Receivership - Supervision - Financial - CA

Section § 8250

If a financial association is in trouble, such as being financially unstable or not following legal orders, the commissioner can step in and appoint someone to take over, called a receiver. This receiver could be the commissioner themselves or another appointed person. Once appointed, the receiver takes control of the association's property and records immediately.

(a) If the commissioner finds that any association (1) is in an impaired condition, (2) is engaging in practices that threaten to result in an impaired condition, or (3) is in violation of an order or injunction issued pursuant to this division, the commissioner may appoint a receiver for the association.

(b) The receiver may be the commissioner, deputy commissioner or any other person.

(c) The receiver shall, upon appointment, immediately take possession of the books, records, and assets of every description of the association.

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Section § 8251

This law explains that when the state commissioner appoints a receiver for an insured association, it is considered an official action under state authority to start the process of liquidation as defined by federal law. The receiver appointed has the full power of a conservator, as well as the power to liquidate the association. They can also have additional powers granted by a court order.

(a) In the case of an insured association, the appointment by the commissioner of a receiver under this article shall constitute an official determination of a public authority of this state pursuant to which a receiver is appointed for the purpose of liquidation as contemplated by and within the meaning of subdivision (d) of Section 401 of the National Housing Act of 1934 (12 U.S.C. Sec. 1701 et seq.), as amended.

(b) A receiver shall have all the powers and authority of a conservator plus the power to liquidate, and shall have any other powers and authority that are expressed in an order of a court.

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Section § 8252

If a commissioner or department employee is made a receiver, they won't get extra pay. But if someone else is chosen, the court decides their pay, and it comes from the association's assets.

If the commissioner or a department employee is appointed receiver, no additional compensation shall be paid, but if another person is appointed, then the compensation of the receiver, as determined by the court, shall be paid from the assets of the association.

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Section § 8253

If a financial association is insured by the FDIC and needs a receiver, the FDIC should be offered the role. If the FDIC accepts, it can lend money using the association’s assets as security or buy those assets through public or private sale. However, these actions must be approved by a court.

If the association is an institution insured by the Federal Deposit Insurance Corporation, the Federal Deposit Insurance Corporation shall be tendered appointment as receiver or coreceiver. If it accepts the appointment, it may, nevertheless, make loans on the security of or purchase at public or private sale any part or all of the assets of the association of which it is receiver or coreceiver, provided the loan or purchase is approved by the court.

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Section § 8254

If an association's property and business are taken over by a receiver, the association has 10 days to ask the local superior court to stop any further action. The court will review the situation, and if it finds in favor of the association, it may order the receiver to stop and return the property and business to the association.

Whenever a receiver has taken possession of the property and business of any association pursuant to this article, that association, within 10 days after the taking, if it deems itself aggrieved thereby, may apply to the superior court in the county in which the home office of the association is located to enjoin further proceedings. The court, after citing the commissioner to show cause why further proceedings should not be enjoined and after hearing and determination of the facts, may dismiss the application or enjoin the commissioner from further proceedings and direct the commissioner to surrender the property and business to that association.

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