With so much focus on failed banks lately, what happens to the benefit plans when a bank is taken over? I am assumiong without a plan sponsor, they would all be terminated, but who would handle the wrap-up & actual terminations of the plans? A 401(k) with no outstanding issues would be relatively easy to shut down, but what about a frozen DB plan with outstainding liabilities or a self-funded helath plan w/ COBRA participants? Anyone know how this would be handled or what has been done in the past?

On the DC side the FDIC will either contract with an administrator or just use the current administrator to terminate the plan and pay out the distributions. The FDIC wants things to move quickly to keep costs to a minimum. They will probably not want to file for a final DL from the IRS since that delays the termination of the plan.

The bankruptcy court approves a bankruptcy trustee appointment to see to the orderly sale and other disposition of the business -- selling off the good assets to another bank and then dealing with everything else, including handling termination of benefit plans, executive comp issues, health plan claims, etc. That I'm aware, the trustee usually hires outside counsel that is expert in this area. Normally the outside counsel works with the trustee's people and with the few remaining bank employees (at least one or 2 from HR dept, hopefully) to resolve all benefits issues, and counsel deals with:
- amending the plans
- filings with IRS/PBGC
- preparing forms/notices
- arranging for lost participant searches
- escheat filings for DC plans
- 5500, etc. filings
- executive comp issues

The "Chapter 7 Estate of xyz bank, Inc." is designated as the successor plan sponsor and administrator. Of course, if the plan is underfunded, the PBGC may take over the plan and take over as sponsor/administrator.

Where did you get the idea that commercial banks can declare bankruptcy? Insolvent banks are seized by the FDIC (e.g., WAMU) which administers the liquidation of the banks assets and absorbs the bank's liabilities. Only investment banks (Lehman) must declare bankruptcy under chapter 7.