January 01, 2018

MONTH-IN-BRIEF: Bankruptcy & Finance

Penelope Christophorou, Taryn Darling

Commercial Finance

Congress Overturns CFPB Rule on Arbitration Agreements in Financial Products and Services Contracts

By Jonathan Blackman, Matthew Slater, Carmine Boccuzzi, Inna Rozenberg, and Sharon Barbour, Cleary Gottlieb Steen & Hamilton LLP

On November 1, 2017, President Donald J. Trump signed into law Joint Resolution 111 (H.J. Res. 111), which overturns a rule issued by the Consumer Financial Protection Bureau (CFPB) governing arbitration agreements in consumer finance contracts. The CFPB rule would have prohibited providers of certain consumer financial products and services from including in their contracts arbitration clauses waiving the right to bring class-action lawsuits. H.J. Res. 111 was passed pursuant to the Congressional Review Act (CRA), 5 U.S.C. §§ 801 et seq., a statute that provides Congress with 60 legislative days to introduce a joint resolution overturning an agency’s rulemaking. The CRA had been successfully invoked only once before 2017 to invalidate a regulation promulgated by a federal government agency. H.J. Res. 111 passed in the House of Representatives on July 25, 2017, by a vote of 231–190 and passed in the Senate on October 25, 2017, by a vote of 51–50, with Vice President Mike Pence casting the tie-breaking vote.

Penny Christophorou

Counsel; Cleary Gottlieb Steen & Hamilton LLP

Penelope L. Christophorou’s practice focuses on commercial financing, including secured transactions and bankruptcy law, derivative products, and structured finance. She represents leading financial institutions, corporate borrowers, private investment funds and sovereign clients on these matters.

Taryn Darling

Board Member, William H. Dwyer Inns of Court

Taryn began her career as a bankruptcy lawyer almost ten years ago. Her practice includes reorganization, insolvency, receivership, work-outs, and bankruptcy and all related litigation. Taryn has litigated at the trial level and appellate level on behalf of her clients in a number of adversary proceedings and in consumer protection litigation. Taryn’s clients include individuals, business owners, and closely held corporations and businesses. Her breadth of experience in the area of bankruptcy and insolvency enables her to take a preventive approach when clients come to her at the outset of a problem. Taryn develops creative solutions to mitigate the impact or consequences when it becomes clear that a bankruptcy or receivership is the best course of action.