§ 4486. Injunction; liquidation; receivership of domestic society

(a) When the Commissioner of Financial Regulation upon investigation finds that a domestic society:

(1) has exceeded its powers;

(2) has failed to comply with any provision of this chapter;

(3) is not fulfilling its contracts in good faith;

(4) has a membership of less than 400 after an existence of one year or more; or

(5) is conducting business fraudulently or in a manner hazardous to its members, creditors, the public, or the business; he or she shall notify the society of his or her findings, state in writing the reasons for his or her dissatisfaction, and require the society to show cause on a date named why it should not be enjoined from carrying on any business until the violation complained of shall have been corrected, or why an action in quo warranto should not be commenced against the society.

(b) If on that date the society does not present good and sufficient reasons why it should not be so enjoined or why such action should not be commenced, the Commissioner may present the relevant facts to the Attorney General who shall, if the Attorney General believes the circumstances warrant, commence an action to enjoin the society from transacting business or an action under Rule 75 of the Vermont Rules of Civil Procedure.

(c)(1) The court shall thereupon notify the officers of the society of a hearing. If after a full hearing it appears that the society should be so enjoined or liquidated or a receiver appointed, the court shall enter the necessary order.

(2) No society so enjoined may do business until:

(A) the Commissioner of Financial Regulation finds that the violation complained of has been corrected;

(B) the costs of the action have been paid by the society if the court finds that the society was in default as charged;

(C) the court has dissolved its injunction; and

(D) the Commissioner of Financial Regulation has reinstated the certificate of authority.

(3) If the court orders the society liquidated, the society shall be enjoined from carrying on any further business, whereupon the receiver of the society shall proceed at once to take possession of the books, papers, money, and other assets of the society and, under the direction of the court, immediately proceed to close the affairs of the society and to distribute its funds to those entitled to its funds.

(d) No action under this section shall be recognized in any court of this State unless brought by the Attorney General upon request of the Commissioner of Financial Regulation. Whenever a receiver is to be appointed for a domestic society, the court shall appoint the Commissioner of Financial Regulation as the receiver.

(e) The provisions of this section relating to hearing by the Commissioner of Financial Regulation, action by the Attorney General at the request of the Commissioner of Financial Regulation, hearing by the court, injunction, and receivership shall be applicable to a society that voluntarily determines to discontinue business. (Added 1959, No. 197, § 26, eff. Nov. 22, 1959; amended 1989, No. 225 (Adj. Sess.), § 25; 1995, No. 180 (Adj. Sess.), § 38; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2021, No. 105 (Adj. Sess.), § 196, eff. July 1, 2022.)