slow the liquidation procedure down. After that, he touched on other issues relevant to designing an effective system for non-systemic bank liquidation, such as ensuring availability of effective liquidation tools, implementing adequate substantive and procedural safeguards, and permitting cooperation and coordination between liquidation authorities of different countries in cross-border bank insolvencies.
Following Professor Tirado’s lecture, Ms Merrifield returned in her comments to the two institutional models, comparing them and commenting on select practical issues. She re-iterated that while administrative models are particularly efficient, court-based systems can also work well if banking authorities remain closely involved, offering both oversight and checks and balances. The UK’s hybrid model was used as an example, where authorities nominate insolvency practitioners, initiate court applications, and sit on liquidation committees to ensure depositor protection and financial stability. She also drew on examples from her practice to emphasise the need for expertise, coordination, and efficient courts capable of acting quickly.
The session concluded with a brief question-and-answer session, with participants inquiring about the real-world implementation of the guide, specific regulatory challenges, and the intersection of banking and intellectual property law.