Download as PDF
CHAPTER 06-07.2
DISSOLUTION, INSOLVENCY, SUSPENSION, RECEIVERSHIP, AND LIQUIDATION
6-07.2-01. Department taking possession - Procedure.
1. The commissioner may take possession of the business and property of an institution
the commissioner supervises if it appears to the commissioner that any of the following
conditions exist:
a. The directors or officers of the institution, or the liquidators of the institution
subject to a voluntary plan of liquidation, have neglected, failed, or refused to take
action the commissioner deems necessary for the protection of the institution.
b. The directors, officers, or liquidators of the institution have impeded or obstructed
an examination. This may include concealment or refusal to submit books,
papers, records, or affairs of the institution for inspection to any examiner or to
any lawful agent of the appropriate federal financial institution regulatory agency
or of the department.
c. The business is being conducted in a fraudulent, illegal, or unsafe manner.
d. The institution is conducting business in a way causing losses to depositors.
e. The institution is operating in an unsafe or unsound condition.
f. The capital of the institution is impaired such that the likely realizable value of the
institution's assets is insufficient to pay and satisfy the claims of all depositors and
all creditors.
g. The institution is insolvent or in imminent danger of insolvency or has suspended
ordinary business transactions of the institution due to insufficient funds.
h. The institution has refused or been unable to pay deposits or obligations in
accordance with the terms under which those deposits or obligations of the
institution were incurred.
i. Substantial dissipation of assets or earnings due to:
(1) Any violation of any law or rule; or
(2) An unsafe or unsound practice.
j. The institution is unable to continue operations.
k. The institution is in violation of any applicable state or federal regulation.
l. Neglect or refusal to comply with the terms of a final order of the department,
state banking board, state credit union board, or federal financial institution's
regulatory agency essential to preserve the solvency of the institution.
m. The institution has failed to pay the fees charged by the department under section
6-01-17 after due notice of the amount of the fee has been given.
n. The institution's board of directors requests that the department take possession
for the benefit of depositors, other creditors, shareholders, or other persons.
o. The institution has been advised by the federal deposit insurance corporation of
the federal deposit insurance corporation's intention to withdraw deposit
insurance coverage.
p. The institution has been advised by the national credit union association of the
national credit union association's intention to withdraw share insurance
coverage.
q. The directors or officers of the bank, or the liquidators of a bank subject to a
voluntary plan of liquidation, have assumed duties or performed acts in excess of
those authorized by applicable statutes or regulations, by the bank's
organizational documents or plan of liquidation, or without supplying the required
bond.
2. If it appears to the commissioner one or more of the conditions in this section exists as
to any institution, the commissioner shall cause a notice to be served on the president
or other executive officer in charge of the institution and, pursuant to such notice, take
possession of the business, property, and records of the institution from the officer
citing the reasons for such a demand from this section. The decision of the
commissioner is final upon the president or other executive officer's receipt of the
notice and the institution immediately shall surrender possession to the commissioner.
Page No. 1
6-07.2-02. When possession terminates.
If the commissioner has taken possession of the business and property of an institution
under the provisions of section 6-07.2-01, the commissioner shall hold possession of the
business and property until the affairs of the institution have been finally liquidated as provided
in this chapter, unless the institution has undertaken the voluntary liquidation of the affairs of the
institution under this chapter, or either the federal deposit insurance corporation, or any
successor federal deposit insurance agency, or the national credit union association, or any
successor federal deposit insurance agency, has been appointed receiver.
6-07.2-03. Notice of possession.
1. Immediately upon taking possession of the business and property of an institution
under section 6-07.2-01, the commissioner shall give notice by:
a. Causing the notice to be served upon the president or other executive officer in
charge of the business of the institution;
b. Causing the notice to be provided to all correspondent banks of the institution.
However, if the commissioner fails to provide the notice, the commissioner shall
incur no liability for such failure to act; and
c. Causing the notice to be made public.
2. The rights and liabilities of an institution and of the institution's creditors, depositors,
shareholders, and all other persons interested in the institution's estate, unless
otherwise directed, must be fixed as of the date of the delivery of the notice of
possession to the president or other executive officer actively in charge of the business
of the institution. In the case of mutual debts or mutual credits of equal priority
between the institution and another person, the credits and debts must be setoff and
the balance only must be allowed or paid. The right to setoff must be determined as of
the date of delivery of the notice of possession of the institution to the president or
other executive officer actively in charge of the business of the institution.
6-07.2-04. Appointment of receiver - Restrictions on proceedings, liens, or credits Bonding.
1. After taking possession of the business and property of the institution, the
commissioner may appoint the appropriate federal deposit insurance agency or other
qualified party as the receiver of the closed institution. If the federal deposit insurance
corporation or national credit union association accepts appointment as receiver, the
federal deposit insurance corporation or national credit union association is not
required to post bond.
2. Upon appointment as receiver, title to all assets of the institution vests in the receiver
without the execution of any instruments of conveyance, assignment, transfer, or
endorsement. If no other receiver is appointed as provided in this chapter, the
commissioner shall act as receiver and has all of the powers and duties of a receiver
as provided in this chapter.
3. Except as otherwise provided, the sole and exclusive right to liquidate and terminate
the affairs of an institution is vested in the receiver appointed under this section, and
another receiver, assignee, trustee, or liquidating agent may not be appointed by any
court or any other person.
4. After the commissioner has taken possession of the business and property of an
institution, a suit, action, or other proceeding at law or in equity may not be
commenced or prosecuted against the institution upon any debt, obligation, claim, or
demand. All such claims may be brought against the receiver.
5. A person holding any of the property or credits of the institution does not have a lien or
charge against the property or credits for any payment, advance, or clearance made
after the commissioner has taken possession. A lien may not attach to any of the
assets or property of the institution by reason of the entry of any judgment recovered
against the institution after the commissioner has taken possession of the institution's
business and property.
Page No. 2
6.
Every receiver appointed by the commissioner, except a federal deposit insurance
agency, before entering upon the discharge of the receiver's duties and before
proceeding to liquidate the affairs of any institution, may be required by the
commissioner to furnish a bond. Such bond must be approved as to form and amount
by the commissioner. The cost of such bond must be paid from the assets of the
institution being liquidated.
6-07.2-05. Powers of receiver.
The receiver of a closed institution may do the following:
1. Take possession of all books, records, and assets of the institution.
2. Collect all debts, claims, and judgments belonging to the institution and do such other
acts as are necessary to preserve and liquidate the assets of the institution.
3. Execute in the name of the institution any instrument necessary or proper to effectuate
the receiver's powers or perform the duties as receiver.
4. Initiate, pursue, and defend litigation involving any right, claim, interest, or liability of
the institution.
5. Exercise any and all existing fiduciary functions of the institution as of the date of
appointment as receiver.
6. Borrow money as necessary and secure the borrowings by the pledge or mortgage of
assets. The repayment of money borrowed under this subsection and interest on the
money borrowed under this section must be considered an expense of administration
under section 6-07.2-09.
7. Abandon or convey title to any holder of a mortgage, deed of trust, security interest, or
lien against property in which the institution has an interest if the receiver determines
that to continue to claim the interest is burdensome and of no advantage to the
institution or the institution's depositors, creditors, or shareholders.
8. Repudiate any leases or executory contracts to which the institution is a party in
accordance with section 6-07.2-09.
9. Sell any and all real and personal property to compromise any debt, claim, or
judgment due from the institution and discontinue any action or other proceedings
pending.
10. Pay off all mortgages, deeds of trust, security agreements, and liens upon any real or
personal property belonging to the institution and purchase at judicial sale or at sale
authorized by court order, any real or personal property in order to protect the
institution's equity in that property.
11. Sell in bulk the assets and liabilities of the institution.
6-07.2-06. Sale of assets - Assumptions of deposit liabilities by new institution.
The receiver may sell all or any part of the institution's assets to one or more other state or
federally chartered depository institution or to a federal deposit insurance agency in the
receiver's corporate capacity. The receiver may also borrow from a federal deposit insurance
agency an amount necessary to facilitate the assumption of deposit liabilities by a newly
chartered or existing state or federally chartered depository institution, assigning any part or all
of the assets of the institution as security for the loan.
6-07.2-07. Presentation of claims - Notice of claims procedure - Rejection of claims Statute of limitations.
1. All parties having claims against the closed institution shall present the claims of the
parties supported by proof to the receiver within one hundred eighty days after the
commissioner has taken possession. This period may be extended by written
agreement between the claimant and the receiver. The receiver shall cause notice of
the claims procedures prescribed by this section to be made public and mailed to each
person whose name appears as a creditor upon books of the institution at the person's
last address of record. Within one hundred eighty days following receipt of the claim,
the receiver shall notify in writing any claimant whose claim has been rejected. Notice
Page No. 3
2.
is effective when mailed. A claimant whose claim has been rejected by the receiver
may petition a court for a hearing on the claim within sixty days from the date the claim
was rejected. The claim of a party against the closed institution must be disallowed,
other than any portion of the claim which was allowed by the receiver, as of the end of
the sixty-day period if the party having the claim fails to:
a. Request an administrative review of any claim by the receiver in accordance with
proper procedure; or
b. File suit on the claim, or continue an action commenced before the appointment
of the receiver, before the end of the sixty-day period.
The disallowance is final, and the claimant has no further rights or remedies with
respect to the claim.
6-07.2-08. Claims filed after one hundred eighty-day claim period.
A claim filed after the one hundred eighty-day claim period prescribed by section 6-07.2-07
and subsequently accepted by the receiver is entitled to share in the distribution of assets only
to the extent of the undistributed assets in the hands of the receiver on the date the claim is
accepted or allowed.
6-07.2-09. Payment of claims.
1. All claims against the institution's estate, proved to the receiver's satisfaction or
approved by the circuit court, must be paid in the following order:
a. Administration expenses, including compensation of each regular officer or
employee of the receiver for the time actually devoted to the liquidation of the
institution at an amount not to exceed the compensation paid to the officer or
employee for the performance of the officer's or employee's regular duties; actual
expenses of each regular officer and employee necessarily incurred in the
performance of the officer's or employee's duties; compensation and expenses of
any special representative, assistant, accountant, agent, or attorney employed by
the receiver; court costs; and if the commissioner is acting as receiver, such
reasonable general overhead expenses as may be incurred by the commissioner
in the liquidation of the affairs of the institution which shall be ascertained,
determined, and fixed by the commissioner.
b. Claims given priority under other provisions of state or federal law.
c. Deposit obligations, except that notwithstanding sections 6-03-67 and 41-04-31, if
a depositor is indebted to an insolvent bank, the insolvent bank has a right to
setoff against the depositor's account.
d. Other general liabilities.
e. Debt subordinated to the claims of depositors and general creditors.
f. Equity capital securities.
2. Interest on a claim may not be paid until all claims within the same class have received
the full principal amount of claim.
6-07.2-10. Rejection of contracts and leases.
1. Within one hundred eighty days after the date the commissioner has taken
possession, the receiver may reject:
a. An executory contract to which the closed institution is a party without any further
liability to the closed institution or the receiver; and
b. An obligation of the institution as a lessee of real or personal property.
2. The receiver's election to reject a lease does not create a claim for rent other than rent
accrued to the date of termination.
6-07.2-11. Subrogation of federal deposit insurance agency to right of depositors.
If a federal deposit insurance agency pays or makes available for payment the insured
deposit liabilities of a closed institution, the federal deposit insurance agency, whether or not the
federal deposit insurance agency acts as receiver, must be subrogated by operation of law to all
Page No. 4
rights of depositors against the closed institution relating to claims for deposits so paid by the
federal deposit insurance agency to the extent necessary to enable the federal deposit
insurance agency, under federal law, to make insurance payments available to depositors of
closed institutions.
6-07.2-12. Appointment of successor fiduciary and representative proceedings.
1. The receiver may appoint one or more successors to any or all of the rights,
obligations, assets, deposits, agreements, and trusts held by the closed institution as
trustee, administrator, executor, guardian, agent, and all other fiduciary or
representative capacities. The approval may be obtained in connection with the
proceedings authorized under section 6-07.2-06.
2. A successor's duties and obligations begin upon appointment to the same extent
binding upon the closed institution and as though the successor had originally
assumed the duties and obligations. Specifically, a successor must be appointed to
administer trusteeships, administrations, executorships, guardianships, agencies, and
other fiduciary or representative proceedings to which the closed institution is named
or appointed in wills, whenever probated, or to which it is appointed by any other
instrument or court order, or by operation of law.
3. This section does not impair any right of the grantor or beneficiaries of trust assets to
secure the appointment of a substituted trustee or manager.
4. Within thirty days after appointment, a successor shall give written notice, insofar as
practical, that the successor has been appointed in accordance with applicable law to
all interested parties named in:
a. The books and records of the closed institution; and
b. Trust documents held by the successor.
6-07.2-13. Notice concerning safekeeping and safe deposit boxes.
The receiver shall cause notice to be mailed to the last address of record to the owners of
any personal property in the possession of or held by a closed institution for safekeeping, and to
all lessees of safe deposit boxes. The notice must require the intended recipients to appear and
assert the claims of the recipients to the property within sixty days from the date of the notice.
The receiver shall make such agreements or arrangements as may be necessary for the
disposition of property held by the closed institution for safekeeping and the contents of safe
deposit boxes, and for the termination of any leases or other contracts relating to the property or
contents.
6-07.2-14. Actions for enforcement or rights, demands, or claims vested in an
institution or its shareholders of creditors.
Notwithstanding any other provision of state law, the receiver may, within five years from the
date of closing of the institution, institute and maintain, in the name of the receiver, any action or
proceeding for the enforcement of any right, demand, or claim that is vested in the institution.
6-07.2-15. Contents of articles of dissolution.
If the proceedings described in this chapter have been completed, the receiver shall
execute and file, in the manner provided in this section, articles of dissolution, setting forth the
following information:
1. The name of the institution;
2. The place where the institution's main office was located;
3. The names and addresses of the directors and officers of the institution at the time the
liquidation proceedings were begun;
4. A brief summary of the aggregate amount of general claims finally allowed against the
institution, the order in which the claims were paid, and the aggregate amount of all
other claims against the institution. A statement of the aggregate payments made on
each of the groups of claims must be provided, referencing the orders of the receiver
authorizing those payments and the current reports documenting such payments; and
Page No. 5
5.
A brief summary of the aggregate amount of payments made to the shareholders of
the institution, whether of money or other property, and a reference to the orders of the
receiver authorizing the payments and to the current reports in which documentation of
the payments is made.
6-07.2-16. Execution and filing of articles with department - Certificate of dissolution.
1. The articles of dissolution must be executed in duplicate and presented in duplicate to
the department of financial institutions.
a. Upon presentation of the articles of dissolution, the commissioner shall endorse
the commissioner's approval upon each of the duplicate copies of the articles if
the commissioner finds the articles conform to law.
b. The commissioner shall file one copy of the articles in the department and issue
two certificates of dissolution. The commissioner shall file one certificate of
dissolution with the department and shall deliver the second to the receiver.
2. Upon the issuance of the certificate of dissolution, the institution is dissolved and its
existence ceases. Upon the issuance of the certificate of dissolution, the receiver is
authorized, as agent for the directors and shareholders of any subsidiary trust
company, to file any and all documents with the secretary of state necessary to
terminate the subsidiary trust company's corporate existence under applicable
corporate law.
6-07.2-17. Emergency temporary suspension or conservatorship.
1. If upon the examination or investigation of an institution regulated by the
commissioner, the commissioner determines the laws are not being fully observed,
that any irregularities are being practiced, or that the institution's capital has been or is
in danger of being impaired, the commissioner shall give immediate notice of such
determination to the officers and directors of the institutions. In addition, if it is deemed
necessary in order to conserve the assets of the institution or to protect the interests of
depositors and creditors of the institution, the commissioner may do any one or more
of the following:
a. Temporarily suspend the right of the institution to receive any further deposits;
b. Temporarily close the bank, for a period not exceeding sixty days, which period
may be further extended for one or more sixty-day periods as the commissioner
may deem necessary;
c. Require the officers and directors of the bank to liquidate its outstanding loans
insofar as required;
d. Recapitalize the institution;
e. Require that any irregularities be corrected promptly;
f. Require the institution to make reports, daily or at such other times as may be
required to the commissioner; and
g. Without examination, close or appoint a receiver to operate, for such period as
the commissioner may deem necessary, an institution facing an emergency due
to withdrawal of deposits, a liquidity event in which the institution is unable to
continue operations, a cyber- or technology-related incident, or otherwise, or,
without closing the institution, grant the institution the right to suspend or limit the
withdrawal of deposits, for such period as the commissioner may determine.
2. If an institution fails or refuses to comply with any such order of the commissioner, or if
the commissioner determines a receiver for the institution should be appointed, the
commissioner may apply for the appointment of a receiver to take charge of the
business affairs and assets of the institution and to wind up the institution's affairs as
provided in this chapter.
3. A bank or credit union may request a hearing before the state banking board or state
credit union board within ten days of the emergency temporary suspension or
conservatorship to review the factual basis used to issue the emergency temporary
suspension or conservatorship. The decision made by the state banking board or state
Page No. 6
credit union board during the hearing is final. If a hearing is not requested, the initial
decision of the commissioner is final.
6-07.2-18. Voluntary liquidation of a bank.
1. An application for approval to voluntarily liquidate the affairs of a bank must be
submitted to the commissioner in the manner and form that the commissioner may
prescribe, must include the information set forth in this section, and must contain such
additional information the commissioner may require. The application must include
duplicate copies of a resolution authorizing the dissolution and duplicate copies of a
certificate, verified by the applicant's president or chief executive officer or a vice
president, stating the facts pertaining to the resolution and that the applicant's liabilities
have been paid in full. Each duplicate certificate must have annexed to the duplicate,
over the official signatures, evidence showing:
a. The date on which the resolution was authorized by the affirmative vote of the
holders of at least a simple majority of the outstanding shares entitled to vote on
the resolution;
b. The number of shares of each class entitled to vote on the resolution which were
outstanding on the date of the stockholders' meeting;
c. The number of shares of each class entitled to vote on the resolution whose
owners were present in person or by proxy;
d. The number of shares of each class voted for and against the resolution; and
e. The manner in which the meeting was called and the time and manner of giving
notice, with a certification that the meeting was lawfully called and held.
2. Upon receipt of the application, the commissioner shall investigate the merits of the
application. If the commissioner is satisfied the application is complete and all
applicable provisions of law have been complied with, the commissioner shall cause
an examination to be made of the applicant institution for the purpose of verifying the
payment of all the applicant's liabilities. If the examination satisfies the commissioner
that all of the applicant's liabilities have been paid, the commissioner shall endorse
one copy of the certificate with the commissioner's statement that the institution is
voluntarily liquidating. The return of the endorsed copy of the certificate operates to
free the institution from further examination and to authorize the institution, under the
original corporate name of the institution, to sue and be sued, to execute conveyances
and other instruments, to take, hold, and own property, and to do all such other things
as may be necessary to realize upon the institution's remaining assets for the pro rata
benefit of the institution's stockholders, but not to engage or continue in any new or
other business under the institution's charter or otherwise. The liquidation must
proceed as expeditiously as possible, and upon conclusion, the institution shall
surrender its charter. In lieu of continuing the liquidation under the original corporate
name, the institution may transfer the remaining assets to a trustee agreed upon by
the stockholders by a majority vote and upon so doing shall surrender the institution's
charter.
Page No. 7
Disclaimer: These codes may not be the most recent version. North Dakota may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
