| (a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Voluntary liquidation means the dissolution of
a credit union with the assets being sold or collected, liabilities
paid, and shares/deposits distributed under the direction of the board
of directors.
(2) Liquidation date means the date the membership
votes to approve liquidation.
(3) Liquidating agent means the person or persons appointed
by the board of directors to take possession of, manage, and liquidate
the credit union.
(b) Initiating voluntary liquidation process.
(1) Unless the commissioner has issued a liquidation
order, the board of directors may, by resolution, recommend the voluntary
dissolution of the credit union and direct submission of the question
to the members of the credit union.
(2) Within five days after the date the board adopts
the resolution, the chairman of the board shall notify the commissioner,
in writing, of the reasons for the proposed liquidation including
a balance sheet and income statement as of the previous month-end.
(3) The board shall act promptly to obtain the membership's
approval in accordance with subsection (f) of this section.
(4) The board's recommendation to dissolve and liquidate
the credit union must be approved by the affirmative vote of a majority
of members who submit ballots in person at the special membership
meeting and by mail. If less than a majority vote to approve, the
credit union may, subject to the commissioner's approval, resume normal
business, resubmit the question of liquidation to the membership or
request the appointment of a conservator under the Act and the rules
adopted under it.
(5) After an affirmative vote by the members to dissolve
and liquidate the credit union, the board of directors shall be responsible
for conserving the assets, for expediting the liquidation, and for
fair and equitable distribution of the assets to the members.
(6) Within 5 days after an affirmative vote to dissolve
and liquidate the credit union the chairman shall notify the commissioner
in writing of the intention to liquidate together with a list of the
officers and directors.
(c) Notice of liquidation.
(1) If the vote to dissolve and liquidate the credit
union is affirmative, the credit union shall:
(A) File a notice with the Department within five days
after the liquidation date; and
(B) Mail a copy of the notice of liquidation to shareholders/depositors,
other known creditors, and known claimants of the credit union within
ten days after the liquidation date.
(2) A credit union shall publish public notice of liquidation,
if so directed, and in the manner directed, by the Department.
(3) Creditors shall be provided at least 30 days after
the liquidation date to submit their claims.
(d) Transaction of business during liquidation.
(1) Immediately after notice of the special meeting
to consider voluntary liquidation is mailed to the membership, admission
of new members shall be suspended. No new extensions of credit shall
be funded during the period between the board of directors' adoption
of the resolution recommending voluntary liquidation and the membership
meeting called to consider voluntary liquidation, except for the issuance
of loans fully secured by a pledge of shares and the funding of outstanding
loan commitments approved before adoption of the board resolution.
Collection of loans and interest, payments of necessary expenses,
clearing of share drafts and credit card charges shall continue.
(2) If the membership votes to dissolve and liquidate
the credit union, the credit union shall immediately discontinue payments
on shares/deposits, withdrawal of shares/deposits (except for transfer
of shares/deposits to loans and interest), transfer of shares/deposits
to another share/deposit account, in the same credit union, granting
of loans, and making of investments other than short-term investments
shall be discontinued. The credit union shall continue to collect
on loans with interest and shall continue to pay necessary expenses
during the period of liquidation. The credit union shall direct its
Members to discontinue the use of share drafts and credit cards, and
shall inform Members that on and after the 15th calendar day after
the liquidation date, items will no longer be cleared.
(3) Approval of the Department must be obtained prior
to consummating any sale of assets which would not provide sufficient
funds to pay shareholders/depositors dollar-for-dollar, principal
plus any interest accrued or due to the shareholder/depositor, through
the liquidation date.
(e) Liquidation Plan. The board of directors shall
develop and approve a written plan for the liquidation of the assets
and payment of shares/deposits. The liquidation plan shall provide
for the liquidation of the credit union within one year of the liquidation
date. At a minimum, a credit union's liquidation plan shall address
the following areas:
(1) Qualifications and experience of the proposed liquidating
agent and the compensation and expenses attributable to the service
of such person or persons;
(2) Income and expense items must be projected to determine
that sufficient funds will be available to finance the liquidation
of the credit union;
(3) Schedule for payment of all debts and liabilities
owed by the credit union;
(4) Partial distributions of shares/deposits should
be considered as funds become available from the liquidation of assets;
(5) Distribution of the credit union's assets that
remain after settlement of debts and liabilities to all persons entitled
to them;
(6) Disposition or maintenance of any remaining or
unclaimed funds, real or personal property, or other assets;
(7) Surety bond coverage of all persons who will handle
or have access to funds of the credit union and the proposed discovery
period after final distribution of assets; and
(8) Retention of the credit union's records after liquidation,
and in a manner that complies with subsection (j) of this section.
(f) Approval of the liquidation proposal by membership.
(1) Not later than the 10th calendar day before the
date of the special membership meeting to consider approval of the
liquidation, the credit union shall notify, by first class mail, the
Commissioner and each member who is eligible to vote on the proposal.
The notice must adequately describe the purpose and subject matter
of the vote and clearly inform members that they may vote at a special
meeting held on the date set for the vote or by mailing in the ballot.
The notice must include a clear and conspicuous disclosure of how
the voluntary liquidation may affect the availability of funds on
deposit and state the date, time, and place of the meeting. A ballot
must be included in the same envelope as the notice.
(2) No director or senior management employee may receive
any economic benefit in connection with the voluntary liquidation
of the credit union other than compensation and other benefits paid
to directors and senior management employees in the ordinary course
of business.
(3) A credit union considering the question of liquidation
must conduct its membership vote in a fair and legal manner. No inducements
may be offered to encourage members to participate in the vote.
(4) A credit union should be careful to conduct its
special membership meeting in a manner conducive to accommodating
all members wishing to attend, including selecting a meeting location
that can accommodate the anticipated number of attendees and is conveniently
located. The meeting should also be held on a day and time suitable
to most members' schedules.
(g) Distribution of assets.
(1) The liquidating agent shall use the credit union's
assets to pay, in the following order:
(A) Secured creditors to the extent of the value of
their collateral;
(B) Liquidation expenses, including a surety bond;
(C) Depositors;
(D) General creditors, including secured creditors
to the extent that their claims exceed the value of their collateral;
and
(E) Distributions to members in proportion to the shares/deposits
held by each member.
(2) After all assets of the credit union have been
converted to cash or found to be worthless, and all loans and debts
owing to it have been collected or found to be uncollectible, and
all obligations of the credit union have been paid/settled, except
for shares/deposits due its members, the credit union shall close
its books and compute the pro rata distribution to its members. The
computation shall be based on the total amount in each share/deposit
account as of the liquidation date or the date on which all share
drafts have cleared, whichever is later.
Cont'd... |
