2005 Vermont Code - § 2082. — Suspension, voluntary liquidation and involuntary liquidation

§ 2082. Suspension, voluntary liquidation and involuntary liquidation

(a) Suspension. If it appears that any credit union is bankrupt or insolvent, or that it has willfully violated this chapter, or is operating in an unsafe or unsound manner, the department of banking, insurance, securities, and health care administration shall issue an order temporarily suspending the credit union's operations for not more than sixty days. The board of directors shall be given notice by registered mail of the suspension, which notice shall include a list of the reasons for the suspension, or a list of the specific violations of this chapter.

Upon receipt of the suspension notice, the credit union shall immediately cease all operations. The directors of the credit union shall then file with the department of banking, insurance, securities, and health care administration a reply to the suspension notice, request a hearing to present a plan of corrective actions proposed if they desire to continue operations, or request that the credit union be declared insolvent and a liquidating agent appointed. If the credit union fails to answer the suspension notice or request a hearing with the department of banking, insurance, securities, and health care administration, the department may then revoke the credit union's charter, appoint a liquidating agent and liquidate the credit union in accordance with subsection (d) of this section.

(b) Voluntary liquidation. At a meeting especially called to consider the matter, a majority of the entire membership may vote to dissolve the credit union, if a copy of the notice was mailed to the members of the credit union at least ten days prior thereto. Any member not present at the meeting may, within the next twenty days vote in favor of dissolution by signing a statement in form approved by the department of banking, insurance, securities, and health care administration and the vote shall have the same force and effect as if cast at the meeting. The credit union shall thereupon immediately cease to do business except for the purposes of liquidation, and the president and secretary shall, within five days following the meeting, notify the department of banking, insurance, securities, and health care administration of intention to liquidate and shall include a list of the names of the directors and officers of the credit union together with their addresses.

(c) Involuntary liquidation. If the department of banking, insurance, securities, and health care administration after issuing notice of suspension and providing an opportunity for a hearing, rejects the credit union's plan to continue operations, the department of banking, insurance, securities, and health care administration may issue a notice of involuntary liquidation and appoint a liquidating agent. The credit union may request a stay of execution of that action by appealing to the appropriate court of the jurisdiction in which the credit union is located. Involuntary liquidation may not be ordered before the suspension procedures outlined in subsection (a) of this section are completed.

(d) Liquidating procedure. The credit union shall continue in existence for the purpose of discharging its debts, collecting and distributing its assets, and doing all acts required in order to wind up its business and may sue and be sued for the purpose of enforcing those debts and obligations until its affairs are fully adjusted. The board of directors, or in the case of involuntary dissolution, the liquidating agent shall use the assets of the credit union to pay: first, expenses incidental to liquidation including any surety bond that may be required; second, any liability due nonmembers; third, deposits and savings club accounts as provided in this chapter. Assets then remaining shall be distributed to the members proportionately to the shares held by each member as of the date liquidation was voted.

As soon as the board or the liquidating agent determines that all assets from which there is a reasonable expectancy of realization have been liquidated and distributed as set forth in this section, they shall execute a certificate of liquidation on a form prescribed by the department of banking, insurance, securities, and health care administration and file it with the proper recording agency within the jurisdiction of Vermont in which the credit union has its principal place of business. The certificate shall after filing or recording and indexing be forwarded to the department of banking, insurance, securities, and health care administration whereupon the credit union shall be dissolved.

(e) In the case where the administrator of the National Credit Union Administration is appointed liquidating agent the administrator shall have the right to be subrogated to the rights of the members of the liquidating credit union. (Added 1967, No. 312 (Adj. Sess.), § 1, eff. March 22, 1968; amended 1979, No. 27, § 2; 1985, No. 167 (Adj. Sess.), § 4, eff. May 5, 1986; 1989, No. 225 (Adj. Sess.), § 25(a); 1995, No. 180 (Adj. Sess.), § 38(a).)