Before the enactment of recent amendments to the Bankruptcy Code, there was some question as to whether master swap agreement NETTING provisions would be legally enforceable in the event of bankruptcy. The U.S. Bankruptcy Code grants a firm in bankruptcy PROCEEDINGS an "automatic stay" from the CLAIMS of its creditors. The automatic stay allows a bankrupt firm to postpone scheduled debt payments and overrides most other CONTRACTUAL obligations pending the RESOLUTION of all claims against the firm.

Before the enactment of recent amendments to the Bankruptcy Code, there was some question as to whether master swap agreement netting provisions would be legally enforceable in the event of bankruptcy. The U.S. Bankruptcy Code grants a firm in bankruptcy proceedings an "automatic stay" from the claims of its creditors. The automatic stay allows a bankrupt firm to postpone scheduled debt payments and overrides most other contractual obligations pending the resolution of all claims against the firm.