§ 42-116-12. Payment of depositor's claims.
(a) Subject to the provisions of §â€‚42-116-7(1) — (6), distributions from the corporation with respect to deposit liabilities assumed
from eligible institutions shall be made in accordance with this section.
(b) For the purposes of this section, each assumed deposit liability is the sum of the
principal amount thereof as of January 1, 1991, plus accrued interest thereon to the
date that the eligible institution was petitioned into receivership. In the case of
an eligible institution that is a credit union, all types of the eligible institution's
member share accounts, including regular shares, share certificates and share draft
accounts, except as to one share per account which are deemed to constitute an equity
ownership interest in the eligible institution, are deemed to be deposit liabilities
to the extent assumed by the corporation.
(c) Deposit liabilities and distributions on account thereof made pursuant to this section
shall not include any interest accrued from the time that the eligible institution
from which the deposit liabilities arose was petitioned into receivership.
(d) For the purpose of determining distributions by the corporation in respect of assumed
deposit liabilities, as set forth in subsection (b), assumed deposit liabilities in
the same eligible institution are aggregated and adjusted in accordance with regulations
adopted by the corporation, which regulations follow the principles contained in section
3(m) of the Federal Deposit Insurance Act, 12 U.S.C. §â€‚1811 et seq., as in effect as of December 31, 1990, and rules and regulations of the Federal
Deposit Insurance Corporation as in effect as of December 31, 1990. Assumed deposit
liabilities determined after this aggregation shall be segregated into separate obligations
that are entitled to separate distributions from the corporation as provided in this
section (as so aggregated and determined referred to individually as "distributable
account� and collectively as "distributable accounts�).
(e) Payments on account of distributable accounts as set forth in subsection (d) shall
be made as follows:
(1) Distributable accounts of four thousand dollars ($4,000) or less shall be paid in
full by June 30, 1992.
(2) As to distributable accounts of more than four thousand dollars ($4,000), ninety percent
(90%) of the entire balance of the distributable account shall be paid by June 30,
1992.
(3) As to distributable accounts described in subdivision (2) of this subsection, there
is established a guaranteed balance equal to ten percent (10%) of the distributable
account as initially determined. The guaranteed balance shall bear simple interest,
not compounded, at five percent (5%) per annum beginning July 1, 1992. Interest accrued
through June 30, 1997, shall be posted to each depositor's guaranteed balance as of
June 30, 1997, as an addition to the principal thereof. A depositor has no right to
receive that interest prior to July 1, 1997. The principal of the guaranteed balance,
to include the interest posted on June 30, 1997, shall be paid in fifteen (15) consecutive
equal annual payments commencing on July 1, 1997, and on each July 1, thereafter until
paid in full. Notwithstanding any other provisions or references to pro-rata distribution
in chapter 116 of title 42, all net proceeds from litigation, whether settled in or out of court, shall be paid
equally to each depositor with guaranteed balances upon receipt by the corporation
each time that escrow reaches fifteen million dollars ($15,000,000). Interest accrued
after June 30, 1997, shall be paid in arrears on the outstanding principal of the
guaranteed balance concurrently with each annual principal payments.
(f) The principal amount of any guaranteed balance and/or the amount of each distribution
by the corporation under this section, including without limitation those in respect
of distributable accounts and/or guaranteed balances, shall be reduced permanently
from time to time by an amount equal to the aggregate of all prior payments not previously
applied against each distribution, and the corporation may continue to reduce these
distributions by any unapplied prior payments until the aggregate amount of the prior
payments have been applied against these distributions under this section. For the
purposes of this section, the term "prior payment� means the aggregate amount from
time to time after January 1, 1991, of:
(1) Payments made or issued by an eligible institution, the receiver of the eligible institution
or the corporation (other than distributions under this section) in respect of any
deposit liabilities of the intended recipient of the distribution and/or any deposit
liabilities giving rise to the distribution; and
(2) Set-offs made by the eligible institution, the receiver of the eligible institution
or the corporation in respect of any deposit liabilities of the intended recipient
of the distribution and/or any deposit liabilities giving rise to the distribution.
(g)(1) Within thirty (30) days after the date of the payment set forth in subdivision (e)(2)
and concurrently with each annual payment of the guaranteed balance, the owner thereof
shall receive a statement of account.
(2) From June 30, 1992, until June 30, 1997, except for transfer by will, the laws of
descent and distribution, or otherwise required by operation of law, the guaranteed
balance is non-transferable, whether by sale, pledge, gift, or otherwise. Commencing
on July 1, 1997, any guaranteed balance may be transferred by the holder thereof;
provided that the transfer does not subject the corporation, the transferor, or the
transferee to any registration or reporting requirements under applicable federal
and/or state securities laws; and provided further, that any guaranteed balance transferred
pursuant to this section may not be used by any transferee or subsequent transferee
as a set off or other reduction against any debt or liability to the corporation,
or any assignee or transferee of the corporation.
(3) The guaranteed balances will not be evidenced by a certificate or other instrument.
The corporation shall maintain a record of the name and address of the owner of the
guaranteed balance and the amount of the guaranteed balance.
(h) The corporation may:
(1) Pre-pay any guaranteed balance with a principal amount of less than one thousand dollars
($1,000) at any time;
(2) Pre-pay the outstanding amount of all guaranteed balances at any time; and
(3) Pre-pay all guaranteed balances on a pro-rata basis at any time. Pro-rata means a
distribution in the percentage that the aggregate amount of prepayment bears to the
aggregate amount of the outstanding principal balance of all guaranteed balances.
(i)(1) All net proceeds of litigation, (after payment of all legal fees, costs, and expenses
arising in connection therewith) whether by settlement or suit, prosecuted by an eligible
institution, the receiver of an eligible institution and/or the corporation, shall
be paid to the corporation and shall be utilized by it as follows:
(i) To pay the guaranteed balances in accordance with subdivision (e)(3); and
(ii) After the guaranteed balances have been paid in full, to pay the loan obligations
or bond indebtedness of the corporation.
(2) The term "litigation,� for the purposes of this subsection, means all rights, claims
and causes of action against:
(i) Any eligible institution;
(ii) The Rhode Island share and deposit indemnity corporation;
(iii) And/or any officers, directors, employees, accountants, attorneys, appraisers, consultants,
agents, or providers of professional services to the institution and/or the Rhode
Island share and deposit indemnity corporation.
(j)(1) The corporation requires that any depositor entitled to receive any payment under
the terms of this chapter shall, in consideration of the corporation's making the
payment and as a condition precedent to the depositor's receiving the payment, and
only to the extent of that payment and any tolled or lost interest or consequential
damages attributable to that payment, execute a total and complete waiver and release
of any and all rights, claims and causes of action, of any nature whatsoever, which
that depositor might have against the state or any of its officials or employees in
relation to the pro rata portion of any funds or accounts that the depositor may have
or may have had on deposit with any eligible institution.
(2) Distributions as to distributable accounts arising from the assumed deposit liabilities
of the heritage loan and investment company are limited to those deposit liability
claims which have been allowed and validated by an un-stayed order or judgment of
the superior court sitting at Providence county. Distributable accounts arising from
deposit liability claims which have not been allowed and validated by an un-stayed
order or judgment of the superior court as of June 30, 1992, shall be paid by the
corporation within sixty (60) days of the receipt by the corporation of an un-stayed
order or judgment of the superior court which allows and validates the claim. Payment
of distributable accounts pursuant to this subsection shall be in accordance with
and in the same manner and form as set forth in subdivisions (e)(1), (e)(2) and (e)(3).
(k)(1) The provisions of subdivisions (e)(1) and (e)(2) do not apply to this subsection.
In the event that substantially all of the deposit liabilities of the Davisville Credit
Union are insured by the Federal Deposit Insurance Corporation, the payment of any
distributable account arising from the assumption by the corporation of any uninsured
portion of a deposit liability of the Davisville Credit Union, which uninsured portion
does not exceed ten percent (10%) of the deposit liability existing as of the date
of the insurance, shall be made by the establishment by the corporation of a guaranteed
balance equal to the amount of the distributable account. The amount of the distributable
account shall be determined by the corporation within thirty (30) days of the corporation's
assumption of the portion of the deposit liability. The guaranteed balance as established
in this subsection is payable in the same manner and on the same terms and conditions
as the guaranteed balance provided for in subdivision (e)(3).
(2) The guaranteed balance as established in this subsection is subject to the remaining
provisions of this section.