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SECTION 609
Resumption of business by bank, trust company or industrial bank; retirement of certificates; applicability to stock-form savings banks a...
Banking (BNK) CHAPTER 2, ARTICLE 13
§ 609. Resumption of business by bank, trust company or industrial
bank; retirement of certificates; applicability to stock-form savings
banks and stock-form savings and loan associations. 1. Any bank, trust
company, stock-form savings bank or stock-form savings and loan
association of which the superintendent has taken possession or which is
operating under restrictions imposed by duly constituted authority may
be permitted by the superintendent, in his discretion and subject to
such conditions as may be approved by him, to resume business in
accordance with the provisions of this section.

2. No bank, trust company or industrial bank permitted by the
superintendent to resume business in accordance with the provisions of
this section shall, without previously obtaining the written permission
of the superintendent, pay, on account of any deposit made or debt
incurred before such restrictions were imposed or before the
superintendent took possession of such bank, trust company or industrial
bank, more than that proportion of eighty per centum of the total value
of its sound assets, as determined by the superintendent, which such
deposit or debt bears to the total of the deposits and debts of such
bank, trust company or industrial bank at the time of resuming business:
provided that nothing contained in this section shall affect any
preference created by any law of this state for the benefit of any
depositor or creditor or impair the rights of any secured depositor or
creditor in any assets lawfully pledged or assigned as such security.
For the purposes of this section, the holder of a judgment against any
such bank, trust company or industrial bank for the payment of money
arising out of a cause of action arising prior to such resumption of
business, whether such judgment was recovered prior or subsequent to
such resumption of business, shall have the same rights as if he were a
depositor having a balance equal to the amount of such judgment at the
time such restrictions were imposed or at the time the superintendent
took possession of such bank, trust company or industrial bank. The
superintendent shall prepare for each such bank, trust company or
industrial bank a list of the assets which, in his judgment, are sound
and the value thereof as determined by him.

3. Such bank, trust company or industrial bank shall, immediately upon
resuming business, issue to its depositors and creditors non-negotiable
transferable certificates, in a form approved by the superintendent,
representing the part of its deposits and debts which it is not
authorized to pay at that time under the provisions of subdivision two
of this section. Such certificates shall bear interest, if any, at a
rate not in excess of three per centum per annum.

4. The superintendent shall from time to time determine the excess of
the value of the sound assets of such bank, trust company or industrial
bank over the total of the principal amount of such certificates
outstanding and of the deposits and debts of such bank, trust company or
industrial bank not represented by such certificates, including deposits
made and debts incurred after resuming business. The amount by which
such excess is greater than the excess of the value of the sound assets
of such bank, trust company or industrial bank, determined as provided
in subdivision two of this section, over its total deposits and debts at
the time of resuming business may, unless the superintendent
disapproves, be paid pro rata on account of the principal due on such
certificates or, if the principal has been paid in full, on account of
the interest, if any, due thereon. No such bank, trust company or
industrial bank shall, without previously obtaining the written
permission of the superintendent, make any other payment on account of
the principal or interest of such certificates.

5. No dividends shall be paid on the stock of such bank, trust company
or industrial bank while any such certificates are outstanding, unless,
having previously secured the written permission of the superintendent
to pay such certificates, it shall set aside and maintain a sum
sufficient for the payment of all such outstanding certificates and the
interest, if any, accrued thereon and shall publish once a week for two
calendar weeks in a newspaper published in the county in which its
principal office is located, notice to the effect that it will pay all
such certificates and the interest, if any, accrued thereon upon due
presentation for payment. If, thereafter, any such certificate together
with all interest, if any, accrued thereon, shall not be paid when so
presented, the authority of such bank, trust company or industrial bank
to pay such dividends shall cease.

6. So long as any of such certificates are outstanding, every holder
of such a certificate shall have the same right to notice of all regular
or special meetings of the stockholders of such bank, trust company or
industrial bank and to attend and to vote in person or by proxy at such
meetings as would a holder of stock of the par value of the unpaid
principal amount of such certificate, except that no holder of a
certificate or certificates shall be entitled to vote upon any change in
respect to shares or capital stock pursuant to title eight of article
fifteen or to receive notice of or attend a meeting of stockholders
specially called for that purpose. Within sixty days after such bank,
trust company or industrial bank has resumed business a meeting of its
stockholders and holders of such certificates shall be called upon
notice prescribed by the superintendent. At such meeting directors shall
be elected who shall succeed the former directors, and the directors so
elected shall elect officers who shall succeed the former officers.
Directors in office at the date of such meeting may be elected at such
meeting to succeed themselves and the directors elected at such meeting
may elect officers then serving to succeed themselves.

7. If the superintendent shall retake possession of the business and
property of such bank, trust company or industrial bank while any such
certificates are still outstanding and liquidate its business as
elsewhere provided in this chapter, deposits and debts not represented
by such certificates, including deposits made and debts incurred after
resuming business, shall be entitled to payment of principal and
interest in priority to the payment of the principal and interest of
such certificates.

8. (a) A plan for the retirement of certificates issued or made
available by a bank, trust company or industrial bank pursuant to the
provisions of this section may be promulgated in accordance with this
subdivision eight in any case where the value of all the assets of such
bank, trust company or industrial bank as determined by the
superintendent is less than the aggregate of the amounts owing to
depositors and other creditors plus the unpaid amount of all such
certificates so issued or made available by such bank, trust company or
industrial bank. Such plan may be promulgated by such bank, trust
company or industrial bank or by the holders of ten per centum or more
in principal amount of all such outstanding certificates or the
representative or representatives of such holders.

(b) Such plan may provide for any one or more of the following:

(1) The retirement of certificates by the issuance in exchange
therefor of shares of capital stock or debentures or both of such bank,
trust company or industrial bank;

(2) The issuance of preferred stock of such bank, trust company or
industrial bank and the sale of such preferred stock for cash or its
exchange for real or personal property or for outstanding capital notes,
debentures or other obligations of such bank, trust company or
industrial bank;

(3) The issuance of fractional shares of capital stock of such bank,
trust company or industrial bank in exchange for certificates or
portions thereof in unpaid amount insufficient to permit the exchange
thereof for a full share of capital stock. Such fractional shares of
capital stock shall have no voting rights, but, when combined with other
fractional shares in sufficient amount, shall be convertible into a full
share or shares of capital stock;

(4) The transfer into a separate account upon the books of such bank,
trust company or industrial bank or to a separate corporation, of any
assets to be liquidated for the pro rata benefit of certificate holders
and the issuance to certificate holders of evidences of participation in
such assets if transferred into a separate account upon the books of
such bank, trust company or industrial bank, or of stock or obligations
or both of such separate corporation, if such assets are transferred to
a separate corporation;

(5) The organization of a corporation to issue its stock or
obligations or both in exchange for certificates and for the exchange of
certificates so acquired by such corporation for shares of the capital
stock or debentures or both of such bank, trust company or industrial
bank;

(6) The amount of capital stock which such bank, trust company or
industrial bank shall have upon the plan becoming effective, the
classes, if any, into which such capital stock shall be divided, the
number of shares in each class and the par value of each share.

In addition to provisions herein specifically authorized to be
contained in a plan promulgated pursuant to this subdivision, such plan
may also contain any other provisions deemed necessary or convenient to
effectuate the general purpose or purposes of the plan.

(c) The person or persons promulgating such plan shall first submit it
to the superintendent for his approval. If the plan is approved by the
superintendent, such person shall within sixty days of such approval
submit it to the supreme court in and for the county in which the
principal office of such bank, trust company or industrial bank is
located, together with an application for its approval. Such application
shall set forth such facts as may be necessary to enable the court to
determine the fairness of such plan and shall be made upon an order to
show cause which shall provide that notice thereof of a kind which the
court deems to be adequate shall be given by such bank, trust company or
industrial bank to all holders of such certificates and all other
persons whose interests, in the opinion of the court, may be affected by
such plan. If the issue is raised in any proceeding involving a plan
promulgated pursuant to this subdivision, a certificate executed by the
superintendent and filed with the court shall be presumptive evidence of
the fact that the value of all of the assets of such bank, trust company
or industrial bank is less than the aggregate of the amounts owing to
depositors and other creditors plus the unpaid amount of all such
certificates issued or made available by such bank, trust company or
industrial bank.

(d) The superintendent or the bank, trust company or industrial bank
or any person or persons authorized to promulgate a plan hereunder may
propose and submit to the court an alternative plan or a modification or
modifications of any plan before the court. The court may modify any
such plan or may propose a new or alternative plan, provided, however,
that a modification or modifications, whether proposed by the court or
by any other person or persons, may be made only after a hearing upon
notice to all holders of certificates and all other persons whose
interests, in the opinion of the court, may be affected thereby, and
subject to the right of any person who shall previously have consented
to such plan to withdraw such consent within a period to be prescribed
by the court and after such notice as the court may direct. If any
person having such right of withdrawal shall not withdraw within the
period so prescribed he shall be deemed to have approved such plan as so
modified.

(e) After the hearing or hearings above provided the court shall by
order approve a plan, with or without modifications, or shall reject all
such plans, provided, however, that no order made pursuant to this
paragraph approving such plan shall be made or entered unless such plan,
in final form, shall first have been approved in writing by the
superintendent and such written approval shall have been filed in the
proceeding. If at the time of making the order approving such plan, the
court is satisfied that the holders of two-thirds in amount of such
certificates have approved such plan, the order of the court shall
recite such fact and shall declare that such plan shall be effective
upon the filing by the superintendent in the office of the clerk of the
county in which is located the principal office of such bank, trust
company or industrial bank of the certificate required to be filed
pursuant to paragraph (k) of this subdivision. If at the time of making
such order, such plan shall not have been approved by the holders of
two-thirds in amount of such certificates, such order shall provide that
upon satisfactory proof of the fact that the holders of two-thirds in
amount of such certificates shall have approved the same, a further
order may be entered ex parte declaring that such plan shall be
effective upon the filing by the superintendent in the office of the
clerk of the county in which is located the principal office of such
bank, trust company or industrial bank of the certificate required to be
filed pursuant to paragraph (k) of this subdivision.

(f) Upon the entering of an order declaring that such plan shall be
effective upon the filing by the superintendent in the office of the
county clerk of the certificate required to be filed pursuant to
paragraph (k) of this subdivision, such plan shall become binding upon
the holders of all certificates of such bank, trust company or
industrial bank and all such holders shall be conclusively deemed to
have consented to all the terms and conditions of such plan whether or
not all of such holders shall actually have consented thereto and
whether or not all of them shall have received notice thereof or of the
hearing thereon hereinbefore provided.

(g) Every executor, administrator, trustee, guardian, committee,
conservator, receiver, or other fiduciary, and every public and private
corporation or association, and every political and public
instrumentality or body, including, but not by way of limitation of the
generality of the foregoing, boards of education and school districts
and other special districts, is hereby authorized and empowered to
approve and accept a plan promulgated pursuant to this subdivision and
to execute and deliver such papers and documents as may be necessary or
proper to evidence such approval and acceptance, and shall not be
subject to any liability whatsoever for any such approval or acceptance
or any exchange of certificates for stock or other securities or both
made pursuant thereto.

(h) A plan promulgated pursuant to this subdivision may be effectuated
even though it has not been expressly approved by the holders of
two-thirds in amount of all outstanding certificates, provided, as an
alternative to such express approval, the provisions of this paragraph
have been complied with. After the plan is approved by the
superintendent as provided by paragraph (c) of this subdivision, the
person or persons promulgating such plan shall file a copy thereof with
the clerk of the court and shall prepare and mail to each of the holders
of such certificates and to each of the holders of stock of the bank,
trust company or industrial bank, addressed by registered mail to him,
postage prepaid, to his last known address as the same appears on the
records of the bank, trust company or industrial bank, a summary of such
plan together with a notice stating in substance that such plan will be
presented to the supreme court in and for the county in which the
principal office of the bank, trust company or industrial bank is
located, and designating a date, which date shall not be less than
thirty days after the mailing of such notice, when such court will
consider such plan and hear any objection thereto on the part of any
holder of a certificate or of stock. Such notice shall also be published
by the person or persons promulgating such plan once, at least twenty
days before said date, in a daily newspaper of general circulation
published in the county where such hearing is to be had and if no such
daily newspaper is published in such county, then such notice shall be
published in a newspaper of general circulation in said county. Upon the
return of such notice or any adjourned date or dates thereof, the court
shall hear the parties interested therein and may accept proof in
affidavit form or otherwise as to any facts and circumstances material
thereto. The court upon proof by affidavit that the provisions hereof
with respect to mailing and publication have been fully complied with
shall thereupon approve, modify or disapprove such plan, but in no event
shall any such plan, with or without modifications, be approved by the
court unless the court deems such plan fair and equitable to the holders
of certificates and unless such plan, in final form, shall first have
been approved in writing by the superintendent, and such written
approval shall have been filed in the proceeding; or if written dissent
therefrom, duly executed and acknowledged, shall be filed with the clerk
of the court prior to such return date, or prior to such other date as
may be fixed by the court, by the holders in the aggregate of more than
thirty-three and one-third per centum of the face amount of the
certificates affected by such plan. All holders of certificates who have
not dissented from the plan in the manner provided by this paragraph and
prior to the return date or such other date as may be fixed by the court
shall be conclusively deemed to have assented thereto. Such plan shall
contain a provision in respect of certificate holders dissenting
thereto, to the effect that adequate protection will be provided for the
realization by them of the value of their certificates by such method as
will in the opinion of the court, under and consistent with the
circumstances of the particular case, be equitable and fair to them.
When such plan, with or without modifications, shall be approved by the
court, the court shall make an order reciting such approval and
declaring that such plan shall be effective upon the filing by the
superintendent in the office of the clerk of the county in which is
located the principal office of such bank, trust company or industrial
bank of the certificate required to be filed pursuant to paragraph (k)
of this subdivision. The appellate court to which an appeal is taken by
any dissenting certificate holder or by any stockholder from any action
by the court pursuant to this section shall have the right to impose
upon the appellant as part of the costs of the appeal, reasonable fees
of counsel for the respondent, and such appellate court may also, in its
discretion, require bond therefor before entertaining any such appeal.

(i) Upon the entering of an order declaring that such plan shall be
effective upon the filing by the superintendent in the office of the
county clerk of the certificate required to be filed pursuant to
paragraph (k) of this subdivision, such steps shall be taken by the
superintendent and all other persons, and all acts shall be done as may
be required by such plan and as may be necessary or desirable to make
such plan operative. Within ten days after the entering of such order,
the superintendent shall issue an order pursuant to article two of this
chapter directing that such bank, trust company or industrial bank shall
forthwith make good the impairment of its capital. Upon receipt of such
order, the directors of the bank, trust company or industrial bank shall
give notice to each stockholder of such requisition and of the amount of
the assessment he must pay, which amount shall be the aggregate par
value of his shares. Such notice shall be mailed to each stockholder at
his address appearing on the records of the bank, trust company or
industrial bank or shall be served personally upon him. Notwithstanding
any provision of section one hundred fourteen or section three hundred
six of this chapter, all outstanding stock certificates of the bank,
trust company or industrial bank shall be canceled of record not less
than thirty days after notice of assessment is given to stockholders as
herein provided, and thereupon such stock certificates shall be null and
void for all purposes and the rights of the holders thereunder shall
cease and determine; provided, however, that each stockholder who pays
the full amount of such assessment within thirty days after notice of
assessment is given as herein provided shall receive, in lieu of the
stock on account of which such assessment was paid, new stock in the
amount to which he would be entitled if he held certificates issued by
such bank, trust company or industrial bank pursuant to the provisions
of this section in an aggregate unpaid principal and interest amount
equal to the assessment so paid.

(j) Not less than thirty nor more than sixty days after notice of
assessment is given to stockholders as provided in paragraph (i) of this
subdivision, the superintendent shall, if the plan so provides, cause
any assets of such bank, trust company or industrial bank which are to
be liquidated for the pro rata benefit of certificate holders, to be set
aside in a special account upon the books of such bank, trust company or
industrial bank or transferred to a separate corporation.

(k) Upon the completion of the acts required to be done pursuant to
paragraph (i) and paragraph (j) of this subdivision and not more than
sixty days after notice of assessment is given to stockholders as
provided in paragraph (i) of this subdivision, the superintendent shall
execute in triplicate a certificate declaring such plan to be effective
and stating the amount of capital stock which such bank, trust company
or industrial bank shall thereafter have, the classes, if any, into
which such capital stock shall be divided, the number of shares in each
class and the par value of each such share. The amount of capital stock
stated in such certificate shall be not less than the amount of capital
stock required to be issued to certificate holders pursuant to such
plan, plus the amount of capital stock required, pursuant to paragraph
(i) of this subdivision, to be issued to stockholders who shall have
paid the full amount of the assessments levied pursuant to such
paragraph (i). The amount of capital stock, the number of shares and
the par value of each such share as stated in such certificate shall be
the amount of capital stock, the number of shares and the par value
thereof which such bank, trust company or industrial bank shall
thereafter be authorized to have, provided that nothing herein contained
shall be deemed to limit the power of any such bank, trust company or
industrial bank subsequently to change the amount of its capital stock,
the number of its shares or the par value of its shares pursuant to
subdivision two of section eight thousand one. One of such triplicate
certificates shall be transmitted forthwith by the superintendent to
such bank, trust company or industrial bank, another shall be filed in
the office of the superintendent and the third shall be filed by the
superintendent in the office of the clerk of the county in which is
located the principal office of such bank, trust company or industrial
bank. Upon such filing in the office of the county clerk, the plan shall
become effective and all certificates theretofore issued by such bank,
trust company or industrial bank pursuant to the provisions of this
section shall be null and void and shall not be deemed to be outstanding
for any purpose. Thereupon such bank, trust company or industrial bank
shall issue and make available to the holders of such certificates
shares of stock or debentures or both of such bank, trust company or
industrial bank, and if the plan so provides, evidences of participation
in the assets aside in a special account or stock or other securities or
both of a separate corporation, in the proportions and amounts specified
in such plan.

(l) Within sixty days after a plan pursuant to this subdivision has
become effective with respect to any bank, trust company or industrial
bank, there shall be called in accordance with its by-laws a meeting of
its stockholders who shall elect directors who shall succeed the former
directors. The directors so elected shall elect officers who shall
succeed the former officers. Directors in office at the date of such
meeting may be elected at such meeting to succeed themselves and the
directors elected at such meeting may elect officers then serving to
succeed themselves. Notwithstanding the requirements as to ownership of
capital stock contained in section one hundred sixteen or section three
hundred three of this chapter, the directors of such bank, trust company
or industrial bank holding office at the time that such plan becomes
effective may continue to hold office as directors, until their
successors are elected and shall have qualified.

(m) The supreme court in and for the county in which is located the
principal office of such bank, trust company or industrial bank is
hereby vested with jurisdiction and authority to determine the fairness
of, and to approve or disapprove, any plan, or modification or
modifications thereof, which may be promulgated hereunder and to
determine the fairness of, and to approve or disapprove, the terms and
conditions of the issuance and exchange of stock or other securities, or
both, of any corporation for certificates issued pursuant to the
provisions of this section and to make such orders and do such other
things as may be required by this subdivision or as may be necessary or
convenient to carry out the purposes hereof.

9. If there be in article fifteen of this chapter a provision which
conflicts with any provision of this section six hundred nine, the
provision of this section six hundred nine shall prevail, and the
conflicting provision of article fifteen shall not apply in such case.
If there be in article fifteen a provision relating to a matter embraced
in this section six hundred nine, but not in conflict therewith, both
provisions shall apply.