N.H. Rev. Stat. § 383-C:5-503 — NH Code / Title XXXV / Chapter 383-C / Section 5-503
383-C:5-503 Liquidation Pledge.
Status: in_force

(a) To defray the costs of liquidation of a trust company by the commissioner under RSA 395, a trust company shall pledge to the commissioner cash or securities in accordance with this section. In the event of a liquidation of a trust company under RSA 395 and without regard to any priorities, preferences, or adverse claims, the commissioner may claim all or any amount of the cash or securities so pledged, as applicable, liquidate the claimed securities, and, as soon as practicable, utilize the cash claimed or received upon liquidation of pledged securities to defray the costs of the trust company liquidation. To satisfy the obligation of a trust company to provide liquidation pledge, the trust company's parent or affiliate may pledge cash or securities on behalf of the trust company. The commissioner may specify the types of securities that may be pledged, or the commissioner may require a pledge of cash. The pledged cash or securities shall be held at a bank located in this state, a Federal Reserve Bank, or any other depository entity approved by the commissioner in the commissioner's discretion. Any fees associated with establishing and maintaining a pledge under this section shall be the responsibility of the trust company. (b) In consideration of the safety and soundness of a trust company, the commissioner shall determine and, upon notice to a trust company, may increase or reduce the amount of cash or the value of securities pledged to the commissioner under this section so long as the amount of cash or value of securities required to be pledged is not less than $250,000 nor more than $1,000,000. If the commissioner requires a trust company to increase the trust company's required liquidation pledge, then the commissioner shall afford the trust company a reasonable time within which to achieve the increase in the trust company's required liquidation pledge and shall specify the reasonable time in the notice of increase provided to the trust company under this section. The amount of cash or value of securities pledged by a trust company shall not be reduced below the level determined by the commissioner, as adjusted by the commissioner, except (i) upon liquidation of the trust company under RSA 395, or (ii) as permitted to fund a special assessment under RSA 383:11-b. (c) A trust company may apply to provide a letter of credit in lieu of pledging cash or securities by filing with the commissioner an application to provide a letter of credit. (1) In accordance with RSA 383-A:6-604, the commissioner shall make a determination as to whether the trust company qualifies to provide a letter of credit. (2) A trust company qualifies to provide a letter of credit if: (A) Under the terms of the letter of credit, the issuing bank unconditionally agrees to pay the liquidation pledge amount to the commissioner upon presentation of a written instrument that is signed by the commissioner and states that the commissioner has commenced the liquidation of a trust company under RSA 395; (B) The issuing bank is: (i) A depository bank; (ii) A national bank having a branch or office in this state; (iii) A federal savings bank having a branch or office in this state; or (iv) A foreign state bank having a branch or office in this state; (C) The letter of credit is: (i) Irrevocable during its term; and (ii) On a form prescribed by the commissioner. (D) For purposes of securing the trust company's obligation to pay to the issuing bank any amounts that the commissioner draws against the letter of credit, the trust company or other person: (i) Grants to the issuing bank a security interest in money or other property in an amount that is not less than 120 percent of the liquidation pledge amount; (ii) Together with the issuing bank, executes a collateral pledge and security agreement that: (a) Is irrevocable during the term of the letter of credit; (b) Requires the pledgor to transfer to the issuing bank money or other property sufficient to maintain the minimum collateral amount under subsection (c)(2)(D)(i) at all times during the term of the letter of credit; and (c) Is in a form acceptable to the commissioner; and (E) Under the collateral pledge and security agreement or other agreement the issuing bank agrees that: (i) If the commissioner draws against the letter of credit, then the issuing bank may claim its right of reimbursement only against the collateral in which the issuing bank has a security interest under the collateral pledge and security agreement; (ii) Except as provided under subsection (c)(2)(E)(i), the issuing bank waives any right of reimbursement against the trust company, and the issuing bank may not claim its right of reimbursement against the liquidation estate of the trust company; (iii) The letter of credit will be drawn in the event of a failure of the institution requiring liquidation by the commissioner; and (iv) If, for any reason, the letter of credit is terminated, it shall immediately notify the commissioner. (3) If the commissioner approves the trust company's application to provide a letter of credit, then the trust company shall continuously maintain the letter of credit in accordance with this subsection until it pledges cash or securities in accordance with subsection (a). (4) The trust company shall pay any fees and expenses associated with obtaining and maintaining the letter of credit and the collateral pledge and security agreement.