U.S. Code > Title 12 > Chapter 46 > Subchapter II > § 4616 - Supervisory actions applicable to significantly undercapitalized regulated entities
Current as of: February 2010
(a) Appointment of the Agency as conservator or receiver
(1) In general
Notwithstanding any other provision of Federal or State law,
the Director may appoint the Agency as conservator or receiver
for a regulated entity in the manner provided under paragraph (2)
or (4). All references to the conservator or receiver under this
section are references to the Agency acting as conservator or
receiver.
(2) Discretionary appointment
The Agency may, at the discretion of the Director, be appointed
conservator or receiver for the purpose of reorganizing,
rehabilitating, or winding up the affairs of a regulated entity.
(3) Grounds for discretionary appointment of conservator or
receiver
The grounds for appointing conservator or receiver for any
regulated entity under paragraph (2) are as follows:
(A) Assets insufficient for obligations
The assets of the regulated entity are less than the
obligations of the regulated entity to its creditors and
others.
(B) Substantial dissipation
Substantial dissipation of assets or earnings due to -
(i) any violation of any provision of Federal or State law;
or
(ii) any unsafe or unsound practice.
(C) Unsafe or unsound condition
An unsafe or unsound condition to transact business.
(D) Cease and desist orders
Any willful violation of a cease and desist order that has
become final.
(E) Concealment
Any concealment of the books, papers, records, or assets of
the regulated entity, or any refusal to submit the books,
papers, records, or affairs of the regulated entity, for
inspection to any examiner or to any lawful agent of the
Director.
(F) Inability to meet obligations
The regulated entity is likely to be unable to pay its
obligations or meet the demands of its creditors in the normal
course of business.
(G) Losses
The regulated entity has incurred or is likely to incur
losses that will deplete all or substantially all of its
capital, and there is no reasonable prospect for the regulated
entity to become adequately capitalized (as defined in section
4614(a)(1) of this title).
(H) Violations of law
Any violation of any law or regulation, or any unsafe or
unsound practice or condition that is likely to -
(i) cause insolvency or substantial dissipation of assets
or earnings; or
(ii) weaken the condition of the regulated entity.
(I) Consent
The regulated entity, by resolution of its board of directors
or its shareholders or members, consents to the appointment.
(J) Undercapitalization
The regulated entity is undercapitalized or significantly
undercapitalized (as defined in section 4614(a)(3) of this
title), and -
(i) has no reasonable prospect of becoming adequately
capitalized;
(ii) fails to become adequately capitalized, as required by
-
(I) section 4615(a)(1) of this title with respect to a
regulated entity; or
(II) section 4616(a)(1) of this title with respect to a
significantly undercapitalized regulated entity;
(iii) fails to submit a capital restoration plan acceptable
to the Agency within the time prescribed under section 4622
of this title; or
(iv) materially fails to implement a capital restoration
plan submitted and accepted under section 4622 of this title.
(K) Critical undercapitalization
The regulated entity is critically undercapitalized, as
defined in section 4614(a)(4) of this title.
(L) Money laundering
The Attorney General notifies the Director in writing that
the regulated entity has been found guilty of a criminal
offense under section 1956 or 1957 of title 18 or section 5322
or 5324 of title 31.
(4) Mandatory receivership
(A) In general
The Director shall appoint the Agency as receiver for a
regulated entity if the Director determines, in writing, that -
(i) the assets of the regulated entity are, and during the
preceding 60 calendar days have been, less than the
obligations of the regulated entity to its creditors and
others; or
(ii) the regulated entity is not, and during the preceding
60 calendar days has not been, generally paying the debts of
the regulated entity (other than debts that are the subject
of a bona fide dispute) as such debts become due.
(B) Periodic determination required for critically
undercapitalized regulated entity
If a regulated entity is critically undercapitalized, the
Director shall make a determination, in writing, as to whether
the regulated entity meets the criteria specified in clause (i)
or (ii) of subparagraph (A) -
(i) not later than 30 calendar days after the regulated
entity initially becomes critically undercapitalized; and
(ii) at least once during each succeeding 30-calendar day
period.
(C) Determination not required if receivership already in place
Subparagraph (B) does not apply with respect to a regulated
entity in any period during which the Agency serves as receiver
for the regulated entity.
(D) Receivership terminates conservatorship
The appointment of the Agency as receiver of a regulated
entity under this section shall immediately terminate any
conservatorship established for the regulated entity under this
chapter.
(5) Judicial review
(A) In general
If the Agency is appointed conservator or receiver under this
section, the regulated entity may, within 30 days of such
appointment, bring an action in the United States district
court for the judicial district in which the home office of
such regulated entity is located, or in the United States
District Court for the District of Columbia, for an order
requiring the Agency to remove itself as conservator or
receiver.
(B) Review
Upon the filing of an action under subparagraph (A), the
court shall, upon the merits, dismiss such action or direct the
Agency to remove itself as such conservator or receiver.
(6) Directors not liable for acquiescing in appointment of
conservator or receiver
The members of the board of directors of a regulated entity
shall not be liable to the shareholders or creditors of the
regulated entity for acquiescing in or consenting in good faith
to the appointment of the Agency as conservator or receiver for
that regulated entity.
(7) Agency not subject to any other Federal agency
When acting as conservator or receiver, the Agency shall not be
subject to the direction or supervision of any other agency of
the United States or any State in the exercise of the rights,
powers, and privileges of the Agency.
(b) Powers and duties of the Agency as conservator or receiver
(1) Rulemaking authority of the agency
The Agency may prescribe such regulations as the Agency
determines to be appropriate regarding the conduct of
conservatorships or receiverships.
(2) General powers
(A) Successor to regulated entity
The Agency shall, as conservator or receiver, and by
operation of law, immediately succeed to -
(i) all rights, titles, powers, and privileges of the
regulated entity, and of any stockholder, officer, or
director of such regulated entity with respect to the
regulated entity and the assets of the regulated entity; and
(ii) title to the books, records, and assets of any other
legal custodian of such regulated entity.
(B) Operate the regulated entity
The Agency may, as conservator or receiver -
(i) take over the assets of and operate the regulated
entity with all the powers of the shareholders, the
directors, and the officers of the regulated entity and
conduct all business of the regulated entity;
(ii) collect all obligations and money due the regulated
entity;
(iii) perform all functions of the regulated entity in the
name of the regulated entity which are consistent with the
appointment as conservator or receiver;
(iv) preserve and conserve the assets and property of the
regulated entity; and
(v) provide by contract for assistance in fulfilling any
function, activity, action, or duty of the Agency as
conservator or receiver.
(C) Functions of officers, directors, and shareholders of a
regulated entity
The Agency may, by regulation or order, provide for the
exercise of any function by any stockholder, director, or
officer of any regulated entity for which the Agency has been
named conservator or receiver.
(D) Powers as conservator
The Agency may, as conservator, take such action as may be -
(i) necessary to put the regulated entity in a sound and
solvent condition; and
(ii) appropriate to carry on the business of the regulated
entity and preserve and conserve the assets and property of
the regulated entity.
(E) Additional powers as receiver
In any case in which the Agency is acting as receiver, the
Agency shall place the regulated entity in liquidation and
proceed to realize upon the assets of the regulated entity in
such manner as the Agency deems appropriate, including through
the sale of assets, the transfer of assets to a limited-life
regulated entity established under subsection (i), or the
exercise of any other rights or privileges granted to the
Agency under this paragraph.
(F) Organization of new enterprise
The Agency may, as receiver for an enterprise, organize a
successor enterprise that will operate pursuant to subsection
(i).
(G) Transfer or sale of assets and liabilities
The Agency may, as conservator or receiver, transfer or sell
any asset or liability of the regulated entity in default, and
may do so without any approval, assignment, or consent with
respect to such transfer or sale.
(H) Payment of valid obligations
The Agency, as conservator or receiver, shall, to the extent
of proceeds realized from the performance of contracts or sale
of the assets of a regulated entity, pay all valid obligations
of the regulated entity that are due and payable at the time of
the appointment of the Agency as conservator or receiver, in
accordance with the prescriptions and limitations of this
section.
(I) Subpoena authority
(i) In general
(I) Agency authority
The Agency may, as conservator or receiver, and for
purposes of carrying out any power, authority, or duty with
respect to a regulated entity (including determining any
claim against the regulated entity and determining and
realizing upon any asset of any person in the course of
collecting money due the regulated entity), exercise any
power established under section 4588 of this title.
(II) Applicability of law
The provisions of section 4588 of this title shall apply
with respect to the exercise of any power under this
subparagraph, in the same manner as such provisions apply
under that section.
(ii) Subpoena
A subpoena or subpoena duces tecum may be issued under
clause (i) only by, or with the written approval of, the
Director, or the designee of the Director.
(iii) Rule of construction
This subsection shall not be construed to limit any rights
that the Agency, in any capacity, might otherwise have under
section 4517 or 4639 of this title.
(J) Incidental powers
The Agency may, as conservator or receiver -
(i) exercise all powers and authorities specifically
granted to conservators or receivers, respectively, under
this section, and such incidental powers as shall be
necessary to carry out such powers; and
(ii) take any action authorized by this section, which the
Agency determines is in the best interests of the regulated
entity or the Agency.
(K) Other provisions
(i) Shareholders and creditors of failed regulated entity
Notwithstanding any other provision of law, the appointment
of the Agency as receiver for a regulated entity pursuant to
paragraph (2) or (4) of subsection (a) and its succession, by
operation of law, to the rights, titles, powers, and
privileges described in subsection (b)(2)(A) shall terminate
all rights and claims that the stockholders and creditors of
the regulated entity may have against the assets or charter
of the regulated entity or the Agency arising as a result of
their status as stockholders or creditors, except for their
right to payment, resolution, or other satisfaction of their
claims, as permitted under subsections (b)(9), (c), and (e).
(ii) Assets of regulated entity
Notwithstanding any other provision of law, for purposes of
this section, the charter of a regulated entity shall not be
considered an asset of the regulated entity.
(3) Authority of receiver to determine claims
(A) In general
The Agency may, as receiver, determine claims in accordance
with the requirements of this subsection and any regulations
prescribed under paragraph (4).
(B) Notice requirements
The receiver, in any case involving the liquidation or
winding up of the affairs of a closed regulated entity, shall -
(i) promptly publish a notice to the creditors of the
regulated entity to present their claims, together with
proof, to the receiver by a date specified in the notice
which shall be not less than 90 days after the date of
publication of such notice; and
(ii) republish such notice approximately 1 month and 2
months, respectively, after the date of publication under
clause (i).
(C) Mailing required
The receiver shall mail a notice similar to the notice
published under subparagraph (B)(i) at the time of such
publication to any creditor shown on the books of the regulated
entity -
(i) at the last address of the creditor appearing in such
books; or
(ii) upon discovery of the name and address of a claimant
not appearing on the books of the regulated entity, within 30
days after the discovery of such name and address.
(4) Rulemaking authority relating to determination of claims
Subject to subsection (c), the Director may prescribe
regulations regarding the allowance or disallowance of claims by
the receiver and providing for administrative determination of
claims and review of such determination.
(5) Procedures for determination of claims
(A) Determination period
(i) In general
Before the end of the 180-day period beginning on the date
on which any claim against a regulated entity is filed with
the Agency as receiver, the Agency shall determine whether to
allow or disallow the claim and shall notify the claimant of
any determination with respect to such claim.
(ii) Extension of time
The period described in clause (i) may be extended by a
written agreement between the claimant and the Agency.
(iii) Mailing of notice sufficient
The requirements of clause (i) shall be deemed to be
satisfied if the notice of any determination with respect to
any claim is mailed to the last address of the claimant which
appears -
(I) on the books of the regulated entity;
(II) in the claim filed by the claimant; or
(III) in documents submitted in proof of the claim.
(iv) Contents of notice of disallowance
If any claim filed under clause (i) is disallowed, the
notice to the claimant shall contain -
(I) a statement of each reason for the disallowance; and
(II) the procedures available for obtaining agency review
of the determination to disallow the claim or judicial
determination of the claim.
(B) Allowance of proven claim
The receiver shall allow any claim received on or before the
date specified in the notice published under paragraph
(3)(B)(i) by the receiver from any claimant which is proved to
the satisfaction of the receiver.
(C) Disallowance of claims filed after filing period
Claims filed after the date specified in the notice published
under paragraph (3)(B)(i), or the date specified under
paragraph (3)(C), shall be disallowed and such disallowance
shall be final.
(D) Authority to disallow claims
(i) In general
The receiver may disallow any portion of any claim by a
creditor or claim of security, preference, or priority which
is not proved to the satisfaction of the receiver.
(ii) Payments to less than fully secured creditors
In the case of a claim of a creditor against a regulated
entity which is secured by any property or other asset of
such regulated entity, the receiver -
(I) may treat the portion of such claim which exceeds an
amount equal to the fair market value of such property or
other asset as an unsecured claim against the regulated
entity; and
(II) may not make any payment with respect to such
unsecured portion of the claim, other than in connection
with the disposition of all claims of unsecured creditors
of the regulated entity.
(iii) Exceptions
No provision of this paragraph shall apply with respect to -
(I) any extension of credit from any Federal Reserve
Bank, Federal Home Loan Bank, or the United States
Treasury; or
(II) any security interest in the assets of the regulated
entity securing any such extension of credit.
(E) No judicial review of determination pursuant to
subparagraph (D)
No court may review the determination of the Agency under
subparagraph (D) to disallow a claim.
(F) Legal effect of filing
(i) Statute of limitation tolled
For purposes of any applicable statute of limitations, the
filing of a claim with the receiver shall constitute a
commencement of an action.
(ii) No prejudice to other actions
Subject to paragraph (10), the filing of a claim with the
receiver shall not prejudice any right of the claimant to
continue any action which was filed before the date of the
appointment of the receiver, subject to the determination of
claims by the receiver.
(6) Provision for judicial determination of claims
(A) In general
The claimant may file suit on a claim (or continue an action
commenced before the appointment of the receiver) in the
district or territorial court of the United States for the
district within which the principal place of business of the
regulated entity is located or the United States District Court
for the District of Columbia (and such court shall have
jurisdiction to hear such claim), before the end of the 60-day
period beginning on the earlier of -
(i) the end of the period described in paragraph (5)(A)(i)
with respect to any claim against a regulated entity for
which the Agency is receiver; or
(ii) the date of any notice of disallowance of such claim
pursuant to paragraph (5)(A)(i).
(B) Statute of limitations
A claim shall be deemed to be disallowed (other than any
portion of such claim which was allowed by the receiver), and
such disallowance shall be final, and the claimant shall have
no further rights or remedies with respect to such claim, if
the claimant fails, before the end of the 60-day period
described under subparagraph (A), to file suit on such claim
(or continue an action commenced before the appointment of the
receiver).
(7) Review of claims
(A) Other review procedures
(i) In general
The Agency shall establish such alternative dispute
resolution processes as may be appropriate for the resolution
of claims filed under paragraph (5)(A)(i).
(ii) Criteria
In establishing alternative dispute resolution processes,
the Agency shall strive for procedures which are expeditious,
fair, independent, and low cost.
(iii) Voluntary binding or nonbinding procedures
The Agency may establish both binding and nonbinding
processes under this subparagraph, which may be conducted by
any government or private party. All parties, including the
claimant and the Agency, must agree to the use of the process
in a particular case.
(B) Consideration of incentives
The Agency shall seek to develop incentives for claimants to
participate in the alternative dispute resolution process.
(8) Expedited determination of claims
(A) Establishment required
The Agency shall establish a procedure for expedited relief
outside of the routine claims process established under
paragraph (5) for claimants who -
(i) allege the existence of legally valid and enforceable
or perfected security interests in assets of any regulated
entity for which the Agency has been appointed receiver; and
(ii) allege that irreparable injury will occur if the
routine claims procedure is followed.
(B) Determination period
Before the end of the 90-day period beginning on the date on
which any claim is filed in accordance with the procedures
established under subparagraph (A), the Director shall -
(i) determine -
(I) whether to allow or disallow such claim; or
(II) whether such claim should be determined pursuant to
the procedures established under paragraph (5); and
(ii) notify the claimant of the determination, and if the
claim is disallowed, provide a statement of each reason for
the disallowance and the procedure for obtaining agency
review or judicial determination.
(C) Period for filing or renewing suit
Any claimant who files a request for expedited relief shall
be permitted to file a suit, or to continue a suit filed before
the date of appointment of the receiver, seeking a
determination of the rights of the claimant with respect to
such security interest after the earlier of -
(i) the end of the 90-day period beginning on the date of
the filing of a request for expedited relief; or
(ii) the date on which the Agency denies the claim.
(D) Statute of limitations
If an action described under subparagraph (C) is not filed,
or the motion to renew a previously filed suit is not made,
before the end of the 30-day period beginning on the date on
which such action or motion may be filed under subparagraph
(B), the claim shall be deemed to be disallowed as of the end
of such period (other than any portion of such claim which was
allowed by the receiver), such disallowance shall be final, and
the claimant shall have no further rights or remedies with
respect to such claim.
(E) Legal effect of filing
(i) Statute of limitation tolled
For purposes of any applicable statute of limitations, the
filing of a claim with the receiver shall constitute a
commencement of an action.
(ii) No prejudice to other actions
Subject to paragraph (10), the filing of a claim with the
receiver shall not prejudice any right of the claimant to
continue any action that was filed before the appointment of
the receiver, subject to the determination of claims by the
receiver.
(9) Payment of claims
(A) In general
The receiver may, in the discretion of the receiver, and to
the extent that funds are available from the assets of the
regulated entity, pay creditor claims, in such manner and
amounts as are authorized under this section, which are -
(i) allowed by the receiver;
(ii) approved by the Agency pursuant to a final
determination pursuant to paragraph (7) or (8); or
(iii) determined by the final judgment of any court of
competent jurisdiction.
(B) Agreements against the interest of the Agency
No agreement that tends to diminish or defeat the interest of
the Agency in any asset acquired by the Agency as receiver
under this section shall be valid against the Agency unless
such agreement is in writing and executed by an authorized
officer or representative of the regulated entity.
(C) Payment of dividends on claims
The receiver may, in the sole discretion of the receiver, pay
from the assets of the regulated entity dividends on proved
claims at any time, and no liability shall attach to the Agency
by reason of any such payment, for failure to pay dividends to
a claimant whose claim is not proved at the time of any such
payment.
(D) Rulemaking authority of the Director
The Director may prescribe such rules, including definitions
of terms, as the Director deems appropriate to establish a
single uniform interest rate for, or to make payments of post-
insolvency interest to creditors holding proven claims against
the receivership estates of the regulated entity, following
satisfaction by the receiver of the principal amount of all
creditor claims.
(10) Suspension of legal actions
(A) In general
After the appointment of a conservator or receiver for a
regulated entity, the conservator or receiver may, in any
judicial action or proceeding to which such regulated entity is
or becomes a party, request a stay for a period not to exceed -
(i) 45 days, in the case of any conservator; and
(ii) 90 days, in the case of any receiver.
(B) Grant of stay by all courts required
Upon receipt of a request by the conservator or receiver
under subparagraph (A) for a stay of any judicial action or
proceeding in any court with jurisdiction of such action or
proceeding, the court shall grant such stay as to all parties.
(11) Additional rights and duties
(A) Prior final adjudication
The Agency shall abide by any final unappealable judgment of
any court of competent jurisdiction which was rendered before
the appointment of the Agency as conservator or receiver.
(B) Rights and remedies of conservator or receiver
In the event of any appealable judgment, the Agency as
conservator or receiver -
(i) shall have all of the rights and remedies available to
the regulated entity (before the appointment of such
conservator or receiver) and the Agency, including removal to
Federal court and all appellate rights; and
(ii) shall not be required to post any bond in order to
pursue such remedies.
(C) No attachment or execution
No attachment or execution may issue by any court upon assets
in the possession of the receiver, or upon the charter, of a
regulated entity for which the Agency has been appointed
receiver.
(D) Limitation on judicial review
Except as otherwise provided in this subsection, no court
shall have jurisdiction over -
(i) any claim or action for payment from, or any action
seeking a determination of rights with respect to, the assets
or charter of any regulated entity for which the Agency has
been appointed receiver; or
(ii) any claim relating to any act or omission of such
regulated entity or the Agency as receiver.
(E) Disposition of assets
In exercising any right, power, privilege, or authority as
conservator or receiver in connection with any sale or
disposition of assets of a regulated entity for which the
Agency has been appointed conservator or receiver, the Agency
shall conduct its operations in a manner which -
(i) maximizes the net present value return from the sale or
disposition of such assets;
(ii) minimizes the amount of any loss realized in the
resolution of cases; and
(iii) ensures adequate competition and fair and consistent
treatment of offerors.
(12) Statute of limitations for actions brought by conservator or
receiver
(A) In general
Notwithstanding any provision of any contract, the applicable
statute of limitations with regard to any action brought by the
Agency as conservator or receiver shall be -
(i) in the case of any contract claim, the longer of -
(I) the 6-year period beginning on the date on which the
claim accrues; or
(II) the period applicable under State law; and
(ii) in the case of any tort claim, the longer of -
(I) the 3-year period beginning on the date on which the
claim accrues; or
(II) the period applicable under State law.
(B) Determination of the date on which a claim accrues
For purposes of subparagraph (A), the date on which the
statute of limitations begins to run on any claim described in
such subparagraph shall be the later of -
(i) the date of the appointment of the Agency as
conservator or receiver; or
(ii) the date on which the cause of action accrues.
(13) Revival of expired state causes of action
(A) In general
In the case of any tort claim described under clause (ii) for
which the statute of limitations applicable under State law
with respect to such claim has expired not more than 5 years
before the appointment of the Agency as conservator or
receiver, the Agency may bring an action as conservator or
receiver on such claim without regard to the expiration of the
statute of limitations applicable under State law.
(B) Claims described
A tort claim referred to under clause (i) is a claim arising
from fraud, intentional misconduct resulting in unjust
enrichment, or intentional misconduct resulting in substantial
loss to the regulated entity.
(14) Accounting and recordkeeping requirements
(A) In general
The Agency as conservator or receiver shall, consistent with
the accounting and reporting practices and procedures
established by the Agency, maintain a full accounting of each
conservatorship and receivership or other disposition of a
regulated entity in default.
(B) Annual accounting or report
With respect to each conservatorship or receivership, the
Agency shall make an annual accounting or report available to
the Board, the Comptroller General of the United States, the
Committee on Banking, Housing, and Urban Affairs of the Senate,
and the Committee on Financial Services of the House of
Representatives.
(C) Availability of reports
Any report prepared under subparagraph (B) shall be made
available by the Agency upon request to any shareholder of a
regulated entity or any member of the public.
(D) Recordkeeping requirement
After the end of the 6-year period beginning on the date on
which the conservatorship or receivership is terminated by the
Director, the Agency may destroy any records of such regulated
entity which the Agency, in the discretion of the Agency,
determines to be unnecessary, unless directed not to do so by a
court of competent jurisdiction or governmental agency, or
prohibited by law.
(15) Fraudulent transfers
(A) In general
The Agency, as conservator or receiver, may avoid a transfer
of any interest of an entity-affiliated party, or any person
determined by the conservator or receiver to be a debtor of the
regulated entity, in property, or any obligation incurred by
such party or person, that was made within 5 years of the date
on which the Agency was appointed conservator or receiver, if
such party or person voluntarily or involuntarily made such
transfer or incurred such liability with the intent to hinder,
delay, or defraud the regulated entity, the Agency, the
conservator, or receiver.
(B) Right of recovery
To the extent a transfer is avoided under subparagraph (A),
the conservator or receiver may recover, for the benefit of the
regulated entity, the property transferred, or, if a court so
orders, the value of such property (at the time of such
transfer) from -
(i) the initial transferee of such transfer or the entity-
affiliated party or person for whose benefit such transfer
was made; or
(ii) any immediate or mediate transferee of any such
initial transferee.
(C) Rights of transferee or obligee
The conservator or receiver may not recover under
subparagraph (B) from -
(i) any transferee that takes for value, including
satisfaction or securing of a present or antecedent debt, in
good faith; or
(ii) any immediate or mediate good faith transferee of such
transferee.
(D) Rights under this paragraph
The rights under this paragraph of the conservator or
receiver described under subparagraph (A) shall be superior to
any rights of a trustee or any other party (other than any
party which is a Federal agency) under title 11.
(16) Attachment of assets and other injunctive relief
Subject to paragraph (17), any court of competent jurisdiction
may, at the request of the conservator or receiver, issue an
order in accordance with rule 65 of the Federal Rules of Civil
Procedure, including an order placing the assets of any person
designated by the conservator or receiver under the control of
the court, and appointing a trustee to hold such assets.
(17) Standards of proof
Rule 65 of the Federal Rules of Civil Procedure shall apply
with respect to any proceeding under paragraph (16) without
regard to the requirement of such rule that the applicant show
that the injury, loss, or damage is irreparable and immediate.
(18) Treatment of claims arising from breach of contracts
executed by the conservator or receiver
(A) In general
Notwithstanding any other provision of this subsection, any
final and unappealable judgment for monetary damages entered
against the conservator or receiver for the breach of an
agreement executed or approved in writing by the conservator or
receiver after the date of its appointment, shall be paid as an
administrative expense of the conservator or receiver.
(B) No limitation of power
Nothing in this paragraph shall be construed to limit the
power of the conservator or receiver to exercise any rights
under contract or law, including to terminate, breach, cancel,
or otherwise discontinue such agreement.
(19) General exceptions
(A) Limitations
The rights of the conservator or receiver appointed under
this section shall be subject to the limitations on the powers
of a receiver under sections 4402 through 4407 of this
title.(!1)
(B) Mortgages held in trust
(i) In general
Any mortgage, pool of mortgages, or interest in a pool of
mortgages held in trust, custodial, or agency capacity by a
regulated entity for the benefit of any person other than the
regulated entity shall not be available to satisfy the claims
of creditors generally, except that nothing in this clause
shall be construed to expand or otherwise affect the
authority of any regulated entity.
(ii) Holding of mortgages
Any mortgage, pool of mortgages, or interest in a pool of
mortgages described in clause (i) shall be held by the
conservator or receiver appointed under this section for the
beneficial owners of such mortgage, pool of mortgages, or
interest in accordance with the terms of the agreement
creating such trust, custodial, or other agency arrangement.
(iii) Liability of conservator or receiver
The liability of the conservator or receiver appointed
under this section for damages shall, in the case of any
contingent or unliquidated claim relating to the mortgages
held in trust, be estimated in accordance with the
regulations of the Director.
(c) Priority of expenses and unsecured claims
(1) In general
Unsecured claims against a regulated entity, or the receiver
therefor, that are proven to the satisfaction of the receiver
shall have priority in the following order:
(A) Administrative expenses of the receiver.
(B) Any other general or senior liability of the regulated
entity (which is not a liability described under subparagraph
(C) or (D).(!2)
(C) Any obligation subordinated to general creditors (which
is not an obligation described under subparagraph (D)).
(D) Any obligation to shareholders or members arising as a
result of their status as shareholder or members.
(2) Creditors similarly situated
All creditors that are similarly situated under paragraph (1)
shall be treated in a similar manner, except that the receiver
may take any action (including making payments) that does not
comply with this subsection, if -
(A) the Director determines that such action is necessary to
maximize the value of the assets of the regulated entity, to
maximize the present value return from the sale or other
disposition of the assets of the regulated entity, or to
minimize the amount of any loss realized upon the sale or other
disposition of the assets of the regulated entity; and
(B) all creditors that are similarly situated under paragraph
(1) receive not less than the amount provided in subsection
(e)(2).
(3) Definition
As used in this subsection, the term "administrative expenses
of the receiver" includes -
(A) the actual, necessary costs and expenses incurred by the
receiver in preserving the assets of a failed regulated entity
or liquidating or otherwise resolving the affairs of a failed
regulated entity; and
(B) any obligations that the receiver determines are
necessary and appropriate to facilitate the smooth and orderly
liquidation or other resolution of the regulated entity.
(d) Provisions relating to contracts entered into before
appointment of conservator or receiver
(1) Authority to repudiate contracts
In addition to any other rights a conservator or receiver may
have, the conservator or receiver for any regulated entity may
disaffirm or repudiate any contract or lease -
(A) to which such regulated entity is a party;
(B) the performance of which the conservator or receiver, in
its sole discretion, determines to be burdensome; and
(C) the disaffirmance or repudiation of which the conservator
or receiver determines, in its sole discretion, will promote
the orderly administration of the affairs of the regulated
entity.
(2) Timing of repudiation
The conservator or receiver shall determine whether or not to
exercise the rights of repudiation under this subsection within a
reasonable period following such appointment.
(3) Claims for damages for repudiation
(A) In general
Except as otherwise provided under subparagraph (C) and
paragraphs (4), (5), and (6), the liability of the conservator
or receiver for the disaffirmance or repudiation of any
contract pursuant to paragraph (1) shall be -
(i) limited to actual direct compensatory damages; and
(ii) determined as of -
(I) the date of the appointment of the conservator or
receiver; or
(II) in the case of any contract or agreement referred to
in paragraph (8), the date of the disaffirmance or
repudiation of such contract or agreement.
(B) No liability for other damages
For purposes of subparagraph (A), the term "actual direct
compensatory damages" shall not include -
(i) punitive or exemplary damages;
(ii) damages for lost profits or opportunity; or
(iii) damages for pain and suffering.
(C) Measure of damages for repudiation of financial contracts
In the case of any qualified financial contract or agreement
to which paragraph (8) applies, compensatory damages shall be -
(i) deemed to include normal and reasonable costs of cover
or other reasonable measures of damages utilized in the
industries for such contract and agreement claims; and
(ii) paid in accordance with this subsection and subsection
(e), except as otherwise specifically provided in this
section.
(4) Leases under which the regulated entity is the lessee
(A) In general
If the conservator or receiver disaffirms or repudiates a
lease under which the regulated entity was the lessee, the
conservator or receiver shall not be liable for any damages
(other than damages determined under subparagraph (B)) for the
disaffirmance or repudiation of such lease.
(B) Payments of rent
Notwithstanding subparagraph (A), the lessor under a lease to
which that subparagraph applies shall -
(i) be entitled to the contractual rent accruing before the
later of the date on which -
(I) the notice of disaffirmance or repudiation is mailed;
or
(II) the disaffirmance or repudiation becomes effective,
unless the lessor is in default or breach of the terms of
the lease;
(ii) have no claim for damages under any acceleration
clause or other penalty provision in the lease; and
(iii) have a claim for any unpaid rent, subject to all
appropriate offsets and defenses, due as of the date of the
appointment, which shall be paid in accordance with this
subsection and subsection (e).
(5) Leases under which the regulated entity is the lessor
(A) In general
If the conservator or receiver repudiates an unexpired
written lease of real property of the regulated entity under
which the regulated entity is the lessor and the lessee is not,
as of the date of such repudiation, in default, the lessee
under such lease may either -
(i) treat the lease as terminated by such repudiation; or
(ii) remain in possession of the leasehold interest for the
balance of the term of the lease, unless the lessee defaults
under the terms of the lease after the date of such
repudiation.
(B) Provisions applicable to lessee remaining in possession
If any lessee under a lease described under subparagraph (A)
remains in possession of a leasehold interest under clause (ii)
of subparagraph (A) -
(i) the lessee -
(I) shall continue to pay the contractual rent pursuant
to the terms of the lease after the date of the repudiation
of such lease; and
(II) may offset against any rent payment which accrues
after the date of the repudiation of the lease, and any
damages which accrue after such date due to the
nonperformance of any obligation of the regulated entity
under the lease after such date; and
(ii) the conservator or receiver shall not be liable to the
lessee for any damages arising after such date as a result of
the repudiation, other than the amount of any offset allowed
under clause (i)(II).
(6) Contracts for the sale of real property
(A) In general
If the conservator or receiver repudiates any contract for
the sale of real property and the purchaser of such real
property under such contract is in possession, and is not, as
of the date of such repudiation, in default, such purchaser may
either -
(i) treat the contract as terminated by such repudiation;
or
(ii) remain in possession of such real property.
(B) Provisions applicable to purchaser remaining in possession
If any purchaser of real property under any contract
described under subparagraph (A) remains in possession of such
property under clause (ii) of subparagraph (A) -
(i) the purchaser -
(I) shall continue to make all payments due under the
contract after the date of the repudiation of the contract;
and
(II) may offset against any such payments any damages
which accrue after such date due to the nonperformance
(after such date) of any obligation of the regulated entity
under the contract; and
(ii) the conservator or receiver shall -
(I) not be liable to the purchaser for any damages
arising after such date as a result of the repudiation,
other than the amount of any offset allowed under clause
(i)(II);
(II) deliver title to the purchaser in accordance with
the provisions of the contract; and
(III) have no obligation under the contract other than
the performance required under subclause (II).
(C) Assignment and sale allowed
(i) In general
No provision of this paragraph shall be construed as
limiting the right of the conservator or receiver to assign
the contract described under subparagraph (A), and sell the
property subject to the contract and the provisions of this
paragraph.
(ii) No liability after assignment and sale
If an assignment and sale described under clause (i) is
consummated, the conservator or receiver shall have no
further liability under the contract described under
subparagraph (A), or with respect to the real property which
was the subject of such contract.
(7) Service contracts
(A) Services performed before appointment
In the case of any contract for services between any person
and any regulated entity for which the Agency has been
appointed conservator or receiver, any claim of such person for
services performed before the appointment of the conservator or
receiver shall be -
(i) a claim to be paid in accordance with subsections (b)
and (e); and
(ii) deemed to have arisen as of the date on which the
conservator or receiver was appointed.
(B) Services performed after appointment and prior to
repudiation
If, in the case of any contract for services described under
subparagraph (A), the conservator or receiver accepts
performance by the other person before the conservator or
receiver makes any determination to exercise the right of
repudiation of such contract under this section -
(i) the other party shall be paid under the terms of the
contract for the services performed; and
(ii) the amount of such payment shall be treated as an
administrative expense of the conservatorship or
receivership.
(C) Acceptance of performance no bar to subsequent repudiation
The acceptance by the conservator or receiver of services
referred to under subparagraph (B) in connection with a
contract described in such subparagraph shall not affect the
right of the conservator or receiver to repudiate such contract
under this section at any time after such performance.
(8) Certain qualified financial contracts
(A) Rights of parties to contracts
Subject to paragraphs (9) and (10), and notwithstanding any
other provision of this chapter (other than subsection
(b)(9)(B) of this section), any other Federal law, or the law
of any State, no person shall be stayed or prohibited from
exercising -
(i) any right of that person to cause the termination,
liquidation, or acceleration of any qualified financial
contract with a regulated entity that arises upon the
appointment of the Agency as receiver for such regulated
entity at any time after such appointment;
(ii) any right under any security agreement or arrangement
or other credit enhancement relating to one or more qualified
financial contracts; or
(iii) any right to offset or net out any termination value,
payment amount, or other transfer obligation arising under or
in connection with 1 or more contracts and agreements
described in clause (i), including any master agreement for
such contracts or agreements.
(B) Applicability of other provisions
Subsection (b)(10) shall apply in the case of any judicial
action or proceeding brought against any receiver referred to
under subparagraph (A), or the regulated entity for which such
receiver was appointed, by any party to a contract or agreement
described under subparagraph (A)(i) with such regulated entity.
(C) Certain transfers not avoidable
(i) In general
Notwithstanding paragraph (11), or any other provision of
Federal or State law relating to the avoidance of
preferential or fraudulent transfers, the Agency, whether
acting as such or as conservator or receiver of a regulated
entity, may not avoid any transfer of money or other property
in connection with any qualified financial contract with a
regulated entity.
(ii) Exception for certain transfers
Clause (i) shall not apply to any transfer of money or
other property in connection with any qualified financial
contract with a regulated entity if the Agency determines
that the transferee had actual intent to hinder, delay, or
defraud such regulated entity, the creditors of such
regulated entity, or any conservator or receiver appointed
for such regulated entity.
(D) Certain contracts and agreements defined
In this subsection the following definitions shall apply:
(i) Qualified financial contract
The term "qualified financial contract" means any
securities contract, commodity contract, forward contract,
repurchase agreement, swap agreement, and any similar
agreement that the Agency determines by regulation,
resolution, or order to be a qualified financial contract for
purposes of this paragraph.
(ii) Securities contract
The term "securities contract" -
(I) means a contract for the purchase, sale, or loan of a
security, a certificate of deposit, a mortgage loan, or any
interest in a mortgage loan, a group or index of
securities, certificates of deposit, or mortgage loans or
interests therein (including any interest therein or based
on the value thereof) or any option on any of the
foregoing, including any option to purchase or sell any
such security, certificate of deposit, mortgage loan,
interest, group or index, or option, and including any
repurchase or reverse repurchase transaction on any such
security, certificate of deposit, mortgage loan, interest,
group or index, or option;
(II) does not include any purchase, sale, or repurchase
obligation under a participation in a commercial mortgage
loan, unless the Agency determines by regulation,
resolution, or order to include any such agreement within
the meaning of such term;
(III) means any option entered into on a national
securities exchange relating to foreign currencies;
(IV) means the guarantee by or to any securities clearing
agency of any settlement of cash, securities, certificates
of deposit, mortgage loans or interests therein, group or
index of securities, certificates of deposit, or mortgage
loans or interests therein (including any interest therein
or based on the value thereof) or option on any of the
foregoing, including any option to purchase or sell any
such security, certificate of deposit, mortgage loan,
interest, group or index, or option;
(V) means any margin loan;
(VI) means any other agreement or transaction that is
similar to any agreement or transaction referred to in this
clause;
(VII) means any combination of the agreements or
transactions referred to in this clause;
(VIII) means any option to enter into any agreement or
transaction referred to in this clause;
(IX) means a master agreement that provides for an
agreement or transaction referred to in subclause (I),
(III), (IV), (V), (VI), (VII), or (VIII), together with all
supplements to any such master agreement, without regard to
whether the master agreement provides for an agreement or
transaction that is not a securities contract under this
clause, except that the master agreement shall be
considered to be a securities contract under this clause
only with respect to each agreement or transaction under
the master agreement that is referred to in subclause (I),
(III), (IV), (V), (VI), (VII), or (VIII); and
(X) means any security agreement or arrangement or other
credit enhancement related to any agreement or transaction
referred to in this clause, including any guarantee or
reimbursement obligation in connection with any agreement
or transaction referred to in this clause.
(iii) Commodity contract
The term "commodity contract" means -
(I) with respect to a futures commission merchant, a
contract for the purchase or sale of a commodity for future
delivery on, or subject to the rules of, a contract market
or board of trade;
(II) with respect to a foreign futures commission
merchant, a foreign future;
(III) with respect to a leverage transaction merchant, a
leverage transaction;
(IV) with respect to a clearing organization, a contract
for the purchase or sale of a commodity for future delivery
on, or subject to the rules of, a contract market or board
of trade that is cleared by such clearing organization, or
commodity option traded on, or subject to the rules of, a
contract market or board of trade that is cleared by such
clearing organization;
(V) with respect to a commodity options dealer, a
commodity option;
(VI) any other agreement or transaction that is similar
to any agreement or transaction referred to in this clause;
(VII) any combination of the agreements or transactions
referred to in this clause;
(VIII) any option to enter into any agreement or
transaction referred to in this clause;
(IX) a master agreement that provides for an agreement or
transaction referred to in subclause (I), (II), (III),
(IV), (V), (VI), (VII), or (VIII), together with all
supplements to any such master agreement, without regard to
whether the master agreement provides for an agreement or
transaction that is not a commodity contract under this
clause, except that the master agreement shall be
considered to be a commodity contract under this clause
only with respect to each agreement or transaction under
the master agreement that is referred to in subclause (I),
(II), (III), (IV), (V), (VI), (VII), or (VIII); or
(X) any security agreement or arrangement or other credit
enhancement related to any agreement or transaction
referred to in this clause, including any guarantee or
reimbursement obligation in connection with any agreement
or transaction referred to in this clause.
(iv) Forward contract
The term "forward contract" means -
(I) a contract (other than a commodity contract) for the
purchase, sale, or transfer of a commodity or any similar
good, article, service, right, or interest which is
presently or in the future becomes the subject of dealing
in the forward contract trade, or product or byproduct
thereof, with a maturity date more than 2 days after the
date on which the contract is entered into, including a
repurchase transaction, reverse repurchase transaction,
consignment, lease, swap, hedge transaction, deposit, loan,
option, allocated transaction, unallocated transaction, or
any other similar agreement;
(II) any combination of agreements or transactions
referred to in subclauses (I) and (III);
(III) any option to enter into any agreement or
transaction referred to in subclause (I) or (II);
(IV) a master agreement that provides for an agreement or
transaction referred to in subclauses (I), (II), or (III),
together with all supplements to any such master agreement,
without regard to whether the master agreement provides for
an agreement or transaction that is not a forward contract
under this clause, except that the master agreement shall
be considered to be a forward contract under this clause
only with respect to each agreement or transaction under
the master agreement that is referred to in subclause (I),
(II), or (III); or
(V) any security agreement or arrangement or other credit
enhancement related to any agreement or transaction
referred to in subclause (I), (II), (III), or (IV),
including any guarantee or reimbursement obligation in
connection with any agreement or transaction referred to in
any such subclause.
(v) Repurchase agreement
The term "repurchase agreement" (including a reverse
repurchase agreement) -
(I) means an agreement, including related terms, which
provides for the transfer of one or more certificates of
deposit, mortgage-related securities (as such term is
defined in section 78c of title 15), mortgage loans,
interests in mortgage-related securities or mortgage loans,
eligible bankers' acceptances, qualified foreign government
securities (defined for purposes of this clause as a
security that is a direct obligation of, or that is fully
guaranteed by, the central government of a member of the
Organization for Economic Cooperation and Development, as
determined by regulation or order adopted by the
appropriate Federal banking authority), or securities that
are direct obligations of, or that are fully guaranteed by,
the United States or any agency of the United States
against the transfer of funds by the transferee of such
certificates of deposit, eligible bankers' acceptances,
securities, mortgage loans, or interests with a
simultaneous agreement by such transferee to transfer to
the transferor thereof certificates of deposit, eligible
bankers' acceptances, securities, mortgage loans, or
interests as described above, at a date certain not later
than 1 year after such transfers or on demand, against the
transfer of funds, or any other similar agreement;
(II) does not include any repurchase obligation under a
participation in a commercial mortgage loan, unless the
Agency determines by regulation, resolution, or order to
include any such participation within the meaning of such
term;
(III) means any combination of agreements or transactions
referred to in subclauses (I) and (IV);
(IV) means any option to enter into any agreement or
transaction referred to in subclause (I) or (III);
(V) means a master agreement that provides for an
agreement or transaction referred to in subclause (I),
(III), or (IV), together with all supplements to any such
master agreement, without regard to whether the master
agreement provides for an agreement or transaction that is
not a repurchase agreement under this clause, except that
the master agreement shall be considered to be a repurchase
agreement under this subclause only with respect to each
agreement or transaction under the master agreement that is
referred to in subclause (I), (III), or (IV); and
(VI) means any securityLegislative History ________________________________________________________________________
U.S. Code Provisions: Bank CapitalizationState Laws: Bank Capitalization
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