N.Y. Banking Law § 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

• Library: New York Statutes
• Edition: 2023
• Currency: Current through 2023 NY Law Chapter 777
• Year: 2023
• Citation: N.Y. Banking Law § 609

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.