N.Y. BNK Law § 606 — New York Code / Act BNK / Article 13 / Section 606
When superintendent may take possession of banking organization; when possession may be surrendered
Status: in_force

§ 606. When superintendent may take possession of banking\norganization; when possession may be surrendered. 1. The superintendent\nmay, in his discretion, forthwith take possession of the business and\nproperty of any banking organization whenever it shall appear that such\nbanking organization:\n  (a) Has violated any law;\n  (b) Is conducting its business in an unauthorized or unsafe manner;\n  (c) Is in an unsound or unsafe condition to transact its business;\n  (d) Cannot with safety and expediency continue business;\n  (e) Has an impairment of its capital; or, in the case of a mutual\nsavings and loan association or credit union, has assets insufficient to\npay its debts and the amount due members upon their shares;\n  (f) Has suspended payment of its obligations; or, in the case of a\nmutual savings and loan association, has failed for sixty days after a\nwithdrawal application has been filed with it by any shareholder to pay\nsuch withdrawal application in full;\n  (g) Has neglected or refused to comply with the terms of a duly issued\norder of the superintendent;\n  (h) Has refused, upon proper demand, to submit its records and affairs\nfor inspection to an examiner of the department;\n  (i) Has refused to be examined upon oath regarding its affairs.\n  (j) Has neglected, refused or failed to take or continue proceedings\nfor voluntary liquidation in accordance with any of the provisions of\nthis chapter.\n  2. The superintendent may, in his discretion, and upon such conditions\nas may be approved by him, surrender possession and permit such banking\norganization to resume business.\n  3. When the superintendent shall have duly taken possession of the\nproperty and business of any such banking organization, he may hold such\npossession until its affairs are finally liquidated by him, unless he\nshall surrender possession as provided in subdivision two of this\nsection or be enjoined from continuing possession as provided in section\nsix hundred seven of this article, or unless such banking organization\nshall, with the written approval of the superintendent, voluntarily wind\nup its affairs as provided in section six hundred five of this article.\n  4. (a) The superintendent may also, in his or her discretion,\nforthwith take possession of the business and property in this state of\nany foreign banking corporation that has been licensed by the\nsuperintendent under the provisions of this chapter, including, for the\npurposes of this article, any such corporation whose license has been\nsurrendered or revoked, upon his or her finding that any of the reasons\nenumerated in subdivision one of this section exist with respect to such\ncorporation or that it is in liquidation at its domicile or elsewhere or\nthat there is reason to doubt its ability or willingness to pay in full\nthe claims of the creditors hereinbelow described. Title to such\nbusiness and property shall vest by operation of law in the\nsuperintendent and his or her successors forthwith upon taking\npossession. Thereafter the superintendent shall liquidate or otherwise\ndeal with such business and property in accordance with the provisions\nof this chapter applicable to the liquidation of banking organizations,\nexcept that the superintendent may deal with such business and property\nand prosecute and defend any and all actions relating thereto in his or\nher own name as superintendent. Only the claims of creditors of such\ncorporation arising out of transactions had by them with its New York\nagency or agencies, or with its New York branch or branches, shall be\naccepted by the superintendent for payment out of such business and\nproperty in this state as provided in this article. Acceptance or\nrejection of such claims by the superintendent shall not prejudice such\ncreditors' rights to otherwise share in the assets of such corporation.\nThe following claims shall not be accepted by the superintendent for\npayment out of such business and property in this state: (1) claims\nwhich would not represent an enforceable legal obligation against such\nbranch or agency if such branch or agency were a separate and\nindependent legal entity; and (2) amounts due and other liabilities to\nother offices, agencies or branches of, and affiliates of, such foreign\nbanking corporation.\n  (b) Whenever the accepted claims, together with interest thereon, if\ninterest was paid, and the expenses of the liquidation have been paid in\nfull or properly provided for, the superintendent upon the order of the\nsupreme court shall turn over the remaining assets to, in the first\ninstance, other offices of the foreign banking corporation that are\nbeing liquidated in the United States, upon the request of the\nliquidators of those offices, in amounts which the liquidators of those\noffices demonstrate to the superintendent are needed to pay the claims\naccepted by those liquidators and any expenses incurred by the\nliquidators in liquidating those other offices of the foreign banking\ncorporation. After such payments, if any, have been made, any assets of\nthe foreign banking corporation remaining in the hands of the\nsuperintendent shall be turned over to the principal office of such\nforeign banking corporation, or to the duly appointed domiciliary\nliquidator or receiver of said foreign banking corporation. Dividends\nand other amounts remaining unclaimed or unpaid in the hands of the\nsuperintendent for six months after such turn-over shall be deposited by\nhim or her as provided in article two of this chapter.\n  (c) As used in this subdivision the phrase "business and property in\nthis state" includes, but is not limited to, all property of the foreign\ncorporation, real, personal or mixed, whether tangible or intangible,\n(1) wherever situated, constituting part of the business of the New York\nagency or branch and appearing on its books as such, and (2) situated\nwithin this state whether or not constituting part of the business of\nthe New York agency or branch or so appearing on its books.\n  (d) For the purposes of this subdivision, the words "debts",\n"obligations", "deposits" and other similar terms as used in subsequent\nsections of this article, shall be deemed to refer to the claims that\nthe superintendent shall accept pursuant to paragraph (a) of this\nsubdivision, the words "creditors" and "depositors" shall be deemed to\nrefer to the owners of such accepted claims and, except when the context\nshall otherwise require, the terms "banking organization" and\n"corporation" shall be deemed to refer to the New York agency or\nagencies or branch or branches and the word "officer" shall include the\nagent or other person in charge of such agency or agencies and any\nperson in charge of or who is an officer of such branch or branches. As\nused in this subdivision, (i) "affiliate" shall mean any person, or\ngroup of persons acting in concert, that controls, is controlled by or\nis under common control with such foreign banking corporation and (ii)\n"control" means any person, or group of persons acting in concert,\ndirectly or indirectly, owning, controlling or holding with power to\nvote, more than fifty percent of the voting stock of a company, or\nhaving the ability in any manner to elect a majority of the directors of\na company, or otherwise exercising a controlling influence over the\nmanagement and policies of a company as defined by the superintendent by\nregulation. For purposes of this subdivision, the term "person" shall\nmean a corporation, unincorporated association, partnership, or any\nother entity or individual.\n  5. The term "banking organization" as used in this and subsequent\nsections of this article shall be deemed to include a corporation which\nhas engaged in any business or other activity prohibited by section one\nhundred thirty-one of this chapter, and an unincorporated association,\npartnership, fiduciary or individual who has engaged in any business or\nother activity prohibited by section one hundred eighty of this chapter.\n  6. (a) In the case of the liquidation of an investment company by the\nsuperintendent, accepted claims, amounts due and other liabilities owed\nto affiliates of such investment company shall be paid only after all\naccepted claims, amounts due and other liabilities owed have been fully\npaid to such creditors and other claimants of the investment company\nthat are not affiliates of such investment company.\n  (b) For the purposes of this subdivision, (i) "affiliate" shall mean\nany person, or group of persons acting in concert, that controls, is\ncontrolled by or is under common control with such investment company,\nand (ii) "control" means any person, or group of persons acting in\nconcert, directly or indirectly, owning, controlling, or holding with\npower to vote, more than fifty percent of the voting stock of a company,\nor having the ability in any manner to elect a majority of the directors\nof a company, or otherwise exercising a controlling influence over the\nmanagement and policies of a company as defined by the superintendent by\nregulation. For purposes of this subdivision, the term "person" shall\nmean a corporation, unincorporated association, partnership, or any\nother entity or individual.\n