§ 609 — Resumption of business by bank, trust company or industrial bank; retirement of certificates; applicability to stock-form savings banks a...

§ 609. Resumption of business by bank, trust company or industrial\nbank; retirement of certificates; applicability to stock-form savings\nbanks and stock-form savings and loan associations. 1. Any bank, trust\ncompany, stock-form savings bank or stock-form savings and loan\nassociation of which the superintendent has taken possession or which is\noperating under restrictions imposed by duly constituted authority may\nbe permitted by the superintendent, in his discretion and subject to\nsuch conditions as may be approved by him, to resume business in\naccordance with the provisions of this section.\n 2. No bank, trust company or industrial bank permitted by the\nsuperintendent to resume business in accordance with the provisions of\nthis section shall, without previously obtaining the written permission\nof the superintendent, pay, on account of any deposit made or debt\nincurred before such restrictions were imposed or before the\nsuperintendent took possession of such bank, trust company or industrial\nbank, more than that proportion of eighty per centum of the total value\nof its sound assets, as determined by the superintendent, which such\ndeposit or debt bears to the total of the deposits and debts of such\nbank, trust company or industrial bank at the time of resuming business:\nprovided that nothing contained in this section shall affect any\npreference created by any law of this state for the benefit of any\ndepositor or creditor or impair the rights of any secured depositor or\ncreditor in any assets lawfully pledged or assigned as such security.\nFor the purposes of this section, the holder of a judgment against any\nsuch bank, trust company or industrial bank for the payment of money\narising out of a cause of action arising prior to such resumption of\nbusiness, whether such judgment was recovered prior or subsequent to\nsuch resumption of business, shall have the same rights as if he were a\ndepositor having a balance equal to the amount of such judgment at the\ntime such restrictions were imposed or at the time the superintendent\ntook possession of such bank, trust company or industrial bank. The\nsuperintendent shall prepare for each such bank, trust company or\nindustrial bank a list of the assets which, in his judgment, are sound\nand the value thereof as determined by him.\n 3. Such bank, trust company or industrial bank shall, immediately upon\nresuming business, issue to its depositors and creditors non-negotiable\ntransferable certificates, in a form approved by the superintendent,\nrepresenting the part of its deposits and debts which it is not\nauthorized to pay at that time under the provisions of subdivision two\nof this section. Such certificates shall bear interest, if any, at a\nrate not in excess of three per centum per annum.\n 4. The superintendent shall from time to time determine the excess of\nthe value of the sound assets of such bank, trust company or industrial\nbank over the total of the principal amount of such certificates\noutstanding and of the deposits and debts of such bank, trust company or\nindustrial bank not represented by such certificates, including deposits\nmade and debts incurred after resuming business. The amount by which\nsuch excess is greater than the excess of the value of the sound assets\nof such bank, trust company or industrial bank, determined as provided\nin subdivision two of this section, over its total deposits and debts at\nthe time of resuming business may, unless the superintendent\ndisapproves, be paid pro rata on account of the principal due on such\ncertificates or, if the principal has been paid in full, on account of\nthe interest, if any, due thereon. No such bank, trust company or\nindustrial bank shall, without previously obtaining the written\npermission of the superintendent, make any other payment on account of\nthe principal or interest of such certificates.\n 5. No dividends shall be paid on the stock of such bank, trust company\nor industrial bank while any such certificates are outstanding, unless,\nhaving previously secured the written permission of the superintendent\nto pay such certificates, it shall set aside and maintain a sum\nsufficient for the payment of all such outstanding certificates and the\ninterest, if any, accrued thereon and shall publish once a week for two\ncalendar weeks in a newspaper published in the county in which its\nprincipal office is located, notice to the effect that it will pay all\nsuch certificates and the interest, if any, accrued thereon upon due\npresentation for payment. If, thereafter, any such certificate together\nwith all interest, if any, accrued thereon, shall not be paid when so\npresented, the authority of such bank, trust company or industrial bank\nto pay such dividends shall cease.\n 6. So long as any of such certificates are outstanding, every holder\nof such a certificate shall have the same right to notice of all regular\nor special meetings of the stockholders of such bank, trust company or\nindustrial bank and to attend and to vote in person or by proxy at such\nmeetings as would a holder of stock of the par value of the unpaid\nprincipal amount of such certificate, except that no holder of a\ncertificate or certificates shall be entitled to vote upon any change in\nrespect to shares or capital stock pursuant to title eight of article\nfifteen or to receive notice of or attend a meeting of stockholders\nspecially called for that purpose. Within sixty days after such bank,\ntrust company or industrial bank has resumed business a meeting of its\nstockholders and holders of such certificates shall be called upon\nnotice prescribed by the superintendent. At such meeting directors shall\nbe elected who shall succeed the former directors, and the directors so\nelected shall elect officers who shall succeed the former officers.\nDirectors in office at the date of such meeting may be elected at such\nmeeting to succeed themselves and the directors elected at such meeting\nmay elect officers then serving to succeed themselves.\n 7. If the superintendent shall retake possession of the business and\nproperty of such bank, trust company or industrial bank while any such\ncertificates are still outstanding and liquidate its business as\nelsewhere provided in this chapter, deposits and debts not represented\nby such certificates, including deposits made and debts incurred after\nresuming business, shall be entitled to payment of principal and\ninterest in priority to the payment of the principal and interest of\nsuch certificates.\n 8. (a) A plan for the retirement of certificates issued or made\navailable by a bank, trust company or industrial bank pursuant to the\nprovisions of this section may be promulgated in accordance with this\nsubdivision eight in any case where the value of all the assets of such\nbank, trust company or industrial bank as determined by the\nsuperintendent is less than the aggregate of the amounts owing to\ndepositors and other creditors plus the unpaid amount of all such\ncertificates so issued or made available by such bank, trust company or\nindustrial bank. Such plan may be promulgated by such bank, trust\ncompany or industrial bank or by the holders of ten per centum or more\nin principal amount of all such outstanding certificates or the\nrepresentative or representatives of such holders.\n (b) Such plan may provide for any one or more of the following:\n (1) The retirement of certificates by the issuance in exchange\ntherefor of shares of capital stock or debentures or both of such bank,\ntrust company or industrial bank;\n (2) The issuance of preferred stock of such bank, trust company or\nindustrial bank and the sale of such preferred stock for cash or its\nexchange for real or personal property or for outstanding capital notes,\ndebentures or other obligations of such bank, trust company or\nindustrial bank;\n (3) The issuance of fractional shares of capital stock of such bank,\ntrust company or industrial bank in exchange for certificates or\nportions thereof in unpaid amount insufficient to permit the exchange\nthereof for a full share of capital stock. Such fractional shares of\ncapital stock shall have no voting rights, but, when combined with other\nfractional shares in sufficient amount, shall be convertible into a full\nshare or shares of capital stock;\n (4) The transfer into a separate account upon the books of such bank,\ntrust company or industrial bank or to a separate corporation, of any\nassets to be liquidated for the pro rata benefit of certificate holders\nand the issuance to certificate holders of evidences of participation in\nsuch assets if transferred into a separate account upon the books of\nsuch bank, trust company or industrial bank, or of stock or obligations\nor both of such separate corporation, if such assets are transferred to\na separate corporation;\n (5) The organization of a corporation to issue its stock or\nobligations or both in exchange for certificates and for the exchange of\ncertificates so acquired by such corporation for shares of the capital\nstock or debentures or both of such bank, trust company or industrial\nbank;\n (6) The amount of capital stock which such bank, trust company or\nindustrial bank shall have upon the plan becoming effective, the\nclasses, if any, into which such capital stock shall be divided, the\nnumber of shares in each class and the par value of each share.\n In addition to provisions herein specifically authorized to be\ncontained in a plan promulgated pursuant to this subdivision, such plan\nmay also contain any other provisions deemed necessary or convenient to\neffectuate the general purpose or purposes of the plan.\n (c) The person or persons promulgating such plan shall first submit it\nto the superintendent for his approval. If the plan is approved by the\nsuperintendent, such person shall within sixty days of such approval\nsubmit it to the supreme court in and for the county in which the\nprincipal office of such bank, trust company or industrial bank is\nlocated, together with an application for its approval. Such application\nshall set forth such facts as may be necessary to enable the court to\ndetermine the fairness of such plan and shall be made upon an order to\nshow cause which shall provide that notice thereof of a kind which the\ncourt deems to be adequate shall be given by such bank, trust company or\nindustrial bank to all holders of such certificates and all other\npersons whose interests, in the opinion of the court, may be affected by\nsuch plan. If the issue is raised in any proceeding involving a plan\npromulgated pursuant to this subdivision, a certificate executed by the\nsuperintendent and filed with the court shall be presumptive evidence of\nthe fact that the value of all of the assets of such bank, trust company\nor industrial bank is less than the aggregate of the amounts owing to\ndepositors and other creditors plus the unpaid amount of all such\ncertificates issued or made available by such bank, trust company or\nindustrial bank.\n (d) The superintendent or the bank, trust company or industrial bank\nor any person or persons authorized to promulgate a plan hereunder may\npropose and submit to the court an alternative plan or a modification or\nmodifications of any plan before the court. The court may modify any\nsuch plan or may propose a new or alternative plan, provided, however,\nthat a modification or modifications, whether proposed by the court or\nby any other person or persons, may be made only after a hearing upon\nnotice to all holders of certificates and all other persons whose\ninterests, in the opinion of the court, may be affected thereby, and\nsubject to the right of any person who shall previously have consented\nto such plan to withdraw such consent within a period to be prescribed\nby the court and after such notice as the court may direct. If any\nperson having such right of withdrawal shall not withdraw within the\nperiod so prescribed he shall be deemed to have approved such plan as so\nmodified.\n (e) After the hearing or hearings above provided the court shall by\norder approve a plan, with or without modifications, or shall reject all\nsuch plans, provided, however, that no order made pursuant to this\nparagraph approving such plan shall be made or entered unless such plan,\nin final form, shall first have been approved in writing by the\nsuperintendent and such written approval shall have been filed in the\nproceeding. If at the time of making the order approving such plan, the\ncourt is satisfied that the holders of two-thirds in amount of such\ncertificates have approved such plan, the order of the court shall\nrecite such fact and shall declare that such plan shall be effective\nupon the filing by the superintendent in the office of the clerk of the\ncounty in which is located the principal office of such bank, trust\ncompany or industrial bank of the certificate required to be filed\npursuant to paragraph (k) of this subdivision. If at the time of making\nsuch order, such plan shall not have been approved by the holders of\ntwo-thirds in amount of such certificates, such order shall provide that\nupon satisfactory proof of the fact that the holders of two-thirds in\namount of such certificates shall have approved the same, a further\norder may be entered ex parte declaring that such plan shall be\neffective upon the filing by the superintendent in the office of the\nclerk of the county in which is located the principal office of such\nbank, trust company or industrial bank of the certificate required to be\nfiled pursuant to paragraph (k) of this subdivision.\n (f) Upon the entering of an order declaring that such plan shall be\neffective upon the filing by the superintendent in the office of the\ncounty clerk of the certificate required to be filed pursuant to\nparagraph (k) of this subdivision, such plan shall become binding upon\nthe holders of all certificates of such bank, trust company or\nindustrial bank and all such holders shall be conclusively deemed to\nhave consented to all the terms and conditions of such plan whether or\nnot all of such holders shall actually have consented thereto and\nwhether or not all of them shall have received notice thereof or of the\nhearing thereon hereinbefore provided.\n (g) Every executor, administrator, trustee, guardian, committee,\nconservator, receiver, or other fiduciary, and every public and private\ncorporation or association, and every political and public\ninstrumentality or body, including, but not by way of limitation of the\ngenerality of the foregoing, boards of education and school districts\nand other special districts, is hereby authorized and empowered to\napprove and accept a plan promulgated pursuant to this subdivision and\nto execute and deliver such papers and documents as may be necessary or\nproper to evidence such approval and acceptance, and shall not be\nsubject to any liability whatsoever for any such approval or acceptance\nor any exchange of certificates for stock or other securities or both\nmade pursuant thereto.\n (h) A plan promulgated pursuant to this subdivision may be effectuated\neven though it has not been expressly approved by the holders of\ntwo-thirds in amount of all outstanding certificates, provided, as an\nalternative to such express approval, the provisions of this paragraph\nhave been complied with. After the plan is approved by the\nsuperintendent as provided by paragraph (c) of this subdivision, the\nperson or persons promulgating such plan shall file a copy thereof with\nthe clerk of the court and shall prepare and mail to each of the holders\nof such certificates and to each of the holders of stock of the bank,\ntrust company or industrial bank, addressed by registered mail to him,\npostage prepaid, to his last known address as the same appears on the\nrecords of the bank, trust company or industrial bank, a summary of such\nplan together with a notice stating in substance that such plan will be\npresented to the supreme court in and for the county in which the\nprincipal office of the bank, trust company or industrial bank is\nlocated, and designating a date, which date shall not be less than\nthirty days after the mailing of such notice, when such court will\nconsider such plan and hear any objection thereto on the part of any\nholder of a certificate or of stock. Such notice shall also be published\nby the person or persons promulgating such plan once, at least twenty\ndays before said date, in a daily newspaper of general circulation\npublished in the county where such hearing is to be had and if no such\ndaily newspaper is published in such county, then such notice shall be\npublished in a newspaper of general circulation in said county. Upon the\nreturn of such notice or any adjourned date or dates thereof, the court\nshall hear the parties interested therein and may accept proof in\naffidavit form or otherwise as to any facts and circumstances material\nthereto. The court upon proof by affidavit that the provisions hereof\nwith respect to mailing and publication have been fully complied with\nshall thereupon approve, modify or disapprove such plan, but in no event\nshall any such plan, with or without modifications, be approved by the\ncourt unless the court deems such plan fair and equitable to the holders\nof certificates and unless such plan, in final form, shall first have\nbeen approved in writing by the superintendent, and such written\napproval shall have been filed in the proceeding; or if written dissent\ntherefrom, duly executed and acknowledged, shall be filed with the clerk\nof the court prior to such return date, or prior to such other date as\nmay be fixed by the court, by the holders in the aggregate of more than\nthirty-three and one-third per centum of the face amount of the\ncertificates affected by such plan. All holders of certificates who have\nnot dissented from the plan in the manner provided by this paragraph and\nprior to the return date or such other date as may be fixed by the court\nshall be conclusively deemed to have assented thereto. Such plan shall\ncontain a provision in respect of certificate holders dissenting\nthereto, to the effect that adequate protection will be provided for the\nrealization by them of the value of their certificates by such method as\nwill in the opinion of the court, under and consistent with the\ncircumstances of the particular case, be equitable and fair to them.\nWhen such plan, with or without modifications, shall be approved by the\ncourt, the court shall make an order reciting such approval and\ndeclaring that such plan shall be effective upon the filing by the\nsuperintendent in the office of the clerk of the county in which is\nlocated the principal office of such bank, trust company or industrial\nbank of the certificate required to be filed pursuant to paragraph (k)\nof this subdivision. The appellate court to which an appeal is taken by\nany dissenting certificate holder or by any stockholder from any action\nby the court pursuant to this section shall have the right to impose\nupon the appellant as part of the costs of the appeal, reasonable fees\nof counsel for the respondent, and such appellate court may also, in its\ndiscretion, require bond therefor before entertaining any such appeal.\n (i) Upon the entering of an order declaring that such plan shall be\neffective upon the filing by the superintendent in the office of the\ncounty clerk of the certificate required to be filed pursuant to\nparagraph (k) of this subdivision, such steps shall be taken by the\nsuperintendent and all other persons, and all acts shall be done as may\nbe required by such plan and as may be necessary or desirable to make\nsuch plan operative. Within ten days after the entering of such order,\nthe superintendent shall issue an order pursuant to article two of this\nchapter directing that such bank, trust company or industrial bank shall\nforthwith make good the impairment of its capital. Upon receipt of such\norder, the directors of the bank, trust company or industrial bank shall\ngive notice to each stockholder of such requisition and of the amount of\nthe assessment he must pay, which amount shall be the aggregate par\nvalue of his shares. Such notice shall be mailed to each stockholder at\nhis address appearing on the records of the bank, trust company or\nindustrial bank or shall be served personally upon him. Notwithstanding\nany provision of section one hundred fourteen or section three hundred\nsix of this chapter, all outstanding stock certificates of the bank,\ntrust company or industrial bank shall be canceled of record not less\nthan thirty days after notice of assessment is given to stockholders as\nherein provided, and thereupon such stock certificates shall be null and\nvoid for all purposes and the rights of the holders thereunder shall\ncease and determine; provided, however, that each stockholder who pays\nthe full amount of such assessment within thirty days after notice of\nassessment is given as herein provided shall receive, in lieu of the\nstock on account of which such assessment was paid, new stock in the\namount to which he would be entitled if he held certificates issued by\nsuch bank, trust company or industrial bank pursuant to the provisions\nof this section in an aggregate unpaid principal and interest amount\nequal to the assessment so paid.\n (j) Not less than thirty nor more than sixty days after notice of\nassessment is given to stockholders as provided in paragraph (i) of this\nsubdivision, the superintendent shall, if the plan so provides, cause\nany assets of such bank, trust company or industrial bank which are to\nbe liquidated for the pro rata benefit of certificate holders, to be set\naside in a special account upon the books of such bank, trust company or\nindustrial bank or transferred to a separate corporation.\n (k) Upon the completion of the acts required to be done pursuant to\nparagraph (i) and paragraph (j) of this subdivision and not more than\nsixty days after notice of assessment is given to stockholders as\nprovided in paragraph (i) of this subdivision, the superintendent shall\nexecute in triplicate a certificate declaring such plan to be effective\nand stating the amount of capital stock which such bank, trust company\nor industrial bank shall thereafter have, the classes, if any, into\nwhich such capital stock shall be divided, the number of shares in each\nclass and the par value of each such share. The amount of capital stock\nstated in such certificate shall be not less than the amount of capital\nstock required to be issued to certificate holders pursuant to such\nplan, plus the amount of capital stock required, pursuant to paragraph\n(i) of this subdivision, to be issued to stockholders who shall have\npaid the full amount of the assessments levied pursuant to such\nparagraph (i). The amount of capital stock, the number of shares and\nthe par value of each such share as stated in such certificate shall be\nthe amount of capital stock, the number of shares and the par value\nthereof which such bank, trust company or industrial bank shall\nthereafter be authorized to have, provided that nothing herein contained\nshall be deemed to limit the power of any such bank, trust company or\nindustrial bank subsequently to change the amount of its capital stock,\nthe number of its shares or the par value of its shares pursuant to\nsubdivision two of section eight thousand one. One of such triplicate\ncertificates shall be transmitted forthwith by the superintendent to\nsuch bank, trust company or industrial bank, another shall be filed in\nthe office of the superintendent and the third shall be filed by the\nsuperintendent in the office of the clerk of the county in which is\nlocated the principal office of such bank, trust company or industrial\nbank. Upon such filing in the office of the county clerk, the plan shall\nbecome effective and all certificates theretofore issued by such bank,\ntrust company or industrial bank pursuant to the provisions of this\nsection shall be null and void and shall not be deemed to be outstanding\nfor any purpose. Thereupon such bank, trust company or industrial bank\nshall issue and make available to the holders of such certificates\nshares of stock or debentures or both of such bank, trust company or\nindustrial bank, and if the plan so provides, evidences of participation\nin the assets aside in a special account or stock or other securities or\nboth of a separate corporation, in the proportions and amounts specified\nin such plan.\n (l) Within sixty days after a plan pursuant to this subdivision has\nbecome effective with respect to any bank, trust company or industrial\nbank, there shall be called in accordance with its by-laws a meeting of\nits stockholders who shall elect directors who shall succeed the former\ndirectors. The directors so elected shall elect officers who shall\nsucceed the former officers. Directors in office at the date of such\nmeeting may be elected at such meeting to succeed themselves and the\ndirectors elected at such meeting may elect officers then serving to\nsucceed themselves. Notwithstanding the requirements as to ownership of\ncapital stock contained in section one hundred sixteen or section three\nhundred three of this chapter, the directors of such bank, trust company\nor industrial bank holding office at the time that such plan becomes\neffective may continue to hold office as directors, until their\nsuccessors are elected and shall have qualified.\n (m) The supreme court in and for the county in which is located the\nprincipal office of such bank, trust company or industrial bank is\nhereby vested with jurisdiction and authority to determine the fairness\nof, and to approve or disapprove, any plan, or modification or\nmodifications thereof, which may be promulgated hereunder and to\ndetermine the fairness of, and to approve or disapprove, the terms and\nconditions of the issuance and exchange of stock or other securities, or\nboth, of any corporation for certificates issued pursuant to the\nprovisions of this section and to make such orders and do such other\nthings as may be required by this subdivision or as may be necessary or\nconvenient to carry out the purposes hereof.\n 9. If there be in article fifteen of this chapter a provision which\nconflicts with any provision of this section six hundred nine, the\nprovision of this section six hundred nine shall prevail, and the\nconflicting provision of article fifteen shall not apply in such case.\nIf there be in article fifteen a provision relating to a matter embraced\nin this section six hundred nine, but not in conflict therewith, both\nprovisions shall apply.\n