2023 New York Laws › BNK - Banking › Article 13 - Merger; Voluntary Dissolution; Superintendent's Taking Possession; Reorganization; Liquidation › 606 - When Superintendent May Take Possession of Banking Organization; When Possession May Be Surrendered.

§ 606.   When   superintendent   may   take   possession   of  banking
organization; when possession may be surrendered. 1. The  superintendent
may,  in  his  discretion, forthwith take possession of the business and
property of any banking organization whenever it shall appear that  such
banking organization:
(a) Has violated any law;
(b) Is conducting its business in an unauthorized or unsafe manner;
(c) Is in an unsound or unsafe condition to transact its business;
(d) Cannot with safety and expediency continue business;
(e)  Has  an  impairment  of  its capital; or, in the case of a mutual
savings and loan association or credit union, has assets insufficient to
pay its debts and the amount due members upon their shares;
(f) Has suspended payment of its obligations; or, in  the  case  of  a
mutual  savings  and loan association, has failed for sixty days after a
withdrawal application has been filed with it by any shareholder to  pay
such withdrawal application in full;
(g) Has neglected or refused to comply with the terms of a duly issued
order of the superintendent;
(h) Has refused, upon proper demand, to submit its records and affairs
for inspection to an examiner of the department;
(i) Has refused to be examined upon oath regarding its affairs.
(j)  Has  neglected, refused or failed to take or continue proceedings
for voluntary liquidation in accordance with any of  the  provisions  of
this chapter.
2. The superintendent may, in his discretion, and upon such conditions
as  may be approved by him, surrender possession and permit such banking
organization to resume business.
3. When the superintendent shall have duly  taken  possession  of  the
property and business of any such banking organization, he may hold such
possession  until  its  affairs are finally liquidated by him, unless he
shall surrender possession  as  provided  in  subdivision  two  of  this
section or be enjoined from continuing possession as provided in section
six  hundred  seven of this article, or unless such banking organization
shall, with the written approval of the superintendent, voluntarily wind
up its affairs as provided in section six hundred five of this article.
4. (a)  The  superintendent  may  also,  in  his  or  her  discretion,
forthwith  take possession of the business and property in this state of
any  foreign  banking  corporation  that  has  been  licensed   by   the
superintendent  under the provisions of this chapter, including, for the
purposes of this article, any such corporation whose  license  has  been
surrendered  or revoked, upon his or her finding that any of the reasons
enumerated in subdivision one of this section exist with respect to such
corporation or that it is in liquidation at its domicile or elsewhere or
that there is reason to doubt its ability or willingness to pay in  full
the  claims  of  the  creditors  hereinbelow  described.  Title  to such
business  and  property  shall  vest  by  operation  of   law   in   the
superintendent   and   his  or  her  successors  forthwith  upon  taking
possession. Thereafter the superintendent shall liquidate  or  otherwise
deal  with  such business and property in accordance with the provisions
of this chapter applicable to the liquidation of banking  organizations,
except  that the superintendent may deal with such business and property
and prosecute and defend any and all actions relating thereto in his  or
her  own  name  as  superintendent. Only the claims of creditors of such
corporation arising out of transactions had by them with  its  New  York
agency  or  agencies,  or with its New York branch or branches, shall be
accepted by the superintendent for payment  out  of  such  business  and
property  in  this  state  as  provided  in  this article. Acceptance or
rejection of such claims by the superintendent shall not prejudice  such

creditors'  rights to otherwise share in the assets of such corporation.
The following claims shall not be accepted  by  the  superintendent  for
payment  out  of  such  business  and property in this state: (1) claims
which  would  not represent an enforceable legal obligation against such
branch  or  agency  if  such  branch  or  agency  were  a  separate  and
independent  legal  entity; and (2) amounts due and other liabilities to
other offices, agencies or branches of, and affiliates of, such  foreign
banking corporation.
(b)  Whenever  the accepted claims, together with interest thereon, if
interest was paid, and the expenses of the liquidation have been paid in
full or properly provided for, the superintendent upon the order of  the
supreme  court  shall  turn  over  the remaining assets to, in the first
instance, other offices of the  foreign  banking  corporation  that  are
being  liquidated  in  the  United  States,  upon  the  request  of  the
liquidators of those offices, in amounts which the liquidators of  those
offices  demonstrate  to the superintendent are needed to pay the claims
accepted  by  those  liquidators  and  any  expenses  incurred  by   the
liquidators  in  liquidating  those other offices of the foreign banking
corporation. After such payments, if any, have been made, any assets  of
the   foreign   banking  corporation  remaining  in  the  hands  of  the
superintendent shall be turned over to  the  principal  office  of  such
foreign  banking  corporation,  or  to  the  duly  appointed domiciliary
liquidator or receiver of said foreign  banking  corporation.  Dividends
and  other  amounts  remaining  unclaimed  or unpaid in the hands of the
superintendent for six months after such turn-over shall be deposited by
him or her as provided in article two of this chapter.
(c) As used in this subdivision the phrase "business and  property  in
this state" includes, but is not limited to, all property of the foreign
corporation,  real,  personal  or mixed, whether tangible or intangible,
(1) wherever situated, constituting part of the business of the New York
agency or branch and appearing on its books as such,  and  (2)  situated
within  this  state  whether or not constituting part of the business of
the New York agency or branch or so appearing on its books.
(d)  For  the  purposes  of  this  subdivision,  the  words   "debts",
"obligations",  "deposits" and other similar terms as used in subsequent
sections of this article, shall be deemed to refer to  the  claims  that
the  superintendent  shall  accept  pursuant  to  paragraph  (a) of this
subdivision, the words "creditors" and "depositors" shall be  deemed  to
refer to the owners of such accepted claims and, except when the context
shall   otherwise   require,   the   terms  "banking  organization"  and
"corporation" shall be deemed  to  refer  to  the  New  York  agency  or
agencies  or branch or branches and the word "officer" shall include the
agent or other person in charge of  such  agency  or  agencies  and  any
person  in charge of or who is an officer of such branch or branches. As
used in this subdivision, (i) "affiliate"  shall  mean  any  person,  or
group  of  persons acting in concert, that controls, is controlled by or
is under common control with such foreign banking corporation  and  (ii)
"control"  means  any  person,  or  group  of persons acting in concert,
directly or indirectly, owning, controlling or  holding  with  power  to
vote,  more  than  fifty  percent  of  the voting stock of a company, or
having the ability in any manner to elect a majority of the directors of
a company, or otherwise exercising  a  controlling  influence  over  the
management and policies of a company as defined by the superintendent by
regulation.  For  purposes  of this subdivision, the term "person" shall
mean a corporation,  unincorporated  association,  partnership,  or  any
other entity or individual.
5.  The  term  "banking  organization"  as used in this and subsequent
sections of this article shall be deemed to include a corporation  which

has  engaged in any business or other activity prohibited by section one
hundred thirty-one of this chapter, and an  unincorporated  association,
partnership,  fiduciary or individual who has engaged in any business or
other activity prohibited by section one hundred eighty of this chapter.
6.  (a) In the case of the liquidation of an investment company by the
superintendent, accepted claims, amounts due and other liabilities  owed
to  affiliates  of  such investment company shall be paid only after all
accepted claims, amounts due and other liabilities owed have been  fully
paid  to  such  creditors  and other claimants of the investment company
that are not affiliates of such investment company.
(b) For the purposes of this subdivision, (i) "affiliate"  shall  mean
any  person,  or  group  of persons acting in concert, that controls, is
controlled by or is under common control with such  investment  company,
and  (ii)  "control"  means  any  person,  or group of persons acting in
concert, directly or indirectly, owning, controlling,  or  holding  with
power to vote, more than fifty percent of the voting stock of a company,
or having the ability in any manner to elect a majority of the directors
of  a  company, or otherwise exercising a controlling influence over the
management and policies of a company as defined by the superintendent by
regulation. For purposes of this subdivision, the  term  "person"  shall
mean  a  corporation,  unincorporated  association,  partnership, or any
other entity or individual.