12629. The provisions of this article shall apply to any mortgage
insurer:
(a) The property, business and assets of which are in possession
of the commissioner;
(b) Which is no longer able to conduct the normal business of a
mortgage insurer;
(c) Which is unable to discharge its debts or other obligations as
they become due;
(d) Which is in such condition that unless such insurer is
liquidated or a plan of reorganization consummated a preference is
likely to be obtained by some holders of mortgage participation
certificates over other such holders, or by some creditors over other
creditors of the same class;
(e) Which is in such condition that it will probably be necessary,
unless a plan of reorganization is consummated, to liquidate such
insurer or to sell or otherwise dispose of a substantial part of its
assets at substantially less than the amount which might reasonably
be expected to be realized therefrom in the ordinary and proper
conduct of a going business.
The determination of the commissioner that a mortgage insurer is
included in one or more of the foregoing classifications shall be
prima facie evidence of such fact.
12629.21. In the case of a mortgage insurer which has issued
mortgage participation certificates under mortgage participation
trusts pursuant to the provisions of Chapter VIII, Title II, Part IV,
Division I of the Civil Code, such mortgage participation trusts,
the mortgage participation certificates issued thereunder and any
policies of mortgage insurance issued in connection therewith shall
be subject also to the provisions of this article whenever a
revision, modification or termination of such trusts, certificates or
policies is found by the court to be necessary or advantageous in
connection with any plan submitted to it as hereinafter provided.
12629.22. The term "plan" as used in this article means any plan
for the rehabilitation, readjustment or reorganization of any
mortgage insurer or of all or any part of the business, properties
and assets of such insurer, or for the readjustment, modification or
reorganization of the rights or interests of any or all of the
holders of mortgage participation certificates or other certificates
or securities or policies of mortgage insurance of such insurer, or
of any creditors of such insurer and other persons, if any,
interested therein.
12629.23. Without limiting the generality of section 12629.22, a
plan may provide for any one or more of the following:
(a) For the delivery of all or any part of the business,
properties, or assets of such insurer to the commissioner and the
return thereof to such insurer after the plan is fully consummated;
(b) For the transfer of all or any part of the business,
properties, or assets of such insurer to another corporation or to
two or more other corporations, which corporation or corporations, or
any of them, may, but need not be, a mortgage insurer or a national
mortgage association;
(c) For the modification, revision or termination of any mortgage
participation trusts which have been created by such insurer;
(d) For the issuance of new mortgage participation certificates or
amended mortgage participation certificates or stock, bonds,
debentures or other securities of such insurer or of any other
corporation or corporations, to which the business, properties or
assets, or any part thereof, of such insurer have been transferred,
and for the exchange thereof to the holders of mortgage participation
certificates issued by such insurer or to other creditors of such
insurer for the outstanding mortgage participation certificates or
other obligations of such insurer or for the sale or other
disposition of such new certificates, stock, bonds, debentures or
other securities.
12629.24. Any new mortgage insurer formed pursuant to a plan to
continue the business of an existing insurer may adopt and continue
to use the name of such existing insurer or any part of such name.
12629.25. A plan may be proposed:
(a) By the commissioner; or
(b) Subject to the approval of the commissioner by any mortgage
insurer through action of its board of directors.
12629.26. No plan shall be proposed or approved by the commissioner
unless the commissioner is satisfied that the plan is fair and
equitable and does not discriminate in favor of any class of
certificate holders, investors, creditors or other persons affected
thereby, and is feasible.
12629.27. A plan, if proposed or approved by the commissioner,
shall be presented by the proposer to the superior court of the
county in which the principal office of such insurer is located, with
a petition that the court determine the fairness of such plan and
the approvals requisite to such plan becoming operative, which
petition shall set forth such plan and the fact that it has been
proposed or approved by the commissioner and any other facts which
such proposer shall deem material to a consideration of the fairness
of the plan.
12629.28. Thereupon the court shall fix the time and place for the
hearing of such petition and shall direct that notice thereof shall
be mailed to each of the known certificate holders, investors and
creditors of such insurer affected by such plan and to the trustee or
depositary under all mortgage participation trusts created by such
insurer and then in existence, together with either a copy of such
plan or a summary thereof, which summary shall be either prepared or
approved by the commissioner. If the commissioner shall be the
proposer of such plan the court shall direct such insurer to deliver
to the commissioner a list of the names and addresses of all
certificate holders, creditors, investors and other known persons
affected by such plan. Said notices shall be mailed, postage prepaid,
to the respective addresses as shown on such list, or if no address
be there shown, to the last known address.
12629.29. In addition the proposer of such plan shall cause notice
of the time and place fixed for such hearing to be posted in three
public places in said county not less than twenty days before the day
fixed for such hearing and to be published at least once, not less
than twenty days nor more than thirty days before the day fixed for
such hearing in a newspaper of general circulation published in said
county.
12629.30. At the time and place fixed for such hearing or at the
time and place to which such hearing may be continued by the court,
the court shall hear the parties interested therein and if it deem it
necessary may take testimony relative thereto and may accept proof
in affidavit form as to any fact or circumstance material thereto.
12629.31. Such hearing shall be, among other things, upon the
fairness of the terms and conditions of the issuance of all new or
amended mortgage participation certificates, stock, bonds, debentures
or other securities to be issued pursuant to such plan and of the
exchange thereof for outstanding mortgage participation certificates,
claims or property interests, or partly for such exchange and partly
for cash, and all persons to whom it is proposed to issue such
certificates, stock, bonds, debentures or other securities in such
exchange shall have the right to appear and be heard at such hearing.
12629.32. No plan shall be approved by the court unless the court
is satisfied that the plan is fair and equitable and does not
discriminate in favor of any class of investors, creditors,
certificate holders or other persons affected thereby and is
feasible. In case an insurer has outstanding mortgage participation
certificates issued under one or more than one mortgage participation
trust, the holders of mortgage participation certificates in each of
such trusts may be considered as one class.
12629.33. After the completion of such hearing the court shall
approve, modify or disapprove such plan. No such plan shall become
operative unless and until it shall have been approved in its
original form or, if modified, in its modified form, by such court
and the commissioner, nor unless and until such plan shall have been
consented to either in person or by a duly appointed agent, attorney
or committee by the following persons:
(a) If the plan affects the stockholders of such insurer, then by
the holders of a majority in amount of the outstanding stock of such
insurer;
(b) If the plan affects mortgage participation trusts or the
holders of mortgage participation certificates issued thereunder,
then by the holders of two-thirds in interest of all mortgage
participation certificates outstanding under each or all, as the
court may determine, of the mortgage participation trusts which may
be so affected;
(c) If such insurer shall have creditors, then by two-thirds of
each class of creditors of such insurer; and
(d) By two-thirds in amount of each class of other known persons,
if any, affected by the plan.
12629.34. Consent shall not be required in the case of any
stockholder, mortgage participation certificate holder, creditor or
other person, or any class thereof, if:
(a) The rights of such person or class shall not be materially
affected by such plan; or
(b) Such plan shall provide for the payment in cash of the value
of the right or interest of such person or class.
Such consents shall not be required from stockholders of any
insurer if the value of the assets of such insurer shall be less than
the liabilities thereof (mortgage participation certificates and
policies of mortgage insurance not being included as liabilities), or
if the business, properties and assets of such insurer be then in
the possession of the commissioner.
12629.35. For the purpose of this article real property, contracts
for the sale of real property, loans and all other assets (whether
like or unlike the foregoing) shall be valued at what may reasonably
be expected to be realized therefrom in the ordinary and proper
conduct of a going business.
12629.36. The consents required by this article may be given before
the plan is presented to the court or after such presentation and
before the court has approved it or after such approval.
12629.37. If at such time as the plan is approved by the court the
proportions above required of the stockholders, certificate holders,
creditors and other persons, if any, affected thereby shall not have
consented to the plan, the order of court may provide that upon
satisfactory proof of the fact that such consents have been given a
further order may be entered ex parte providing that such plan shall
become operative, which further order shall be binding upon the
commissioner, the insurer and all such stockholders, certificate
holders, creditors and other persons, if any, affected thereby.
12629.38. The superior court in which such petition is pending is
hereby given jurisdiction to determine all questions required to be
determined pursuant to this article including, without limiting the
generality of the foregoing, the following: Whether the insurer
subject to such plan is included in one or more of the classes
specified in section 12629; whether any such plan, either in its
original or modified form is fair and equitable; whether it
discriminates in favor of any class of certificate holders, creditors
or other persons affected thereby; whether it is feasible; whether
the terms and conditions of any proposed issuance and exchange of
stock, mortgage participation certificates, bonds, notes, debentures
or other securities thereunder are fair, and to approve or disapprove
such terms and conditions; the total liabilities and total assets of
such insurer; the approvals requisite under this article to such
plan becoming operative, including jurisdiction to determine, for the
purposes of the plan and the consents, the division of the creditors
and other known persons, if any, affected by the plan into classes
according to the nature of their respective claims and interests.
12629.39. When the plan shall have been approved by the court and
the commissioner, as hereinbefore provided, and shall have been
consented to by or on behalf of the respective proportions herein
required of stockholders, certificate holders, creditors and other
persons, if any, affected thereby, such plan shall be binding upon
the commissioner, the mortgage insurer affected thereby, all the
stockholders, certificate holders and creditors of such insurer, and
all other persons, if any, affected thereby; and such insurer, the
trustees and depositaries under all mortgage participation trusts
affected thereby and all stockholders, certificate holders, creditors
and other persons shall be conclusively deemed to have consented to
all the terms and conditions of such plan whether or not all of such
persons shall actually have consented thereto and whether or not all
of them shall have received notice of such plan or of such hearing,
as hereinbefore provided.
12629.40. Thereupon such steps shall be taken by the commissioner,
the insurer and all persons affected by the plan, and all acts shall
be done, or instruments executed and all new or amended certificates,
stock, bonds, debentures, notes or other securities issued as may be
required by such plan so approved and as may be necessary or
desirable for the consummation of such plan.
12629.41. In all cases where the plan involves the revision,
modification or termination of mortgage participation trusts and as
an incident thereto the transfer of the title to trust assets, the
title to and management of such trust assets pending the hearing on
such plan and its approval by the court and the commissioner and for
such further period as the court may prescribe and subject to such
reserve powers as may be granted by the trust agreement to the
insurer, or conferred by the court, shall continue in the trustee or
depositary under the respective mortgage participation trusts
affected. Upon the approval of such plan by the court and the
commissioner the trust assets of all such trusts shall be
transferred, conveyed, assigned, delivered, or otherwise dealt with,
conformably to such plan, as the court may order and direct, upon
application of the proposer of such plan.
12629.42. The superior court shall retain jurisdiction of all
parties to said proceeding until the plan approved is fully carried
out and consummated and the carrying out and consummation of such
plan shall be subject to the supervision and control of such court.
In connection therewith the court may make all orders and decrees by
way of injunction or otherwise as may be necessary, proper and
equitable in order to carry out and consummate said plan and make the
same fully effective.
12629.43. No appeal from an order of the superior court approving
or modifying a plan shall be effectual for any purpose unless within
30 days after the entry of the order the appellant or appellants file
with the clerk of the court a bond to the effect that the appellant
or appellants, in the event the order is affirmed on appeal, will pay
all of respondent's costs, expenses and reasonable attorney's fees
arising from the appeal, and also all losses and damages to the
certificate holders, creditors and other persons, if any, affected by
the plan, arising from any delay in consummating the plan during the
pendency of the appeal. The form of the bond shall be approved and
the amount of the bond fixed by the superior court. In no case shall
the bond be for an amount greater than 1 percent of the total
liabilities of the insurer, provided that if mortgage participation
certificates are affected by the plan the bond shall be for an amount
not more than 1 percent of the total liabilities of the insurer plus
1 percent of the aggregate face amount of all mortgage participation
certificates of the insurer outstanding.
12629.44. Appeals from orders approving plans shall be given
preference in the hearing on appeal over all other appeals, except
contested election cases and cases in which the people of the State
are parties.
12629.45. The term "securities" as used in this article shall
include not only stock of one or more classes issuable by
corporations generally but also shares of national mortgage
associations or other Federal agencies or corporations organized
under Federal authority, whose purposes include the loaning of money
on real estate, and also mortgage participation certificates, bonds,
notes, debentures, warrants or evidences of indebtedness or of
beneficial interests or of any other classes or rights.
12629.46. A mortgage insurer may issue and may invest in, hold,
own, sell, exchange or otherwise dispose of, pursuant to a plan
approved under this article, any one or more of the above mentioned
kinds of securities, regardless of any provisions of the laws of this
State to the contrary. None of the provisions of the Corporate
Securities Act shall apply to any securities issued pursuant to a
plan approved under this article, whether or not such securities are
issued by a mortgage insurer, except that brokers, as defined in said
act, shall be subject to the provisions of said act with respect to
all transactions involving such securities.
12629.47. Any executor, administrator, guardian, conservator, or
receiver, and any trustee of any kind or nature, and any insurer,
bank, banking institution or trust company, and any officer of the
State of California, holding any securities or certificates of a
mortgage insurer as a legal investment or as a fund or deposit
required by law to be made by the State of California, may, without
the necessity of obtaining any specific court approval (a) consent to
any plan which has been approved by the court pursuant to Sections
12629.30 to 12629.38, inclusive; (b) exchange any mortgage
participation certificates or other securities or rights or claims
for certificates, amended certificates or securities issued pursuant
to such plan; and (c) may continue to hold as a legal investment or
as a fund or deposit required by law to be made with the State of
California any certificates, amended certificates or securities so
received.
12629.48. No plan shall be operative pursuant to this article
unless approved by the court and consented to as required by this
article during the emergency period, which period, for the purposes
of this article, shall commence with the effective date of this
article and shall expire April 1, 1939, or at such earlier date as
the commissioner shall find and declare that such emergency period
has terminated; provided, however, that if, prior to the expiration
or termination of said emergency period, such plan shall have been
approved by the superior court, and shall have been consented to as
required by this article, such plan shall become operative unless
such approval be set aside on appeal, notwithstanding the fact that
such approval of the superior court was not final at the expiration
or termination of such emergency period.
12629. The provisions of this article shall apply to any mortgage
insurer:
(a) The property, business and assets of which are in possession
of the commissioner;
(b) Which is no longer able to conduct the normal business of a
mortgage insurer;
(c) Which is unable to discharge its debts or other obligations as
they become due;
(d) Which is in such condition that unless such insurer is
liquidated or a plan of reorganization consummated a preference is
likely to be obtained by some holders of mortgage participation
certificates over other such holders, or by some creditors over other
creditors of the same class;
(e) Which is in such condition that it will probably be necessary,
unless a plan of reorganization is consummated, to liquidate such
insurer or to sell or otherwise dispose of a substantial part of its
assets at substantially less than the amount which might reasonably
be expected to be realized therefrom in the ordinary and proper
conduct of a going business.
The determination of the commissioner that a mortgage insurer is
included in one or more of the foregoing classifications shall be
prima facie evidence of such fact.
12629.21. In the case of a mortgage insurer which has issued
mortgage participation certificates under mortgage participation
trusts pursuant to the provisions of Chapter VIII, Title II, Part IV,
Division I of the Civil Code, such mortgage participation trusts,
the mortgage participation certificates issued thereunder and any
policies of mortgage insurance issued in connection therewith shall
be subject also to the provisions of this article whenever a
revision, modification or termination of such trusts, certificates or
policies is found by the court to be necessary or advantageous in
connection with any plan submitted to it as hereinafter provided.
12629.22. The term "plan" as used in this article means any plan
for the rehabilitation, readjustment or reorganization of any
mortgage insurer or of all or any part of the business, properties
and assets of such insurer, or for the readjustment, modification or
reorganization of the rights or interests of any or all of the
holders of mortgage participation certificates or other certificates
or securities or policies of mortgage insurance of such insurer, or
of any creditors of such insurer and other persons, if any,
interested therein.
12629.23. Without limiting the generality of section 12629.22, a
plan may provide for any one or more of the following:
(a) For the delivery of all or any part of the business,
properties, or assets of such insurer to the commissioner and the
return thereof to such insurer after the plan is fully consummated;
(b) For the transfer of all or any part of the business,
properties, or assets of such insurer to another corporation or to
two or more other corporations, which corporation or corporations, or
any of them, may, but need not be, a mortgage insurer or a national
mortgage association;
(c) For the modification, revision or termination of any mortgage
participation trusts which have been created by such insurer;
(d) For the issuance of new mortgage participation certificates or
amended mortgage participation certificates or stock, bonds,
debentures or other securities of such insurer or of any other
corporation or corporations, to which the business, properties or
assets, or any part thereof, of such insurer have been transferred,
and for the exchange thereof to the holders of mortgage participation
certificates issued by such insurer or to other creditors of such
insurer for the outstanding mortgage participation certificates or
other obligations of such insurer or for the sale or other
disposition of such new certificates, stock, bonds, debentures or
other securities.
12629.24. Any new mortgage insurer formed pursuant to a plan to
continue the business of an existing insurer may adopt and continue
to use the name of such existing insurer or any part of such name.
12629.25. A plan may be proposed:
(a) By the commissioner; or
(b) Subject to the approval of the commissioner by any mortgage
insurer through action of its board of directors.
12629.26. No plan shall be proposed or approved by the commissioner
unless the commissioner is satisfied that the plan is fair and
equitable and does not discriminate in favor of any class of
certificate holders, investors, creditors or other persons affected
thereby, and is feasible.
12629.27. A plan, if proposed or approved by the commissioner,
shall be presented by the proposer to the superior court of the
county in which the principal office of such insurer is located, with
a petition that the court determine the fairness of such plan and
the approvals requisite to such plan becoming operative, which
petition shall set forth such plan and the fact that it has been
proposed or approved by the commissioner and any other facts which
such proposer shall deem material to a consideration of the fairness
of the plan.
12629.28. Thereupon the court shall fix the time and place for the
hearing of such petition and shall direct that notice thereof shall
be mailed to each of the known certificate holders, investors and
creditors of such insurer affected by such plan and to the trustee or
depositary under all mortgage participation trusts created by such
insurer and then in existence, together with either a copy of such
plan or a summary thereof, which summary shall be either prepared or
approved by the commissioner. If the commissioner shall be the
proposer of such plan the court shall direct such insurer to deliver
to the commissioner a list of the names and addresses of all
certificate holders, creditors, investors and other known persons
affected by such plan. Said notices shall be mailed, postage prepaid,
to the respective addresses as shown on such list, or if no address
be there shown, to the last known address.
12629.29. In addition the proposer of such plan shall cause notice
of the time and place fixed for such hearing to be posted in three
public places in said county not less than twenty days before the day
fixed for such hearing and to be published at least once, not less
than twenty days nor more than thirty days before the day fixed for
such hearing in a newspaper of general circulation published in said
county.
12629.30. At the time and place fixed for such hearing or at the
time and place to which such hearing may be continued by the court,
the court shall hear the parties interested therein and if it deem it
necessary may take testimony relative thereto and may accept proof
in affidavit form as to any fact or circumstance material thereto.
12629.31. Such hearing shall be, among other things, upon the
fairness of the terms and conditions of the issuance of all new or
amended mortgage participation certificates, stock, bonds, debentures
or other securities to be issued pursuant to such plan and of the
exchange thereof for outstanding mortgage participation certificates,
claims or property interests, or partly for such exchange and partly
for cash, and all persons to whom it is proposed to issue such
certificates, stock, bonds, debentures or other securities in such
exchange shall have the right to appear and be heard at such hearing.
12629.32. No plan shall be approved by the court unless the court
is satisfied that the plan is fair and equitable and does not
discriminate in favor of any class of investors, creditors,
certificate holders or other persons affected thereby and is
feasible. In case an insurer has outstanding mortgage participation
certificates issued under one or more than one mortgage participation
trust, the holders of mortgage participation certificates in each of
such trusts may be considered as one class.
12629.33. After the completion of such hearing the court shall
approve, modify or disapprove such plan. No such plan shall become
operative unless and until it shall have been approved in its
original form or, if modified, in its modified form, by such court
and the commissioner, nor unless and until such plan shall have been
consented to either in person or by a duly appointed agent, attorney
or committee by the following persons:
(a) If the plan affects the stockholders of such insurer, then by
the holders of a majority in amount of the outstanding stock of such
insurer;
(b) If the plan affects mortgage participation trusts or the
holders of mortgage participation certificates issued thereunder,
then by the holders of two-thirds in interest of all mortgage
participation certificates outstanding under each or all, as the
court may determine, of the mortgage participation trusts which may
be so affected;
(c) If such insurer shall have creditors, then by two-thirds of
each class of creditors of such insurer; and
(d) By two-thirds in amount of each class of other known persons,
if any, affected by the plan.
12629.34. Consent shall not be required in the case of any
stockholder, mortgage participation certificate holder, creditor or
other person, or any class thereof, if:
(a) The rights of such person or class shall not be materially
affected by such plan; or
(b) Such plan shall provide for the payment in cash of the value
of the right or interest of such person or class.
Such consents shall not be required from stockholders of any
insurer if the value of the assets of such insurer shall be less than
the liabilities thereof (mortgage participation certificates and
policies of mortgage insurance not being included as liabilities), or
if the business, properties and assets of such insurer be then in
the possession of the commissioner.
12629.35. For the purpose of this article real property, contracts
for the sale of real property, loans and all other assets (whether
like or unlike the foregoing) shall be valued at what may reasonably
be expected to be realized therefrom in the ordinary and proper
conduct of a going business.
12629.36. The consents required by this article may be given before
the plan is presented to the court or after such presentation and
before the court has approved it or after such approval.
12629.37. If at such time as the plan is approved by the court the
proportions above required of the stockholders, certificate holders,
creditors and other persons, if any, affected thereby shall not have
consented to the plan, the order of court may provide that upon
satisfactory proof of the fact that such consents have been given a
further order may be entered ex parte providing that such plan shall
become operative, which further order shall be binding upon the
commissioner, the insurer and all such stockholders, certificate
holders, creditors and other persons, if any, affected thereby.
12629.38. The superior court in which such petition is pending is
hereby given jurisdiction to determine all questions required to be
determined pursuant to this article including, without limiting the
generality of the foregoing, the following: Whether the insurer
subject to such plan is included in one or more of the classes
specified in section 12629; whether any such plan, either in its
original or modified form is fair and equitable; whether it
discriminates in favor of any class of certificate holders, creditors
or other persons affected thereby; whether it is feasible; whether
the terms and conditions of any proposed issuance and exchange of
stock, mortgage participation certificates, bonds, notes, debentures
or other securities thereunder are fair, and to approve or disapprove
such terms and conditions; the total liabilities and total assets of
such insurer; the approvals requisite under this article to such
plan becoming operative, including jurisdiction to determine, for the
purposes of the plan and the consents, the division of the creditors
and other known persons, if any, affected by the plan into classes
according to the nature of their respective claims and interests.
12629.39. When the plan shall have been approved by the court and
the commissioner, as hereinbefore provided, and shall have been
consented to by or on behalf of the respective proportions herein
required of stockholders, certificate holders, creditors and other
persons, if any, affected thereby, such plan shall be binding upon
the commissioner, the mortgage insurer affected thereby, all the
stockholders, certificate holders and creditors of such insurer, and
all other persons, if any, affected thereby; and such insurer, the
trustees and depositaries under all mortgage participation trusts
affected thereby and all stockholders, certificate holders, creditors
and other persons shall be conclusively deemed to have consented to
all the terms and conditions of such plan whether or not all of such
persons shall actually have consented thereto and whether or not all
of them shall have received notice of such plan or of such hearing,
as hereinbefore provided.
12629.40. Thereupon such steps shall be taken by the commissioner,
the insurer and all persons affected by the plan, and all acts shall
be done, or instruments executed and all new or amended certificates,
stock, bonds, debentures, notes or other securities issued as may be
required by such plan so approved and as may be necessary or
desirable for the consummation of such plan.
12629.41. In all cases where the plan involves the revision,
modification or termination of mortgage participation trusts and as
an incident thereto the transfer of the title to trust assets, the
title to and management of such trust assets pending the hearing on
such plan and its approval by the court and the commissioner and for
such further period as the court may prescribe and subject to such
reserve powers as may be granted by the trust agreement to the
insurer, or conferred by the court, shall continue in the trustee or
depositary under the respective mortgage participation trusts
affected. Upon the approval of such plan by the court and the
commissioner the trust assets of all such trusts shall be
transferred, conveyed, assigned, delivered, or otherwise dealt with,
conformably to such plan, as the court may order and direct, upon
application of the proposer of such plan.
12629.42. The superior court shall retain jurisdiction of all
parties to said proceeding until the plan approved is fully carried
out and consummated and the carrying out and consummation of such
plan shall be subject to the supervision and control of such court.
In connection therewith the court may make all orders and decrees by
way of injunction or otherwise as may be necessary, proper and
equitable in order to carry out and consummate said plan and make the
same fully effective.
12629.43. No appeal from an order of the superior court approving
or modifying a plan shall be effectual for any purpose unless within
30 days after the entry of the order the appellant or appellants file
with the clerk of the court a bond to the effect that the appellant
or appellants, in the event the order is affirmed on appeal, will pay
all of respondent's costs, expenses and reasonable attorney's fees
arising from the appeal, and also all losses and damages to the
certificate holders, creditors and other persons, if any, affected by
the plan, arising from any delay in consummating the plan during the
pendency of the appeal. The form of the bond shall be approved and
the amount of the bond fixed by the superior court. In no case shall
the bond be for an amount greater than 1 percent of the total
liabilities of the insurer, provided that if mortgage participation
certificates are affected by the plan the bond shall be for an amount
not more than 1 percent of the total liabilities of the insurer plus
1 percent of the aggregate face amount of all mortgage participation
certificates of the insurer outstanding.
12629.44. Appeals from orders approving plans shall be given
preference in the hearing on appeal over all other appeals, except
contested election cases and cases in which the people of the State
are parties.
12629.45. The term "securities" as used in this article shall
include not only stock of one or more classes issuable by
corporations generally but also shares of national mortgage
associations or other Federal agencies or corporations organized
under Federal authority, whose purposes include the loaning of money
on real estate, and also mortgage participation certificates, bonds,
notes, debentures, warrants or evidences of indebtedness or of
beneficial interests or of any other classes or rights.
12629.46. A mortgage insurer may issue and may invest in, hold,
own, sell, exchange or otherwise dispose of, pursuant to a plan
approved under this article, any one or more of the above mentioned
kinds of securities, regardless of any provisions of the laws of this
State to the contrary. None of the provisions of the Corporate
Securities Act shall apply to any securities issued pursuant to a
plan approved under this article, whether or not such securities are
issued by a mortgage insurer, except that brokers, as defined in said
act, shall be subject to the provisions of said act with respect to
all transactions involving such securities.
12629.47. Any executor, administrator, guardian, conservator, or
receiver, and any trustee of any kind or nature, and any insurer,
bank, banking institution or trust company, and any officer of the
State of California, holding any securities or certificates of a
mortgage insurer as a legal investment or as a fund or deposit
required by law to be made by the State of California, may, without
the necessity of obtaining any specific court approval (a) consent to
any plan which has been approved by the court pursuant to Sections
12629.30 to 12629.38, inclusive; (b) exchange any mortgage
participation certificates or other securities or rights or claims
for certificates, amended certificates or securities issued pursuant
to such plan; and (c) may continue to hold as a legal investment or
as a fund or deposit required by law to be made with the State of
California any certificates, amended certificates or securities so
received.
12629.48. No plan shall be operative pursuant to this article
unless approved by the court and consented to as required by this
article during the emergency period, which period, for the purposes
of this article, shall commence with the effective date of this
article and shall expire April 1, 1939, or at such earlier date as
the commissioner shall find and declare that such emergency period
has terminated; provided, however, that if, prior to the expiration
or termination of said emergency period, such plan shall have been
approved by the superior court, and shall have been consented to as
required by this article, such plan shall become operative unless
such approval be set aside on appeal, notwithstanding the fact that
such approval of the superior court was not final at the expiration
or termination of such emergency period.
12629. The provisions of this article shall apply to any mortgage
insurer:
(a) The property, business and assets of which are in possession
of the commissioner;
(b) Which is no longer able to conduct the normal business of a
mortgage insurer;
(c) Which is unable to discharge its debts or other obligations as
they become due;
(d) Which is in such condition that unless such insurer is
liquidated or a plan of reorganization consummated a preference is
likely to be obtained by some holders of mortgage participation
certificates over other such holders, or by some creditors over other
creditors of the same class;
(e) Which is in such condition that it will probably be necessary,
unless a plan of reorganization is consummated, to liquidate such
insurer or to sell or otherwise dispose of a substantial part of its
assets at substantially less than the amount which might reasonably
be expected to be realized therefrom in the ordinary and proper
conduct of a going business.
The determination of the commissioner that a mortgage insurer is
included in one or more of the foregoing classifications shall be
prima facie evidence of such fact.
12629.21. In the case of a mortgage insurer which has issued
mortgage participation certificates under mortgage participation
trusts pursuant to the provisions of Chapter VIII, Title II, Part IV,
Division I of the Civil Code, such mortgage participation trusts,
the mortgage participation certificates issued thereunder and any
policies of mortgage insurance issued in connection therewith shall
be subject also to the provisions of this article whenever a
revision, modification or termination of such trusts, certificates or
policies is found by the court to be necessary or advantageous in
connection with any plan submitted to it as hereinafter provided.
12629.22. The term "plan" as used in this article means any plan
for the rehabilitation, readjustment or reorganization of any
mortgage insurer or of all or any part of the business, properties
and assets of such insurer, or for the readjustment, modification or
reorganization of the rights or interests of any or all of the
holders of mortgage participation certificates or other certificates
or securities or policies of mortgage insurance of such insurer, or
of any creditors of such insurer and other persons, if any,
interested therein.
12629.23. Without limiting the generality of section 12629.22, a
plan may provide for any one or more of the following:
(a) For the delivery of all or any part of the business,
properties, or assets of such insurer to the commissioner and the
return thereof to such insurer after the plan is fully consummated;
(b) For the transfer of all or any part of the business,
properties, or assets of such insurer to another corporation or to
two or more other corporations, which corporation or corporations, or
any of them, may, but need not be, a mortgage insurer or a national
mortgage association;
(c) For the modification, revision or termination of any mortgage
participation trusts which have been created by such insurer;
(d) For the issuance of new mortgage participation certificates or
amended mortgage participation certificates or stock, bonds,
debentures or other securities of such insurer or of any other
corporation or corporations, to which the business, properties or
assets, or any part thereof, of such insurer have been transferred,
and for the exchange thereof to the holders of mortgage participation
certificates issued by such insurer or to other creditors of such
insurer for the outstanding mortgage participation certificates or
other obligations of such insurer or for the sale or other
disposition of such new certificates, stock, bonds, debentures or
other securities.
12629.24. Any new mortgage insurer formed pursuant to a plan to
continue the business of an existing insurer may adopt and continue
to use the name of such existing insurer or any part of such name.
12629.25. A plan may be proposed:
(a) By the commissioner; or
(b) Subject to the approval of the commissioner by any mortgage
insurer through action of its board of directors.
12629.26. No plan shall be proposed or approved by the commissioner
unless the commissioner is satisfied that the plan is fair and
equitable and does not discriminate in favor of any class of
certificate holders, investors, creditors or other persons affected
thereby, and is feasible.
12629.27. A plan, if proposed or approved by the commissioner,
shall be presented by the proposer to the superior court of the
county in which the principal office of such insurer is located, with
a petition that the court determine the fairness of such plan and
the approvals requisite to such plan becoming operative, which
petition shall set forth such plan and the fact that it has been
proposed or approved by the commissioner and any other facts which
such proposer shall deem material to a consideration of the fairness
of the plan.
12629.28. Thereupon the court shall fix the time and place for the
hearing of such petition and shall direct that notice thereof shall
be mailed to each of the known certificate holders, investors and
creditors of such insurer affected by such plan and to the trustee or
depositary under all mortgage participation trusts created by such
insurer and then in existence, together with either a copy of such
plan or a summary thereof, which summary shall be either prepared or
approved by the commissioner. If the commissioner shall be the
proposer of such plan the court shall direct such insurer to deliver
to the commissioner a list of the names and addresses of all
certificate holders, creditors, investors and other known persons
affected by such plan. Said notices shall be mailed, postage prepaid,
to the respective addresses as shown on such list, or if no address
be there shown, to the last known address.
12629.29. In addition the proposer of such plan shall cause notice
of the time and place fixed for such hearing to be posted in three
public places in said county not less than twenty days before the day
fixed for such hearing and to be published at least once, not less
than twenty days nor more than thirty days before the day fixed for
such hearing in a newspaper of general circulation published in said
county.
12629.30. At the time and place fixed for such hearing or at the
time and place to which such hearing may be continued by the court,
the court shall hear the parties interested therein and if it deem it
necessary may take testimony relative thereto and may accept proof
in affidavit form as to any fact or circumstance material thereto.
12629.31. Such hearing shall be, among other things, upon the
fairness of the terms and conditions of the issuance of all new or
amended mortgage participation certificates, stock, bonds, debentures
or other securities to be issued pursuant to such plan and of the
exchange thereof for outstanding mortgage participation certificates,
claims or property interests, or partly for such exchange and partly
for cash, and all persons to whom it is proposed to issue such
certificates, stock, bonds, debentures or other securities in such
exchange shall have the right to appear and be heard at such hearing.
12629.32. No plan shall be approved by the court unless the court
is satisfied that the plan is fair and equitable and does not
discriminate in favor of any class of investors, creditors,
certificate holders or other persons affected thereby and is
feasible. In case an insurer has outstanding mortgage participation
certificates issued under one or more than one mortgage participation
trust, the holders of mortgage participation certificates in each of
such trusts may be considered as one class.
12629.33. After the completion of such hearing the court shall
approve, modify or disapprove such plan. No such plan shall become
operative unless and until it shall have been approved in its
original form or, if modified, in its modified form, by such court
and the commissioner, nor unless and until such plan shall have been
consented to either in person or by a duly appointed agent, attorney
or committee by the following persons:
(a) If the plan affects the stockholders of such insurer, then by
the holders of a majority in amount of the outstanding stock of such
insurer;
(b) If the plan affects mortgage participation trusts or the
holders of mortgage participation certificates issued thereunder,
then by the holders of two-thirds in interest of all mortgage
participation certificates outstanding under each or all, as the
court may determine, of the mortgage participation trusts which may
be so affected;
(c) If such insurer shall have creditors, then by two-thirds of
each class of creditors of such insurer; and
(d) By two-thirds in amount of each class of other known persons,
if any, affected by the plan.
12629.34. Consent shall not be required in the case of any
stockholder, mortgage participation certificate holder, creditor or
other person, or any class thereof, if:
(a) The rights of such person or class shall not be materially
affected by such plan; or
(b) Such plan shall provide for the payment in cash of the value
of the right or interest of such person or class.
Such consents shall not be required from stockholders of any
insurer if the value of the assets of such insurer shall be less than
the liabilities thereof (mortgage participation certificates and
policies of mortgage insurance not being included as liabilities), or
if the business, properties and assets of such insurer be then in
the possession of the commissioner.
12629.35. For the purpose of this article real property, contracts
for the sale of real property, loans and all other assets (whether
like or unlike the foregoing) shall be valued at what may reasonably
be expected to be realized therefrom in the ordinary and proper
conduct of a going business.
12629.36. The consents required by this article may be given before
the plan is presented to the court or after such presentation and
before the court has approved it or after such approval.
12629.37. If at such time as the plan is approved by the court the
proportions above required of the stockholders, certificate holders,
creditors and other persons, if any, affected thereby shall not have
consented to the plan, the order of court may provide that upon
satisfactory proof of the fact that such consents have been given a
further order may be entered ex parte providing that such plan shall
become operative, which further order shall be binding upon the
commissioner, the insurer and all such stockholders, certificate
holders, creditors and other persons, if any, affected thereby.
12629.38. The superior court in which such petition is pending is
hereby given jurisdiction to determine all questions required to be
determined pursuant to this article including, without limiting the
generality of the foregoing, the following: Whether the insurer
subject to such plan is included in one or more of the classes
specified in section 12629; whether any such plan, either in its
original or modified form is fair and equitable; whether it
discriminates in favor of any class of certificate holders, creditors
or other persons affected thereby; whether it is feasible; whether
the terms and conditions of any proposed issuance and exchange of
stock, mortgage participation certificates, bonds, notes, debentures
or other securities thereunder are fair, and to approve or disapprove
such terms and conditions; the total liabilities and total assets of
such insurer; the approvals requisite under this article to such
plan becoming operative, including jurisdiction to determine, for the
purposes of the plan and the consents, the division of the creditors
and other known persons, if any, affected by the plan into classes
according to the nature of their respective claims and interests.
12629.39. When the plan shall have been approved by the court and
the commissioner, as hereinbefore provided, and shall have been
consented to by or on behalf of the respective proportions herein
required of stockholders, certificate holders, creditors and other
persons, if any, affected thereby, such plan shall be binding upon
the commissioner, the mortgage insurer affected thereby, all the
stockholders, certificate holders and creditors of such insurer, and
all other persons, if any, affected thereby; and such insurer, the
trustees and depositaries under all mortgage participation trusts
affected thereby and all stockholders, certificate holders, creditors
and other persons shall be conclusively deemed to have consented to
all the terms and conditions of such plan whether or not all of such
persons shall actually have consented thereto and whether or not all
of them shall have received notice of such plan or of such hearing,
as hereinbefore provided.
12629.40. Thereupon such steps shall be taken by the commissioner,
the insurer and all persons affected by the plan, and all acts shall
be done, or instruments executed and all new or amended certificates,
stock, bonds, debentures, notes or other securities issued as may be
required by such plan so approved and as may be necessary or
desirable for the consummation of such plan.
12629.41. In all cases where the plan involves the revision,
modification or termination of mortgage participation trusts and as
an incident thereto the transfer of the title to trust assets, the
title to and management of such trust assets pending the hearing on
such plan and its approval by the court and the commissioner and for
such further period as the court may prescribe and subject to such
reserve powers as may be granted by the trust agreement to the
insurer, or conferred by the court, shall continue in the trustee or
depositary under the respective mortgage participation trusts
affected. Upon the approval of such plan by the court and the
commissioner the trust assets of all such trusts shall be
transferred, conveyed, assigned, delivered, or otherwise dealt with,
conformably to such plan, as the court may order and direct, upon
application of the proposer of such plan.
12629.42. The superior court shall retain jurisdiction of all
parties to said proceeding until the plan approved is fully carried
out and consummated and the carrying out and consummation of such
plan shall be subject to the supervision and control of such court.
In connection therewith the court may make all orders and decrees by
way of injunction or otherwise as may be necessary, proper and
equitable in order to carry out and consummate said plan and make the
same fully effective.
12629.43. No appeal from an order of the superior court approving
or modifying a plan shall be effectual for any purpose unless within
30 days after the entry of the order the appellant or appellants file
with the clerk of the court a bond to the effect that the appellant
or appellants, in the event the order is affirmed on appeal, will pay
all of respondent's costs, expenses and reasonable attorney's fees
arising from the appeal, and also all losses and damages to the
certificate holders, creditors and other persons, if any, affected by
the plan, arising from any delay in consummating the plan during the
pendency of the appeal. The form of the bond shall be approved and
the amount of the bond fixed by the superior court. In no case shall
the bond be for an amount greater than 1 percent of the total
liabilities of the insurer, provided that if mortgage participation
certificates are affected by the plan the bond shall be for an amount
not more than 1 percent of the total liabilities of the insurer plus
1 percent of the aggregate face amount of all mortgage participation
certificates of the insurer outstanding.
12629.44. Appeals from orders approving plans shall be given
preference in the hearing on appeal over all other appeals, except
contested election cases and cases in which the people of the State
are parties.
12629.45. The term "securities" as used in this article shall
include not only stock of one or more classes issuable by
corporations generally but also shares of national mortgage
associations or other Federal agencies or corporations organized
under Federal authority, whose purposes include the loaning of money
on real estate, and also mortgage participation certificates, bonds,
notes, debentures, warrants or evidences of indebtedness or of
beneficial interests or of any other classes or rights.
12629.46. A mortgage insurer may issue and may invest in, hold,
own, sell, exchange or otherwise dispose of, pursuant to a plan
approved under this article, any one or more of the above mentioned
kinds of securities, regardless of any provisions of the laws of this
State to the contrary. None of the provisions of the Corporate
Securities Act shall apply to any securities issued pursuant to a
plan approved under this article, whether or not such securities are
issued by a mortgage insurer, except that brokers, as defined in said
act, shall be subject to the provisions of said act with respect to
all transactions involving such securities.
12629.47. Any executor, administrator, guardian, conservator, or
receiver, and any trustee of any kind or nature, and any insurer,
bank, banking institution or trust company, and any officer of the
State of California, holding any securities or certificates of a
mortgage insurer as a legal investment or as a fund or deposit
required by law to be made by the State of California, may, without
the necessity of obtaining any specific court approval (a) consent to
any plan which has been approved by the court pursuant to Sections
12629.30 to 12629.38, inclusive; (b) exchange any mortgage
participation certificates or other securities or rights or claims
for certificates, amended certificates or securities issued pursuant
to such plan; and (c) may continue to hold as a legal investment or
as a fund or deposit required by law to be made with the State of
California any certificates, amended certificates or securities so
received.
12629.48. No plan shall be operative pursuant to this article
unless approved by the court and consented to as required by this
article during the emergency period, which period, for the purposes
of this article, shall commence with the effective date of this
article and shall expire April 1, 1939, or at such earlier date as
the commissioner shall find and declare that such emergency period
has terminated; provided, however, that if, prior to the expiration
or termination of said emergency period, such plan shall have been
approved by the superior court, and shall have been consented to as
required by this article, such plan shall become operative unless
such approval be set aside on appeal, notwithstanding the fact that
such approval of the superior court was not final at the expiration
or termination of such emergency period.
