§ 34-26-220 — Suspension of operations of bankrupt or insolvent credit union; liquidation of assets.

South Carolina § 34-26-220

• Jurisdiction: South Carolina
• Title 34: BANKING, FINANCIAL INSTITUTIONS AND MONEY
• Ch. 26: SOUTH CAROLINA CREDIT UNION ACT

Text

(1) If it appears that any credit union is bankrupt or insolvent, or that it has wilfully violated this chapter, or is operating in an unsafe or unsound manner, the board may issue an order temporarily suspending the credit union's operations for not more than sixty days. The board of directors shall be given notice by registered mail of such suspension, which notice shall include a list of the reasons for such suspension, and a list of the specific violations of this chapter, if any. The board shall also notify the insuring organization of any suspension. (2) Upon receipt of such suspension notice, the credit union shall cease all operations, except those authorized by the board. The board of directors shall then file with the board a reply to the suspension notice, and may request a hearing to present a plan of corrective actions proposed if the board desires to continue operations. The board of directors may request that the credit union be declared insolvent and a liquidating agent be appointed. (3) Upon receipt of evidence from the suspended credit union that the conditions causing the order of suspension have been corrected, the board may revoke the suspension notice, permit the credit union to resume normal operations, and notify the insuring organization. (4) If the board, after issuing notice of suspension and providing an opportunity for a hearing, rejects the credit union's plan to continue operations, the board may issue a notice of involuntary liquidation and appoint a liquidating agent. However, before issuing the notice of involuntary liquidation the board shall make an effort to merge the troubled credit union with another credit union. Involuntary liquidation may not be ordered prior to the conclusion of suspension procedures outlined in this section. (5) If, within the suspension period, the credit union fails to answer the suspension notice or request a hearing, the board may then revoke the credit union's charter, appoint a liquidating agent, and liquidate the credit union. (6) In the event of liquidation, the assets of the credit union or the proceeds from any disposition of the assets shall be applied and distributed in the following sequence: (a) secured creditors up to the value of their collateral; (b) costs and expenses of liquidation; (c) wages due the employees of the credit union; (d) costs and expenses incurred by creditors in successfully opposing the release of the credit union from certain debts as allowed by the board; (e) taxes owed to the United States or any other governmental unit; (f) debts owed to the United States; (g) general creditors, secured creditors to the extent their claims exceed the value of their collateral, and owners of deposit accounts to the extent such accounts are uninsured; (h) members, to the extent of uninsured share accounts and the organization that insured the accounts of the credit union.

Legislative History

HISTORY: 1996 Act No. 371, SECTION 1, eff May 29, 1996.