2005 California Financial Code Sections 3100-3132 Article 1. Liquidation by the Commissioner

3100.  The commissioner may, whenever it appears to him or her that
any of the conditions described in subdivisions (a) to (h),
inclusive, exist with respect to a bank, forthwith take possession of
the property and business of the bank and retain possession until
the bank resumes business or its affairs are finally liquidated as
herein provided.  The bank, with the consent of the commissioner, may
resume business subject to any conditions that may be prescribed by
the commissioner.  The term "bank" wherever used in this chapter
includes trust companies.
   (a) The tangible shareholders' equity of the bank is less than:
   (1) In case the bank is a commercial bank or industrial bank, the
greater of three percent of the bank's total assets or one million
dollars ($1,000,000); or
   (2) In case the bank is a trust company other than a commercial
bank authorized to engage in trust business, one million dollars
($1,000,000).
   (b) The bank has violated its articles or any law of this state.
   (c) The bank is conducting its business in an unsafe or
unauthorized manner.
   (d) The bank refuses to submit its books, papers, and affairs to
the inspection of any examiner.
   (e) Any officer of the bank refuses to be examined upon oath
touching the concerns of the bank.
   (f) The bank has failed to pay any of its obligations as they came
due or that is reasonably expected to be unable to pay its
obligations as they come due.
   (g) The bank is in a condition that it is unsound, unsafe, or
inexpedient for it to transact business.
   (h) The bank neglects or refuses to observe any order of the
commissioner made pursuant to Section 1913 unless the enforcement of
the order is restrained in a proceeding brought by the bank.
3101.  Whenever the commissioner has taken possession of the
property and business of any bank, such bank, within 10 days after
such taking, if it deems itself aggrieved thereby, may apply to the
superior court in the county in which the head office of such bank is
located to enjoin further proceedings.  The court, after citing the
commissioner to show cause why further proceedings should not be
enjoined and after a hearing and a determination of the facts upon
the merits may dismiss such application or enjoin the commissioner
from further proceedings and direct him or her to surrender the
property and business to such bank.
3102.  An appeal may be taken from the judgment of the court by the
commissioner or by the bank in the manner provided by law for appeals
from the judgment of a superior court to the court of appeal.
3103.  Upon taking possession of the property and business of any
bank, the commissioner shall forthwith give notice of such fact to
all persons holding or having in their possession any assets of such
bank.  No person knowing of such taking or who has been notified
thereof shall have a lien or charge upon any assets of the bank for
any payment, advance, or clearance thereafter made or for any
liability thereafter incurred.
   The giving of notice in accordance with this section shall not be
deemed to be a prerequisite to the taking of possession of the
property and business of the bank.
3104.  Upon taking possession of the property and business of any
bank, the commissioner has authority and it is his or her duty to
collect all moneys due to such bank and to do such other acts as are
necessary or expedient to collect, conserve, or protect its assets,
property, and business and he or she shall proceed to conserve or
liquidate the affairs thereof as herein provided.
3105.  No attachment shall be issued against the property of any
bank or trust company.
3106.  The commissioner, from time to time, under his or her
official seal, may appoint one or more special deputy commissioners
as his or her agent or agents with the powers specified in the
certificate of appointment to assist him or her in the duty of
conservation or of liquidation and distribution.  The certificate of
appointment shall be filed in the office of the commissioner and a
certified copy in the office of the clerk of the county in which the
head office of the bank is located.  The commissioner may employ such
counsel and procure such expert assistance and advice as may be
necessary in the liquidation and distribution of the assets of the
bank and for that purpose may retain such of the officers or
employees of the bank as he or she may deem necessary.
3107.  The compensation of special deputies, counsel, and other
employees and assistants appointed to assist in the liquidation of
any bank and the distribution of its assets and all expenses of
supervision and liquidation shall be fixed by the commissioner and
shall be paid out of the funds of such bank in the hands of the
commissioner.  Such expenses of liquidation must be reported to the
court upon each application for payment of a dividend.
3108.  Upon the commissioner taking possession of the business and
property of any bank the superior court of the State of California
for the county in which the head office of such bank is located shall
have exclusive original jurisdiction of all proceedings relating
thereto and of any action or other proceedings brought under the
provisions of this chapter.  All papers relating to such proceeding,
including copies of the certificate of appointment of any special
deputy and the inventories required to be filed, shall be filed and
be made a part of the record of such proceeding without the payment
of any additional fees therefor.  No damages may be awarded in such
proceeding but, if sought, may only be recovered in a separate
action.
3109.  The commissioner may sell, compromise, or compound any bad or
doubtful debt owing the bank, which is for a principal sum not
exceeding five hundred dollars ($500), upon such terms as the
commissioner may deem proper, and, if the principal sum thereof
exceeds five hundred dollars ($500), the commissioner may compromise,
compound, or sell the same upon such terms as the court may approve.
  If it appears improbable that a recovery on any debt can be had and
that the costs of an action to collect would be lost and the
principal sum thereof does not exceed five hundred dollars ($500),
the commissioner may determine that no suit thereon shall be brought,
and if the principal sum thereof exceeds five hundred dollars
($500), the commissioner may determine that no suit thereon be
brought after obtaining approval of the court.
3110.  The commissioner may sell any real or personal property of
the bank for cash or on credit and on such other terms and conditions
as the commissioner may deem proper, subject to the approval of the
court.
3110.1.  (a) The commissioner may, with the approval of the court
and of the commissioner, sell any part or the whole of the business
of the bank to any other bank.  Such purchase and sale shall be
approved by the purchasing bank, as follows:
   (1) In case the purchasing bank is a bank organized under the laws
of this state, by two-thirds of all of its directors.
   (2) In case the bank is any bank other than a bank organized under
the laws of this state, in accordance with the laws of the
jurisdiction under the laws of which the bank is organized.
   (b) (1) Subject to any applicable federal statutes and
regulations, any bank organized under the laws of this state may,
with the approval of two-thirds of all of its directors and of the
commissioner, purchase from the receiver of a national banking
association the whole or any part of the business of such national
banking association.
   (2) Subject to any applicable federal statutes and regulations and
any applicable laws of the jurisdiction under the laws of which such
foreign banking corporation is organized, any foreign banking
corporation which is licensed by the commissioner under Article 1
(commencing with Section 1750) of Chapter 14 to transact banking
business in this state and which is authorized under Sections 1756
and 1756.1 to accept deposits in this state, may, with the approval
of the commissioner, purchase from the receiver of a national banking
association the whole or any part of the business of such national
banking association.
   (c) The provisions of Chapter 12 (commencing with Section 1200)
and Chapter 13 (commencing with Section 1300) of Division 1 of Title
1 of the Corporations Code shall not apply to any purchase and sale
of the type described in subdivision (a) or (b).
   (d) When a purchase and sale of the type described in subdivision
(a) or (b) becomes effective or, in case the receiver of a national
banking association sells the whole or any part of the business of
such national banking association to another national banking
association, when such purchase and sale becomes effective, the
purchasing bank shall, ipso facto and by operation of law and without
further transfer, substitution, act, or deed, to the extent provided
in the agreement of the purchase and sale or in the order of the
court approving the purchase and sale and except as withheld or
limited by such agreement or by such order:
   (1) Succeed to the rights, obligations, properties, assets,
investments, deposits, demands, and agreements of the bank whose
business is sold, subject to the right of every depositor of such
bank whose deposit is sold to withdraw his or her deposit in full on
demand after such sale, irrespective of the terms under which the
deposit was made;
   (2) Succeed to the rights, obligations, properties, assets,
investments, deposits, demands, and agreements of the bank whose
business is sold under all trusts, executorships, administrations,
guardianships, conservatorships, agencies, and other fiduciary or
representative capacities, to the same extent as though the
purchasing bank had originally assumed, acquired, or owned the same,
subject to the rights of trustors and beneficiaries under the trusts
so sold to nominate another or succeeding trustee of the trust so
sold after the sale; and
   (3) Succeed to and be entitled to take and execute the appointment
to executorships, trusteeships, guardianships, conservatorships, and
other fiduciary and representative capacities to which the bank
whose business is sold is or may be named in wills, whenever
probated, or to which it is or may be named or appointed by any other
instrument.
   (e) For purposes of subdivision (d), any purchase and sale of the
type referred to in subdivision (d) shall be deemed to be effective
at such time as is provided in the agreement of such purchase and
sale or in the order of the court approving the purchase and sale.
3111.  Within six months after taking possession of the property and
business of any bank the commissioner may terminate or adopt any
executory contract to which the bank may be a party including leases
of real or personal property.  Claims for damages resulting from the
termination of any such contract or lease may be filed and allowed,
but no claim of a landlord for damages resulting from the rejection
of an unexpired lease of real property or under any covenant of such
lease shall be allowed in an amount exceeding the rent reserved by
the lease, without acceleration, for the year succeeding the date of
the surrender of the premises plus the amount of any unpaid accrued
rent without acceleration.  Any such claim must be filed within 30
days of the date of such termination or within the time that claims
must be filed under Section 3118, whichever is longer.
3112.  The commissioner in his or her own name or in the name of the
bank may execute, acknowledge, and deliver any and all conveyances
and other instruments necessary or appropriate to effectuate the sale
of any real or personal property or to effectuate any other
transaction in connection with the liquidation of the bank or the
distribution of its assets.  Any conveyance or other instrument
executed by the commissioner pursuant to this authority shall be
valid and effectual for all purposes as though the same had been
executed by the officers of the bank by authority of its board of
directors.  Whenever the commissioner sells any real property of the
bank a certified copy of the order of the court approving the same
shall be recorded in the county in which any part of such real
property is located.
3113.  The commissioner in the name of the delinquent bank or in his
or her own name may prosecute and defend any and all actions and
other legal proceedings appropriate or necessary to the liquidation
of such bank.
3114.  The commissioner from time to time shall deposit all moneys
coming into his or her hands in the course of the liquidation of the
bank in one or more state banks and in the event of the suspension or
insolvency of the depositary they shall be preferred before all
other deposits.
3115.  The commissioner shall make an inventory of the assets of the
bank in duplicate and file one in the office of the commissioner and
one with the clerk of the county in which the head office of the
bank is located to be filed with the papers in the liquidation
proceedings.  Such inventory shall be open for inspection at all
reasonable times.
3116.  When the time fixed for the presentation of claims has
expired the commissioner shall make in duplicate a full and complete
list of all claims presented, including and specifying such claims as
have been rejected by the commissioner, and a list of all claims of
depositors as shown by the books or records of said bank for which
claims have not yet been presented, and shall file one copy of said
list in the commissioner's office and one with the clerk of the
county in which the head office of the bank is located to be filed
with the papers in the liquidation proceedings.  Before each
application to the court for leave to declare a dividend the
commissioner shall file a supplemental list of claims presented since
the last preceding list was filed, including and specifying such
claims as have been rejected by him or her.  Such list of claims and
of claims of depositors as shown by the books or records of the bank
shall be open for inspection at all reasonable times.
3117.  The commissioner shall cause notice to be given by
advertisement in such newspapers of general circulation as he or she
may select weekly for three consecutive months, calling on all
persons who have claims against the bank to present the same to the
commissioner and make legal proof thereof at a place to be specified
therein and within four months of the date of the first publication
of such notice, which date shall be specified in the notice.  Such
notice shall also state that all claims other than those of
depositors appearing upon the books or records of the bank shall be
forever barred if not filed within said four months' period and that
all claims of depositors appearing upon the books or records of the
bank will be forever barred, except as herein provided, if not filed
prior to the filing of a petition for a final dividend.  The
commissioner shall also mail a similar notice to all persons,
including depositors, whose names appear as creditors upon the books
of the bank and whose addresses appear upon the books or records of
the bank and shall enclose therewith a printed form of notice of
claim.
3118.  All claims of every kind against the bank or against any
property owned or held by such bank shall be presented to the
commissioner in writing verified by the claimant or someone in his or
her behalf within four months of the date of the first publication
of the notice to creditors.  Any claim, other than the claim of a
depositor whose claim appears upon the books or records of the bank,
not so presented within said four months' period shall be forever
barred and any claim of a depositor whose claim appears upon the
books or records of the bank which is not so presented prior to the
date of the filing of the petition of the commissioner with the court
for approval of the payment of the final dividend shall be forever
barred except as to any moneys remaining after all debts for which
claims were duly filed have been paid in full with interest.  If the
commissioner doubts the validity of any claim he or she may reject
the same and serve notice of such rejection upon the claimant either
by mail or personally.  An affidavit of the mailing or personal
service of such notice shall be prima facie evidence of the receipt
thereof and shall be filed with the commissioner.  Any action upon a
claim so rejected must be brought within three months after the date
of mailing or personal service of the notice of rejection.
3119.  At any time and from time to time after the expiration of the
time fixed for the presentation of claims, the commissioner, after
obtaining approval of the court, may declare and pay one or more
dividends upon all approved claims out of the funds remaining in his
or her hands after the payment of expenses and after setting aside an
amount sufficient to pay to all depositors, who have not yet filed
claims but whose claims appear upon the books or records of the bank,
their pro rata share of the funds then available for the payment of
a dividend.  At any time after the expiration of one year from the
date of the first publication of notice to creditors and after
obtaining the approval of the court the commissioner may declare and
pay a final dividend.
3119.5.  (a) Expenses and claims of unsecured creditors have
priority in the following order:
   (1) Expenses of liquidation and approved claims for fees and
assessments due the department.
   (2) Approved claims given priority under other provisions of state
or federal law, including, but not limited to, Sections 3114 and
3240.
   (3) Approved claims for "deposits," as that term is defined in 12
U.S.C. Section 1813(l), but including obligations of the type
described in 12 U.S.C. Section 1813(l)(5)(A) and (B).
   (4) Approved claims for other general liabilities.
   (5) Approved claims for obligations subordinated to deposits and
other general liabilities.
   (b) Interest shall be given the same priority as the claim on
which it is based, but no interest shall be paid on any claim until
the principal of all claims within the same class has been paid or
adequately provided for in full.
   (c) Any funds remaining shall be paid to the shareholders.
3120.  Objections to any claim not rejected by the commissioner may
be made by any person interested by filing a copy of such objections
with the commissioner, who shall present the same to the court at the
time of the next application for approval of the declaration of a
dividend.  The court shall thereupon dispose of said objections or
may order a reference for that purpose, and should the objections to
any claim be sustained by the court or by the referee, such claim
shall not be allowed by the commissioner until the claimant has
established the claim by judgment.
3121.  Dividends remaining unpaid and any sums available for payment
of deposits for which no claim was filed, which remain in the hands
of the commissioner six months after the order for the payment of a
final dividend, shall be deposited in the State Treasury.  Such
deposits shall be deemed to have been received under the provisions
of Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of
the Code of Civil Procedure, and shall be subject to claim or other
disposition as provided in said Chapter 7 (commencing with Section
1500) of Title 10.  The commissioner may pay over the moneys so held
by him or her to the persons respectively entitled thereto at any
time prior to such deposit, upon being furnished satisfactory
evidence of their right to the same.
3121.5.  Whenever, under the provisions of this chapter, the
commissioner is required to transmit unclaimed money or other
unclaimed property to any state officer for deposit in the State
Treasury, the commissioner, upon request of the Controller, shall
transmit to the Controller all signature cards and such other
identifying information as may be available from the records of the
bank, covering such money or other property.  Upon receipt by the
Controller of such signature cards or other identifying information,
the bank and the commissioner shall be relieved of all responsibility
therefor.  Such signature cards and other identifying information
may be destroyed or otherwise disposed of by the Controller whenever,
in his or her discretion, their further retention by him or her is
no longer required in the interest of the depositors or this state.
3122.  All approved claims of depositors and other creditors shall
bear interest at the rate provided by law on judgments from the date
that the commissioner takes possession of the property and business
of the bank.
3123.  Should the bank have in its possession for safekeeping or
storage any jewelry, plate, money, specie, bullion, stocks, bonds,
securities, valuable papers, or other valuable personal property or
should it have rented any vaults, safes, or safe-deposit boxes, the
commissioner shall cause to be mailed by registered mail, postage
prepaid, to any known person claiming to be or appearing on the books
of the bank to be the owner of such property or to the person in
whose name the safe, vault, or box stands a notice notifying such
person to remove all such personal property within a specified fixed
period of not less than 60 days.
3124.  On the last day fixed in said notice for the removal of such
property or on the date when such property is removed or the box
surrendered any contract between the person owning such property or
holding said box and the bank shall cease and the amount of the
unearned prepaid rent or charges, if any, shall become a debt of the
bank to said person.
3125.  If any property be not removed within the time fixed by
notice mailed by the commissioner, the commissioner may make such
disposition of the property as the court on application thereto shall
direct.  The commissioner may cause any safe, vault, or box to be
opened in his or her presence or in the presence of one of the
special deputy commissioners and of a notary public not an officer or
employee of the bank or of the commissioner.  The contents thereof,
if any, shall be sealed up by such notary public in a package upon
which such notary public shall distinctly mark the name and address
of the person in whose name such safe or box stands upon the books of
the bank and shall attach thereto a list and a description of the
property therein.  The package so sealed and addressed, together with
the list and description may be kept by the commissioner in one or
more of the safes or boxes of the bank or elsewhere until delivered
to the person whose name it bears or until otherwise disposed of as
directed by the court.
3126.  (a) When the commissioner has completed the liquidation of
the bank, he or she shall petition the court for an order declaring
the bank duly wound up and dissolved.
   (b) After such notice as the court may direct and a hearing, the
court may make an order declaring the bank duly wound up and
dissolved.  Such order shall declare:
   (1) That the bank has been duly wound up;
   (2) That any tax or penalty due under the Bank and Corporation Tax
Law has been paid or secured and that the bank's other known debts
and liabilities have been paid or adequately provided for, or that
such taxes, penalties, debts, and liabilities have been paid so far
as the bank's assets permitted, as the case may be.  If there are
known debts or liabilities for the payment of which adequate
provision has been made, the order shall describe such provision,
setting forth such information as may be necessary to enable the
creditor or other person to whom payment is to be made to appear and
claim payment of the debt or liability;
   (3) That all known assets of the bank have been distributed to its
shareholders or wholly applied on account of the bank's debts and
liabilities; and
   (4) That the bank is dissolved.
   (c) The court may make such additional orders and grant such
further relief as it deems proper upon the evidence submitted.
   (d) Upon the making of the order declaring the bank dissolved, the
corporate existence of the bank shall cease, except for the purposes
of any necessary further winding up.
   (e) Upon the making of the order declaring the bank dissolved, the
commissioner shall forthwith file with the Secretary of State a copy
of such order, certified by the clerk of the court.  Notwithstanding
the provisions of Section 23334 of the Revenue and Taxation Code,
there need not be filed with the Secretary of State any certificate
of satisfaction of the Franchise Tax Board that all taxes due from
the bank have been paid or secured.
3131.  Whenever pursuant to the provisions of this chapter the
approval of the court is required of any step in the liquidation
proceedings such approval shall be given after a hearing had upon
such notice as the court may direct.  At any such hearing the court
may by order approve the actions of the commissioner for which he or
she has petitioned the court's approval or it may, by appropriate
order, otherwise direct the commissioner in the matter in connection
with which the petition was filed.
3132.  Whenever in the opinion of the commissioner the liquidation
or reorganization of any bank taken in charge by him or her would be
facilitated thereby, or the public interests and the interests of
depositors or stockholders would be served thereby, the commissioner
shall have power to borrow money in behalf of such bank from any
federal agency authorized to lend money to receivers, trustees,
liquidating agents, or other agents or supervisory authorities in
charge of banks which are closed or in process of liquidation, and
with approval of the court, the commissioner may secure such
borrowings by the pledge of the assets of any such bank in such
manner and amount as may to the commissioner seem necessary, proper,
or expedient.