2023 New York Laws › BNK - Banking › Article 13 - Merger; Voluntary Dissolution; Superintendent's Taking Possession; Reorganization; Liquidation › 609 - Resumption of Business by Bank, Trust Company or Industrial Bank; Retirement of Certificates; Applicability to Stock-Form Savings Banks and Stock-Form

§ 609.  Resumption  of  business  by bank, trust company or industrial
bank; retirement of certificates; applicability  to  stock-form  savings
banks  and  stock-form savings and loan associations. 1. Any bank, trust
company,  stock-form  savings  bank  or  stock-form  savings  and   loan
association of which the superintendent has taken possession or which is
operating  under  restrictions imposed by duly constituted authority may
be permitted by the superintendent, in his  discretion  and  subject  to
such  conditions  as  may  be  approved  by  him,  to resume business in
accordance with the provisions of this section.
2. No  bank,  trust  company  or  industrial  bank  permitted  by  the
superintendent  to  resume business in accordance with the provisions of
this section shall, without previously obtaining the written  permission
of  the  superintendent,  pay,  on  account  of any deposit made or debt
incurred  before  such  restrictions  were   imposed   or   before   the
superintendent took possession of such bank, trust company or industrial
bank,  more than that proportion of eighty per centum of the total value
of its sound assets, as determined by  the  superintendent,  which  such
deposit  or  debt  bears  to the total of the deposits and debts of such
bank, trust company or industrial bank at the time of resuming business:
provided that  nothing  contained  in  this  section  shall  affect  any
preference  created  by  any  law  of  this state for the benefit of any
depositor or creditor or impair the rights of any secured  depositor  or
creditor  in  any  assets lawfully pledged or assigned as such security.
For the purposes of this section, the holder of a judgment  against  any
such  bank,  trust  company  or industrial bank for the payment of money
arising out of a cause of action arising prior  to  such  resumption  of
business,  whether  such  judgment  was recovered prior or subsequent to
such resumption of business, shall have the same rights as if he were  a
depositor  having  a balance equal to the amount of such judgment at the
time such restrictions were imposed or at the  time  the  superintendent
took  possession  of  such  bank,  trust company or industrial bank. The
superintendent shall prepare  for  each  such  bank,  trust  company  or
industrial  bank  a list of the assets which, in his judgment, are sound
and the value thereof as determined by him.
3. Such bank, trust company or industrial bank shall, immediately upon
resuming business, issue to its depositors and creditors  non-negotiable
transferable  certificates,  in  a  form approved by the superintendent,
representing the part  of  its  deposits  and  debts  which  it  is  not
authorized  to  pay at that time under the provisions of subdivision two
of this section. Such certificates shall bear interest,  if  any,  at  a
rate not in excess of three per centum per annum.
4.  The superintendent shall from time to time determine the excess of
the value of the sound assets of such bank, trust company or  industrial
bank  over  the  total  of  the  principal  amount  of such certificates
outstanding and of the deposits and debts of such bank, trust company or
industrial bank not represented by such certificates, including deposits
made and debts incurred after resuming business.  The  amount  by  which
such  excess is greater than the excess of the value of the sound assets
of such bank, trust company or industrial bank, determined  as  provided
in subdivision two of this section, over its total deposits and debts at
the   time   of   resuming   business  may,  unless  the  superintendent
disapproves, be paid pro rata on account of the principal  due  on  such
certificates  or,  if the principal has been paid in full, on account of
the interest, if any, due  thereon.  No  such  bank,  trust  company  or
industrial   bank   shall,  without  previously  obtaining  the  written
permission of the superintendent, make any other payment on  account  of
the principal or interest of such certificates.
5. No dividends shall be paid on the stock of such bank, trust company
or  industrial bank while any such certificates are outstanding, unless,
having previously secured the written permission of  the  superintendent
to  pay  such  certificates,  it  shall  set  aside  and  maintain a sum
sufficient  for the payment of all such outstanding certificates and the
interest, if any, accrued thereon and shall publish once a week for  two
calendar  weeks  in  a  newspaper  published  in the county in which its
principal office is located, notice to the effect that it will  pay  all
such  certificates  and  the  interest, if any, accrued thereon upon due
presentation for payment. If, thereafter, any such certificate  together
with  all  interest,  if any, accrued thereon, shall not be paid when so
presented, the authority of such bank, trust company or industrial  bank
to pay such dividends shall cease.
6.  So  long as any of such certificates are outstanding, every holder
of such a certificate shall have the same right to notice of all regular
or special meetings of the stockholders of such bank, trust  company  or
industrial  bank and to attend and to vote in person or by proxy at such
meetings as would a holder of stock of  the  par  value  of  the  unpaid
principal  amount  of  such  certificate,  except  that  no  holder of a
certificate or certificates shall be entitled to vote upon any change in
respect to shares or capital stock pursuant to title  eight  of  article
fifteen  or  to  receive  notice  of or attend a meeting of stockholders
specially called for that purpose. Within sixty days  after  such  bank,
trust  company  or industrial bank has resumed business a meeting of its
stockholders and holders of  such  certificates  shall  be  called  upon
notice prescribed by the superintendent. At such meeting directors shall
be  elected who shall succeed the former directors, and the directors so
elected shall elect officers who  shall  succeed  the  former  officers.
Directors  in  office at the date of such meeting may be elected at such
meeting to succeed themselves and the directors elected at such  meeting
may elect officers then serving to succeed themselves.
7.  If  the superintendent shall retake possession of the business and
property of such bank, trust company or industrial bank while  any  such
certificates  are  still  outstanding  and  liquidate  its  business  as
elsewhere provided in this chapter, deposits and debts  not  represented
by  such  certificates, including deposits made and debts incurred after
resuming business,  shall  be  entitled  to  payment  of  principal  and
interest  in  priority  to  the payment of the principal and interest of
such certificates.
8. (a) A plan for  the  retirement  of  certificates  issued  or  made
available  by  a  bank, trust company or industrial bank pursuant to the
provisions of this section may be promulgated in  accordance  with  this
subdivision  eight in any case where the value of all the assets of such
bank,  trust  company  or  industrial  bank   as   determined   by   the
superintendent  is  less  than  the  aggregate  of  the amounts owing to
depositors and other creditors  plus  the  unpaid  amount  of  all  such
certificates  so issued or made available by such bank, trust company or
industrial bank. Such plan  may  be  promulgated  by  such  bank,  trust
company  or  industrial bank or by the holders of ten per centum or more
in  principal  amount  of  all  such  outstanding  certificates  or  the
representative or representatives of such holders.
(b) Such plan may provide for any one or more of the following:
(1)  The  retirement  of  certificates  by  the  issuance  in exchange
therefor of shares of capital stock or debentures or both of such  bank,
trust company or industrial bank;
(2)  The  issuance  of  preferred stock of such bank, trust company or
industrial bank and the sale of such preferred stock  for  cash  or  its
exchange for real or personal property or for outstanding capital notes,

debentures   or  other  obligations  of  such  bank,  trust  company  or
industrial bank;
(3)  The  issuance of fractional shares of capital stock of such bank,
trust company  or  industrial  bank  in  exchange  for  certificates  or
portions  thereof  in  unpaid amount insufficient to permit the exchange
thereof for a full share of capital stock.  Such  fractional  shares  of
capital stock shall have no voting rights, but, when combined with other
fractional shares in sufficient amount, shall be convertible into a full
share or shares of capital stock;
(4)  The transfer into a separate account upon the books of such bank,
trust company or industrial bank or to a separate  corporation,  of  any
assets  to be liquidated for the pro rata benefit of certificate holders
and the issuance to certificate holders of evidences of participation in
such assets if transferred into a separate account  upon  the  books  of
such  bank, trust company or industrial bank, or of stock or obligations
or both of such separate corporation, if such assets are transferred  to
a separate corporation;
(5)   The  organization  of  a  corporation  to  issue  its  stock  or
obligations or both in exchange for certificates and for the exchange of
certificates so acquired by such corporation for shares of  the  capital
stock  or  debentures  or both of such bank, trust company or industrial
bank;
(6) The amount of capital stock which  such  bank,  trust  company  or
industrial  bank  shall  have  upon  the  plan  becoming  effective, the
classes, if any, into which such capital stock  shall  be  divided,  the
number of shares in each class and the par value of each share.
In  addition  to  provisions  herein  specifically  authorized  to  be
contained in a plan promulgated pursuant to this subdivision, such  plan
may  also contain any other provisions deemed necessary or convenient to
effectuate the general purpose or purposes of the plan.
(c) The person or persons promulgating such plan shall first submit it
to the superintendent for his approval. If the plan is approved  by  the
superintendent,  such  person  shall  within sixty days of such approval
submit it to the supreme court in  and  for  the  county  in  which  the
principal  office  of  such  bank,  trust  company or industrial bank is
located, together with an application for its approval. Such application
shall set forth such facts as may be necessary to enable  the  court  to
determine  the  fairness of such plan and shall be made upon an order to
show cause which shall provide that notice thereof of a kind  which  the
court deems to be adequate shall be given by such bank, trust company or
industrial  bank  to  all  holders  of  such  certificates and all other
persons whose interests, in the opinion of the court, may be affected by
such plan. If the issue is raised in any  proceeding  involving  a  plan
promulgated  pursuant to this subdivision, a certificate executed by the
superintendent and filed with the court shall be presumptive evidence of
the fact that the value of all of the assets of such bank, trust company
or industrial bank is less than the aggregate of the  amounts  owing  to
depositors  and  other  creditors  plus  the  unpaid  amount of all such
certificates issued or made available by such  bank,  trust  company  or
industrial bank.
(d)  The  superintendent or the bank, trust company or industrial bank
or any person or persons authorized to promulgate a plan  hereunder  may
propose and submit to the court an alternative plan or a modification or
modifications  of  any  plan  before the court. The court may modify any
such plan or may propose a new or alternative plan,  provided,  however,
that  a  modification or modifications, whether proposed by the court or
by any other person or persons, may be made only after  a  hearing  upon
notice  to  all  holders  of  certificates  and  all other persons whose

interests, in the opinion of the court, may  be  affected  thereby,  and
subject  to  the right of any person who shall previously have consented
to such plan to withdraw such consent within a period to  be  prescribed
by  the  court  and  after  such  notice as the court may direct. If any
person having such right of withdrawal shall  not  withdraw  within  the
period so prescribed he shall be deemed to have approved such plan as so
modified.
(e)  After  the  hearing or hearings above provided the court shall by
order approve a plan, with or without modifications, or shall reject all
such plans, provided, however, that  no  order  made  pursuant  to  this
paragraph approving such plan shall be made or entered unless such plan,
in  final  form,  shall  first  have  been  approved  in  writing by the
superintendent and such written approval shall have been  filed  in  the
proceeding.  If at the time of making the order approving such plan, the
court is satisfied that the holders of  two-thirds  in  amount  of  such
certificates  have  approved  such  plan,  the  order of the court shall
recite such fact and shall declare that such  plan  shall  be  effective
upon  the filing by the superintendent in the office of the clerk of the
county in which is located the principal  office  of  such  bank,  trust
company  or  industrial  bank  of  the  certificate required to be filed
pursuant to paragraph (k) of this subdivision. If at the time of  making
such  order,  such  plan  shall not have been approved by the holders of
two-thirds in amount of such certificates, such order shall provide that
upon satisfactory proof of the fact that the holders  of  two-thirds  in
amount  of  such  certificates  shall  have approved the same, a further
order may be  entered  ex  parte  declaring  that  such  plan  shall  be
effective  upon  the  filing  by the superintendent in the office of the
clerk of the county in which is located the  principal  office  of  such
bank, trust company or industrial bank of the certificate required to be
filed pursuant to paragraph (k) of this subdivision.
(f)  Upon  the  entering of an order declaring that such plan shall be
effective upon the filing by the superintendent in  the  office  of  the
county  clerk  of  the  certificate  required  to  be  filed pursuant to
paragraph (k) of this subdivision, such plan shall become  binding  upon
the  holders  of  all  certificates  of  such  bank,  trust  company  or
industrial bank and all such holders shall  be  conclusively  deemed  to
have  consented  to all the terms and conditions of such plan whether or
not all of such  holders  shall  actually  have  consented  thereto  and
whether  or not all of them shall have received notice thereof or of the
hearing thereon hereinbefore provided.
(g)  Every  executor,  administrator,  trustee,  guardian,  committee,
conservator,  receiver, or other fiduciary, and every public and private
corporation   or   association,   and   every   political   and   public
instrumentality  or body, including, but not by way of limitation of the
generality of the foregoing, boards of education  and  school  districts
and  other  special  districts,  is  hereby  authorized and empowered to
approve and accept a plan promulgated pursuant to this  subdivision  and
to  execute and deliver such papers and documents as may be necessary or
proper to evidence such  approval  and  acceptance,  and  shall  not  be
subject  to any liability whatsoever for any such approval or acceptance
or any exchange of certificates for stock or other  securities  or  both
made pursuant thereto.
(h) A plan promulgated pursuant to this subdivision may be effectuated
even  though  it  has  not  been  expressly  approved  by the holders of
two-thirds in amount of all outstanding certificates,  provided,  as  an
alternative  to  such express approval, the provisions of this paragraph
have  been  complied  with.  After  the  plan   is   approved   by   the
superintendent  as  provided  by  paragraph (c) of this subdivision, the

person or persons promulgating such plan shall file a copy thereof  with
the clerk of the court and shall prepare and mail to each of the holders
of  such  certificates  and to each of the holders of stock of the bank,
trust  company  or industrial bank, addressed by registered mail to him,
postage prepaid, to his last known address as the same  appears  on  the
records of the bank, trust company or industrial bank, a summary of such
plan  together with a notice stating in substance that such plan will be
presented to the supreme court in  and  for  the  county  in  which  the
principal  office  of  the  bank,  trust  company  or industrial bank is
located, and designating a date, which  date  shall  not  be  less  than
thirty  days  after  the  mailing  of  such notice, when such court will
consider such plan and hear any objection thereto on  the  part  of  any
holder of a certificate or of stock. Such notice shall also be published
by  the  person  or persons promulgating such plan once, at least twenty
days before said date, in  a  daily  newspaper  of  general  circulation
published  in  the county where such hearing is to be had and if no such
daily newspaper is published in such county, then such notice  shall  be
published in a newspaper of general circulation in said county. Upon the
return  of such notice or any adjourned date or dates thereof, the court
shall hear the parties  interested  therein  and  may  accept  proof  in
affidavit  form  or otherwise as to any facts and circumstances material
thereto. The court upon proof by affidavit that  the  provisions  hereof
with  respect  to  mailing and publication have been fully complied with
shall thereupon approve, modify or disapprove such plan, but in no event
shall any such plan, with or without modifications, be approved  by  the
court unless the court deems such plan fair and equitable to the holders
of  certificates  and  unless such plan, in final form, shall first have
been approved  in  writing  by  the  superintendent,  and  such  written
approval  shall have been filed in the proceeding; or if written dissent
therefrom, duly executed and acknowledged, shall be filed with the clerk
of the court prior to such return date, or prior to such other  date  as
may  be fixed by the court, by the holders in the aggregate of more than
thirty-three and  one-third  per  centum  of  the  face  amount  of  the
certificates affected by such plan. All holders of certificates who have
not dissented from the plan in the manner provided by this paragraph and
prior to the return date or such other date as may be fixed by the court
shall  be  conclusively deemed to have assented thereto. Such plan shall
contain  a  provision  in  respect  of  certificate  holders  dissenting
thereto, to the effect that adequate protection will be provided for the
realization by them of the value of their certificates by such method as
will  in  the  opinion  of  the  court,  under  and  consistent with the
circumstances of the particular case, be equitable  and  fair  to  them.
When  such plan, with or without modifications, shall be approved by the
court, the  court  shall  make  an  order  reciting  such  approval  and
declaring  that  such  plan  shall  be  effective upon the filing by the
superintendent in the office of the clerk of  the  county  in  which  is
located  the  principal office of such bank, trust company or industrial
bank of the certificate required to be filed pursuant to  paragraph  (k)
of  this subdivision. The appellate court to which an appeal is taken by
any dissenting certificate holder or by any stockholder from any  action
by  the  court  pursuant  to this section shall have the right to impose
upon the appellant as part of the costs of the appeal,  reasonable  fees
of counsel for the respondent, and such appellate court may also, in its
discretion, require bond therefor before entertaining any such appeal.
(i)  Upon  the  entering of an order declaring that such plan shall be
effective upon the filing by the superintendent in  the  office  of  the
county  clerk  of  the  certificate  required  to  be  filed pursuant to
paragraph (k) of this subdivision, such steps  shall  be  taken  by  the

superintendent  and all other persons, and all acts shall be done as may
be required by such plan and as may be necessary or  desirable  to  make
such  plan  operative. Within ten days after the entering of such order,
the  superintendent shall issue an order pursuant to article two of this
chapter directing that such bank, trust company or industrial bank shall
forthwith make good the impairment of its capital. Upon receipt of  such
order, the directors of the bank, trust company or industrial bank shall
give notice to each stockholder of such requisition and of the amount of
the  assessment  he  must  pay,  which amount shall be the aggregate par
value of his shares. Such notice shall be mailed to each stockholder  at
his  address  appearing  on  the  records  of the bank, trust company or
industrial bank or shall be served personally upon him.  Notwithstanding
any provision of section one hundred fourteen or section  three  hundred
six  of  this  chapter,  all outstanding stock certificates of the bank,
trust company or industrial bank shall be canceled of  record  not  less
than  thirty days after notice of assessment is given to stockholders as
herein provided, and thereupon such stock certificates shall be null and
void for all purposes and the rights of  the  holders  thereunder  shall
cease  and  determine; provided, however, that each stockholder who pays
the full amount of such assessment within thirty days  after  notice  of
assessment  is  given  as  herein provided shall receive, in lieu of the
stock on account of which such assessment was paid,  new  stock  in  the
amount  to  which he would be entitled if he held certificates issued by
such bank, trust company or industrial bank pursuant to  the  provisions
of  this  section  in  an aggregate unpaid principal and interest amount
equal to the assessment so paid.
(j) Not less than thirty nor more than  sixty  days  after  notice  of
assessment is given to stockholders as provided in paragraph (i) of this
subdivision,  the  superintendent  shall, if the plan so provides, cause
any assets of such bank, trust company or industrial bank which  are  to
be liquidated for the pro rata benefit of certificate holders, to be set
aside in a special account upon the books of such bank, trust company or
industrial bank or transferred to a separate corporation.
(k)  Upon  the  completion of the acts required to be done pursuant to
paragraph (i) and paragraph (j) of this subdivision and  not  more  than
sixty  days  after  notice  of  assessment  is  given to stockholders as
provided in paragraph (i) of this subdivision, the superintendent  shall
execute  in triplicate a certificate declaring such plan to be effective
and stating the amount of capital stock which such bank,  trust  company
or  industrial  bank  shall  thereafter  have, the classes, if any, into
which such capital stock shall be divided, the number of shares in  each
class  and the par value of each such share. The amount of capital stock
stated in such certificate shall be not less than the amount of  capital
stock  required  to  be  issued  to certificate holders pursuant to such
plan, plus the amount of capital stock required, pursuant  to  paragraph
(i)  of  this  subdivision,  to be issued to stockholders who shall have
paid the  full  amount  of  the  assessments  levied  pursuant  to  such
paragraph  (i).    The amount of capital stock, the number of shares and
the par value of each such share as stated in such certificate shall  be
the  amount  of  capital  stock,  the number of shares and the par value
thereof  which  such  bank,  trust  company  or  industrial  bank  shall
thereafter be authorized to have, provided that nothing herein contained
shall  be  deemed  to limit the power of any such bank, trust company or
industrial bank subsequently to change the amount of its capital  stock,
the  number  of  its  shares  or the par value of its shares pursuant to
subdivision two of section eight thousand one. One  of  such  triplicate
certificates  shall  be  transmitted  forthwith by the superintendent to
such bank, trust company or industrial bank, another shall be  filed  in

the  office  of  the  superintendent and the third shall be filed by the
superintendent in the office of the clerk of  the  county  in  which  is
located  the  principal office of such bank, trust company or industrial
bank. Upon such filing in the office of the county clerk, the plan shall
become  effective  and all certificates theretofore issued by such bank,
trust company or industrial bank pursuant  to  the  provisions  of  this
section shall be null and void and shall not be deemed to be outstanding
for  any  purpose. Thereupon such bank, trust company or industrial bank
shall issue and make available  to  the  holders  of  such  certificates
shares  of  stock  or  debentures or both of such bank, trust company or
industrial bank, and if the plan so provides, evidences of participation
in the assets aside in a special account or stock or other securities or
both of a separate corporation, in the proportions and amounts specified
in such plan.
(l) Within sixty days after a plan pursuant to  this  subdivision  has
become  effective  with respect to any bank, trust company or industrial
bank, there shall be called in accordance with its by-laws a meeting  of
its  stockholders who shall elect directors who shall succeed the former
directors. The directors so  elected  shall  elect  officers  who  shall
succeed  the  former  officers.  Directors in office at the date of such
meeting may be elected at such meeting to  succeed  themselves  and  the
directors  elected  at  such  meeting may elect officers then serving to
succeed themselves. Notwithstanding the requirements as to ownership  of
capital  stock contained in section one hundred sixteen or section three
hundred three of this chapter, the directors of such bank, trust company
or industrial bank holding office at the time  that  such  plan  becomes
effective  may  continue  to  hold  office  as  directors,  until  their
successors are elected and shall have qualified.
(m) The supreme court in and for the county in which  is  located  the
principal  office  of  such  bank,  trust  company or industrial bank is
hereby vested with jurisdiction and authority to determine the  fairness
of,  and  to  approve  or  disapprove,  any  plan,  or  modification  or
modifications  thereof,  which  may  be  promulgated  hereunder  and  to
determine  the  fairness of, and to approve or disapprove, the terms and
conditions of the issuance and exchange of stock or other securities, or
both, of  any  corporation  for  certificates  issued  pursuant  to  the
provisions  of  this  section  and to make such orders and do such other
things as may be required by this subdivision or as may be necessary  or
convenient to carry out the purposes hereof.
9.  If  there  be in article fifteen of this chapter a provision which
conflicts with any provision of  this  section  six  hundred  nine,  the
provision  of  this  section  six  hundred  nine  shall prevail, and the
conflicting provision of article fifteen shall not apply in  such  case.
If there be in article fifteen a provision relating to a matter embraced
in  this  section  six hundred nine, but not in conflict therewith, both
provisions shall apply.