About the Course
Introduction
This CLE webinar will review the Uniform Special Deposits Act (SDA), a state law recently promulgated by the Uniform Law Commission and recommended for enactment nationwide. Special deposits can serve an important function in commerce and industry by affording safety and security to the funds deposited in such an account. Regrettably, the current common law of special deposits has been fraught with ambiguities and inconsistencies which have undermined the utility of the device. The panel will discuss the legal uncertainties and the four "mischiefs" which have plagued the common law of special deposits for many years and how the SDA will clarify the law and remedy those mischiefs. The panel will also explain why the SDA is of tremendous benefit and significance to bankruptcy practitioners and secured lenders. Among other provisions, the panel will review the "opt-in" feature of the law and the special choice of law and forum selection rules.
Description
Special deposits are accounts established and funded by a depositor with a depository bank for a "permissible purpose" and only payable to one or another of at least two (2) potential beneficiaries upon the occurrence of a stated contingency set forth in a written special deposit account agreement. Special deposits are highly beneficial to protect funds in a variety of transactions including real estate sales, business mergers and acquisitions, litigation and arbitration settlements, distribution of tenant security deposits, distributions of funds in class action settlements, settlement of payment systems and more. These special deposits are not used more frequently today because of so many uncertainties about everything from how to establish them to what protections they have.
Under the uniform SDA law, which the American Bar Association, the American College of Commercial Finance Lawyers and the New York City Bar Association Committee on Commercial Law and Uniform State Laws have all endorsed, a special deposit meeting the SDA's requirements would be protected against claims asserted against the deposit in a bankruptcy proceeding, creditor process and even the depository bank's right of setoff and recoupment, in each case pending the determination of the contingency and hence the beneficiary or beneficiaries entitled to payment.
The SDA also carefully protects the special deposit from being used for a fraudulent purpose.
It will be important for bankruptcy attorneys and attorneys for lenders with Article 9 security interests in deposit accounts to understand enforcement limitations with respect to special deposit accounts and the limits on set-off and recoupment rights.
Listen as the panel of expert banking, bankruptcy, and lender attorneys reviews the SDA and gives attendees a head start on understanding this new law.
Presented By
Mr. Baxter has long experience as a lawyer in the financial services industry. He has worked for more than 36 years as a lawyer at the Federal Reserve Bank of New York, including more than 20 years as General Counsel. Mr. Baxter has also served private clients during the four years that he served as Of Counsel at the law firm of Sullivan & Cromwell. He remains active in the legal community as a member of the American Bar Association and the International Law Association.
Mr. Harbour regularly represents all major constituencies in formal bankruptcy proceedings and in out-of-court restructurings. His experience includes representing corporate debtors, secured and unsecured creditors, parties to safe harbored financial contracts, indenture and securitization trustees, lessors, and other parties in interest in Chapter 7, Chapter 11 and Chapter 15 bankruptcies, and in workouts. Mr. Harbour’s practice also focuses on providing insolvency-related structuring advice and legal opinions in connection with complex transactions for asset based-lending, asset securitizations, safe harbored financial contracts, conduits, derivatives and other financial hedges, project finance, REITS, REMICS, real estate finance and other capital markets transactions.
Mr. Wiseman joined Sullivan & Cromwell in 1978. He was a partner of the Firm from 1985 to 2020, serving for over 20 years on the executive committee and as managing partner of the financial institutions practice. Mr. Wiseman has represented a broad range of financial firms, including domestic and international commercial banks, investment banks, insurance companies and rating agencies. His practice encompasses regulatory and enforcement issues, mergers and acquisitions, joint ventures, capital markets, new products initiatives, derivative products, payment system issues, consumer financial products, cybersecurity, and corporate governance and counseling. Mr. Wiseman is a graduate of Harvard College and the Harvard Law School and was an editor of Harvard Law Review.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Date + Time
- event
Thursday, December 3, 2026
- schedule
1:00 PM ET/10:00 AM PT
I. SDA history and objectives
II. Key provisions
III. Impact on bankruptcy
IV. Enactment
The panel will review these and other key issues:
- What are the "four mischiefs" that the SDA resolves?
- What types of transactions would benefit from utilizing the special deposit device?
- What happens when the funds in the special deposit account are insufficient to satisfy the contingency?
- How do the choice of law and venue provisions of the SDA apply?
- How would the SDA's venue provisions mesh with the Bankruptcy Code's venue provisions?
- What are permissible purposes for special deposit accounts?
- How will special deposit accounts be treated in bankruptcy?
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