When a bank fails it is split up into a ‘good bank’ and a ‘bad bank’. The assets and liabilities that pass to each can vary but after it was decided that a large debt owed by the former Portuguese bank ‘Banco Espírito Santo’ would not pass to the good bank this was challenged by Goldman Sachs who argued that the agreement’s jurisdiction clause meant that the UK courts should decide. In this episode we find out the answer and consider the legal, political and business consequences of banking collapses.

Music from bensound.com