In this chapter, “Federal Insurance Agency” means the Federal Deposit Insurance Corporation or the National Credit Union Administration, as appropriate, or their respective successors-in-interest.
Liquidation and ConservationGeneral Provisions
Section § 600
This section defines the term 'Federal Insurance Agency' to refer to either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), or any organizations that might take over their roles in the future.
Federal Insurance Agency FDIC National Credit Union Administration
Section § 601
If the commissioner takes control of a business and its property from a licensee, they must collect any money owed to that business. The commissioner is responsible for taking necessary actions to manage, protect, and handle the business's assets. They can either continue running it or start the process of closing it down, as outlined in this article.
Upon taking possession of the property and business of any licensee, the commissioner has authority, and it is his or her duty, to collect all moneys due to the licensee and to do other acts as are necessary or expedient to collect, conserve, or protect the licensee’s assets, property, and business, and he or she shall proceed to conserve or liquidate the affairs of the licensee as provided in this article.
commissioner authority possession of assets business liquidation
Section § 602
This law states that you cannot take legal action to seize the property of a licensed individual if they are undergoing a financial cleanup or shutdown process as defined in this article.
No attachment shall be issued against the property of any licensee subject to conservation or liquidation pursuant to this article.
attachment prohibition property seizure licensed individuals
Section § 603
If the commissioner takes over a licensee's property and business, they can either sell off assets or protect them, following specific rules laid out in this article.
Upon taking possession of the property and business of any licensee pursuant to Section 592, the commissioner may proceed to liquidate or conserve the licensee in the manner provided by this article.
licensee possession property liquidation business conservation
Section § 604
When the commissioner takes control of a licensee's property and business under Section 592, they can appoint a conservator, liquidator, receiver, or a liquidating committee to manage the situation.
Upon taking possession of the property and business of a licensee pursuant to Section 592, the commissioner may tender to any person or persons an appointment as conservator, liquidator, receiver, or liquidating committee of the licensee.
property possession business management commissioner authority
Section § 605
This law gives a commissioner the authority to oversee the actions of a conservator, liquidator, receiver, or liquidating committee. The commissioner can also decide to remove any of these individuals or the entire committee if they see fit.
The commissioner shall supervise the acts of the conservator, liquidator, receiver, or liquidating committee appointed under this article and may remove the conservator, liquidator, receiver, or any or all members of the liquidating committee in his or her discretion.
commissioner authority conservator supervision liquidator oversight
Section § 606
This law requires that if the commissioner demands it, any conservator, liquidator, receiver, or member of a liquidating committee must have a bond. This bond must cover issues like fraud, dishonesty, and ensuring they do their job properly. The cost of this bond is paid from the assets of the licensee involved.
If required by the commissioner, the conservator, liquidator, receiver, or members of the liquidating committee appointed under this article shall provide proof of bond coverage that extends to the conservator, liquidator, receiver, or members of the liquidating committee. The bond shall include fraud, dishonesty, and faithful performance coverage. The premium for that bond shall be paid out of the assets of the licensee.
bond requirement conservator bond liquidator bond
Section § 607
This section explains what happens when a financial licensee's assets are taken over by the state for liquidation or conservation. The commissioner will primarily use their own office's employees, including legal services from the Department of Justice, to manage these assets.
The commissioner can appoint special deputies to help with these tasks, and these appointments are officially recorded. If needed, the commissioner can hire additional legal or expert help, and even retain some of the licensee’s former staff, to ensure the assets are properly liquidated and distributed.
(a)CA Financial Code § 607(a) If the commissioner retains possession of the assets of the licensee for the purpose of liquidation or conservation, the commissioner shall, to the extent possible, use the services of civil service employees of the commissioner’s office, and the attorneys employed by the commissioner or the Department of Justice shall render all necessary legal services, as the commissioner may request.
(b)CA Financial Code § 607(b) The
commissioner, from time to time, under his or her official seal, may appoint one or more special deputy commissioners as his or her agent or agents with the powers specified in the certificate of appointment to assist him or her in the duties of conservation or of liquidation and distribution. The certificate of appointment shall be filed in the office of the commissioner and a certified copy in the office of the clerk of the county in which the head office of the licensee is located. The commissioner may employ counsel and procure expert assistance and advice as may be necessary in the liquidation and distribution of the assets of the licensee and for that purpose may retain any of the officers or employees of the licensee as the commissioner may deem necessary.
asset liquidation conservation duties special deputy commissioners
Section § 608
This law section explains that the commissioner will decide how much to pay civil service employees, deputies, and other staff involved in closing or managing a failing business (licensee) and distributing its assets. The payments and expenses for this process will come from the failing business's own funds. Additionally, the costs related to closing the business must be reported to the court whenever there's a request to pay a dividend to creditors or stakeholders.
The compensation of civil service employees, special deputies, counsel, and other employees and assistants appointed to assist in the conservation or liquidation of any licensee and the distribution of its assets and all expenses of supervision and liquidation shall be fixed by the commissioner and shall be paid out of the funds of the licensee in the hands of the commissioner. The expenses of liquidation shall be reported to the court upon each application for payment of a
dividend.
civil service employee compensation commissioner responsibilities liquidation expenses
Section § 609
If a financial institution isn't insured by a Federal Insurance Agency, and the commissioner takes control of its business and property, the local superior court where the company's main office is located will handle all related legal proceedings. All documents, such as special deputy certificates and inventories, are filed at no extra cost in the court records. Damages cannot be claimed during these proceedings and must be pursued separately.
If a licensee is not insured by a Federal Insurance Agency, upon the commissioner taking possession of the business and property of the licensee, the superior court of the State of California for the county in which the head office of the licensee is located shall have exclusive original jurisdiction of all proceedings relating thereto and of any action or other proceedings brought under the provisions of this article. All papers relating to the proceeding, including copies of the
certificate of appointment of any special deputy and the inventories required to be filed, shall be filed and be made a part of the record of the proceeding without the payment of any additional fees. No damages may be awarded in the proceeding but, if sought, may only be recovered in a separate action.
financial institution Federal Insurance Agency commissioner
