355.4-216 Insolvency and preference.
(1) If an item is in or comes into the possession of a payor or collecting bank that
suspends payment and the item has not been finally paid, the item must be returned <br>by the receiver, trustee, or agent in charge of the closed bank to the presenting bank <br>or the closed bank's customer.
(2) If a payor bank finally pays an item and suspends payments without making a
settlement for the item with its customer or the presenting bank which settlement is <br>or becomes final, the owner of the item has a preferred claim against the payor <br>bank.
(3) If a payor bank gives or a collecting bank gives or receives a provisional settlement
for an item and thereafter suspends payments, the suspension does not prevent or <br>interfere with the settlement's becoming final if the finality occurs automatically <br>upon the lapse of certain time or the happening of certain events.
(4) If a collecting bank receives from subsequent parties settlement for an item which
settlement is or becomes final and the bank suspends payments without making a <br>settlement for the item with its customer which settlement is or becomes final, the <br>owner of the item has a preferred claim against the collecting bank.
Effective: January 1, 1997 <br>History: Repealed, reenacted, renumbered as KRS 355.4-216, and amended 1996 Ky.
Acts ch. 130, sec. 98, effective January 1, 1997. -- Created 1958 Ky. Acts ch. 77, <br>sec. 4-214, effective July 1, 1960.
Formerly codified as KRS 355.4-214.
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