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SECTION 606
When superintendent may take possession of banking organization; when possession may be surrendered
Banking (BNK) CHAPTER 2, ARTICLE 13
§ 606. When superintendent may take possession of banking
organization; when possession may be surrendered. 1. The superintendent
may, in his discretion, forthwith take possession of the business and
property of any banking organization whenever it shall appear that such
banking organization:

(a) Has violated any law;

(b) Is conducting its business in an unauthorized or unsafe manner;

(c) Is in an unsound or unsafe condition to transact its business;

(d) Cannot with safety and expediency continue business;

(e) Has an impairment of its capital; or, in the case of a mutual
savings and loan association or credit union, has assets insufficient to
pay its debts and the amount due members upon their shares;

(f) Has suspended payment of its obligations; or, in the case of a
mutual savings and loan association, has failed for sixty days after a
withdrawal application has been filed with it by any shareholder to pay
such withdrawal application in full;

(g) Has neglected or refused to comply with the terms of a duly issued
order of the superintendent;

(h) Has refused, upon proper demand, to submit its records and affairs
for inspection to an examiner of the department;

(i) Has refused to be examined upon oath regarding its affairs.

(j) Has neglected, refused or failed to take or continue proceedings
for voluntary liquidation in accordance with any of the provisions of
this chapter.

2. The superintendent may, in his discretion, and upon such conditions
as may be approved by him, surrender possession and permit such banking
organization to resume business.

3. When the superintendent shall have duly taken possession of the
property and business of any such banking organization, he may hold such
possession until its affairs are finally liquidated by him, unless he
shall surrender possession as provided in subdivision two of this
section or be enjoined from continuing possession as provided in section
six hundred seven of this article, or unless such banking organization
shall, with the written approval of the superintendent, voluntarily wind
up its affairs as provided in section six hundred five of this article.

4. (a) The superintendent may also, in his or her discretion,
forthwith take possession of the business and property in this state of
any foreign banking corporation that has been licensed by the
superintendent under the provisions of this chapter, including, for the
purposes of this article, any such corporation whose license has been
surrendered or revoked, upon his or her finding that any of the reasons
enumerated in subdivision one of this section exist with respect to such
corporation or that it is in liquidation at its domicile or elsewhere or
that there is reason to doubt its ability or willingness to pay in full
the claims of the creditors hereinbelow described. Title to such
business and property shall vest by operation of law in the
superintendent and his or her successors forthwith upon taking
possession. Thereafter the superintendent shall liquidate or otherwise
deal with such business and property in accordance with the provisions
of this chapter applicable to the liquidation of banking organizations,
except that the superintendent may deal with such business and property
and prosecute and defend any and all actions relating thereto in his or
her own name as superintendent. Only the claims of creditors of such
corporation arising out of transactions had by them with its New York
agency or agencies, or with its New York branch or branches, shall be
accepted by the superintendent for payment out of such business and
property in this state as provided in this article. Acceptance or
rejection of such claims by the superintendent shall not prejudice such
creditors' rights to otherwise share in the assets of such corporation.
The following claims shall not be accepted by the superintendent for
payment out of such business and property in this state: (1) claims
which would not represent an enforceable legal obligation against such
branch or agency if such branch or agency were a separate and
independent legal entity; and (2) amounts due and other liabilities to
other offices, agencies or branches of, and affiliates of, such foreign
banking corporation.

(b) Whenever the accepted claims, together with interest thereon, if
interest was paid, and the expenses of the liquidation have been paid in
full or properly provided for, the superintendent upon the order of the
supreme court shall turn over the remaining assets to, in the first
instance, other offices of the foreign banking corporation that are
being liquidated in the United States, upon the request of the
liquidators of those offices, in amounts which the liquidators of those
offices demonstrate to the superintendent are needed to pay the claims
accepted by those liquidators and any expenses incurred by the
liquidators in liquidating those other offices of the foreign banking
corporation. After such payments, if any, have been made, any assets of
the foreign banking corporation remaining in the hands of the
superintendent shall be turned over to the principal office of such
foreign banking corporation, or to the duly appointed domiciliary
liquidator or receiver of said foreign banking corporation. Dividends
and other amounts remaining unclaimed or unpaid in the hands of the
superintendent for six months after such turn-over shall be deposited by
him or her as provided in article two of this chapter.

(c) As used in this subdivision the phrase "business and property in
this state" includes, but is not limited to, all property of the foreign
corporation, real, personal or mixed, whether tangible or intangible,
(1) wherever situated, constituting part of the business of the New York
agency or branch and appearing on its books as such, and (2) situated
within this state whether or not constituting part of the business of
the New York agency or branch or so appearing on its books.

(d) For the purposes of this subdivision, the words "debts",
"obligations", "deposits" and other similar terms as used in subsequent
sections of this article, shall be deemed to refer to the claims that
the superintendent shall accept pursuant to paragraph (a) of this
subdivision, the words "creditors" and "depositors" shall be deemed to
refer to the owners of such accepted claims and, except when the context
shall otherwise require, the terms "banking organization" and
"corporation" shall be deemed to refer to the New York agency or
agencies or branch or branches and the word "officer" shall include the
agent or other person in charge of such agency or agencies and any
person in charge of or who is an officer of such branch or branches. As
used in this subdivision, (i) "affiliate" shall mean any person, or
group of persons acting in concert, that controls, is controlled by or
is under common control with such foreign banking corporation and (ii)
"control" means any person, or group of persons acting in concert,
directly or indirectly, owning, controlling or holding with power to
vote, more than fifty percent of the voting stock of a company, or
having the ability in any manner to elect a majority of the directors of
a company, or otherwise exercising a controlling influence over the
management and policies of a company as defined by the superintendent by
regulation. For purposes of this subdivision, the term "person" shall
mean a corporation, unincorporated association, partnership, or any
other entity or individual.

5. The term "banking organization" as used in this and subsequent
sections of this article shall be deemed to include a corporation which
has engaged in any business or other activity prohibited by section one
hundred thirty-one of this chapter, and an unincorporated association,
partnership, fiduciary or individual who has engaged in any business or
other activity prohibited by section one hundred eighty of this chapter.

6. (a) In the case of the liquidation of an investment company by the
superintendent, accepted claims, amounts due and other liabilities owed
to affiliates of such investment company shall be paid only after all
accepted claims, amounts due and other liabilities owed have been fully
paid to such creditors and other claimants of the investment company
that are not affiliates of such investment company.

(b) For the purposes of this subdivision, (i) "affiliate" shall mean
any person, or group of persons acting in concert, that controls, is
controlled by or is under common control with such investment company,
and (ii) "control" means any person, or group of persons acting in
concert, directly or indirectly, owning, controlling, or holding with
power to vote, more than fifty percent of the voting stock of a company,
or having the ability in any manner to elect a majority of the directors
of a company, or otherwise exercising a controlling influence over the
management and policies of a company as defined by the superintendent by
regulation. For purposes of this subdivision, the term "person" shall
mean a corporation, unincorporated association, partnership, or any
other entity or individual.