CHAPTER 126. CREDIT UNION SUPERVISION AND REGULATION

State Codes and Statutes

Statutes > Texas > Finance-code > Title-3-financial-institutions-and-businesses > Chapter-126-credit-union-supervision-and-regulation

FINANCE CODE

TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES

SUBTITLE D. CREDIT UNIONS

CHAPTER 126. CREDIT UNION SUPERVISION AND REGULATION

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 126.001. APPOINTMENT OF CONSERVATOR OR LIQUIDATING AGENT.

The commissioner may appoint any person, including the share and

deposit guaranty corporation or credit union provided for by

Section 15.410, as a conservator or a liquidating agent under

this chapter.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.002. CONFIDENTIALITY OF INFORMATION. (a) Except as

provided by Subsections (b) and (c), information obtained

directly or indirectly by the department in any manner, including

by application or examination, concerning the financial condition

or business affairs of a credit union and the files and records

of the department relating to that information, except a

statement intended for publication, are confidential.

(b) Confidential information may not be disclosed to a member of

the commission, and a member of the commission may not be given

access to the files or records of the department, except that the

commissioner may disclose to the commission information, files,

and records pertinent to a hearing or matter pending before the

commission or the commissioner.

Subsection (a) to a law enforcement agency or another department,

agency, or instrumentality of this state, another state, or the

United States if the commissioner determines that disclosure is

necessary or proper to enforce the laws of this state applicable

to credit unions.

(d) Information obtained by the department from a federal or

state supervisory agency that is confidential under federal law

or the laws of that state may not be disclosed except as provided

by the applicable federal or state law.

(e) Confidential information that is provided by the department

to a credit union, organization, or service provider of a credit

union, whether in the form of a report of examination or

otherwise, is the confidential property of the department. The

recipient or an officer, director, employee, or agent of the

recipient may not make the information public and may not

disclose the information to a person not officially connected to

the recipient as an officer, director, employee, attorney,

auditor, or independent auditor, except as authorized by rules

adopted under this subtitle.

(f) Discovery of confidential information from a person subject

to this subtitle or Chapter 15 under subpoena or other legal

process must comply with rules adopted under this subtitle,

Chapter 15, and any other applicable law. The rules may:

(1) restrict release of confidential information to the portion

directly relevant to the legal dispute at issue; and

(2) require that a protective order, in a form and under

circumstances specified by the rules, be issued by a court before

release of the confidential information.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 157, Sec. 13, eff. Sept. 1,

1999; Acts 2003, 78th Leg., ch. 533, Sec. 45, eff. Sept. 1, 2003.

Sec. 126.003. ENFORCEABILITY OF AGREEMENT MADE BY CREDIT UNION

BEFORE CONSERVATORSHIP OR LIQUIDATION. An agreement that tends

to diminish or defeat the interest of the conservator or

liquidating agent in an asset acquired under this chapter, either

as security for a loan or by purchase, is not valid against the

conservator or liquidating agent unless the agreement is:

(1) in writing;

(2) executed by the credit union and each person claiming an

adverse interest under the agreement, including the obligor,

contemporaneously with the acquisition of the asset by the credit

union;

(3) approved by the board with the approval recorded in the

minutes of the board; and

(4) an official record of the credit union continuously from the

time of its execution.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER B. EXAMINATIONS

Sec. 126.051. EXAMINATIONS. (a) The department, through

examiners it appoints and in accordance with commission rules,

shall periodically examine the books and records of each credit

union.

(b) In lieu of an examination under this section, the

commissioner may accept:

(1) the examination report of a regulator authorized to examine

a credit union, foreign credit union, federal credit union, or

other financial institution; or

(2) the audit report of an accountant, satisfactory to the

commissioner, who has made and submitted a report of the

condition of the affairs of a credit union, foreign credit union,

federal credit union, or other financial institution.

of all or part of an examination. An accepted part of the report

has the same validity as an examination under this section.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2003, 78th Leg., ch. 533, Sec. 46, eff. Sept. 1,

2003.

Sec. 126.052. ACCESS TO INFORMATION. An officer, director,

agent, or employee of a credit union shall give an examiner free

access to any information relating to the credit union's

business, including access to books, papers, securities, and

other records.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.053. WITNESSES; PRODUCTION OF DOCUMENTS. (a) In an

examination conducted under this subchapter, the commissioner or

the commissioner's designee may:

(1) subpoena witnesses;

(2) administer an oath or affirmation to a person, including any

officer, director, agent, or employee of a credit union, and

examine the person under oath or affirmation on any subject the

commissioner considers pertinent to the financial condition or

the safety and soundness of the activities of a credit union; or

(3) require and compel by subpoena the production of documents

that are not voluntarily produced, including books, papers,

securities, and records.

(b) The commissioner may apply to a district court in Travis

County for an order requiring a person to obey a subpoena, to

appear, or to answer questions in connection with the examination

or investigation.

court finds good cause to issue the subpoena or to take

testimony.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2003, 78th Leg., ch. 533, Sec. 47, eff. Sept. 1,

2003.

Sec. 126.054. REPORT OF EXAMINATION. (a) An examiner shall

report the results of an examination, including a general

statement of the credit union's affairs, on a form prescribed by

the commissioner and approved by the commission.

(b) The department shall send a copy of the report to the board

not later than the 30th day after the examination date.

may provide a copy of the report to other parties as described in

Section 126.002(c).

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 157, Sec. 14, eff. Sept. 1,

1999.

Sec. 126.055. FEE. The commission may establish and a credit

union shall pay a fee based on the cost of performing an

examination of the credit union.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 157, Sec. 15, eff. Sept. 1,

1999.

SUBCHAPTER C. CONSERVATORSHIP ORDER

Sec. 126.101. CONSERVATORSHIP ORDER; APPOINTMENT OF CONSERVATOR.

(a) The commissioner may immediately issue a conservatorship

order and appoint a conservator to manage a credit union's

affairs if:

(1) the commissioner, in performing the duties under this

subtitle, finds that:

(A) the credit union is insolvent or in imminent danger of

insolvency; or

(B) the credit union or an employee, officer, or director of a

credit union, including an honorary or advisory director has:

(i) violated this subtitle, a rule adopted under this subtitle,

or another law that applies to credit unions;

(ii) violated or neglected a final order of the commissioner or

commission;

(iii) refused to submit to examination under oath;

(iv) refused to permit the commissioner or the commissioner's

representative to examine the credit union's records and affairs,

including books, papers, and accounts;

(v) conducted the credit union's business in an unsafe,

unauthorized, or unlawful manner; or

(vi) failed or refused to authorize and direct another person to

permit the commissioner or the commissioner's representative to

examine the credit union's records in the other person's custody

or control, including books, papers, and accounts, following the

commissioner's request for the granting of that authority and

direction; and

(2) the commissioner determines that the finding under

Subdivision (1) is sufficiently severe to require immediate

affirmative action to prevent further dissipation of the credit

union's assets.

(b) The order must clearly state the grounds for

conservatorship.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.102. SERVICE OF ORDER. (a) A conservatorship order

must be served personally to an officer or director of the credit

union by the commissioner, the deputy commissioner, or another

person authorized by the commissioner.

(b) Service may be by mail if an officer or director is not

available for service on the date of issuance.

(1) must be addressed to the credit union at the address shown

for its principal office by department records; and

(2) is complete on deposit of the order in a postpaid, properly

addressed wrapper, in a post office or official depository under

the care and custody of the United States Postal Service.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.103. EFFECT OF ORDER. Following service of a

conservatorship order:

(1) the commissioner shall take possession and control of the

credit union's books, records, property, assets, and business;

and

(2) the credit union shall cease all operations except those

authorized by the commissioner and conducted under the

commissioner's supervision.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.104. REPLY TO ORDER. Not later than the 30th day after

the date on which a conservatorship order is served, the board

shall file a written reply to the order.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.105. APPEAL OF ORDER; HEARING. (a) The board may file

a written appeal of the conservatorship order with the

commissioner. The appeal must include a certified copy of the

board resolution.

(b) If the board files an appeal to request a hearing before the

commission, the commissioner shall promptly request from the

State Office of Administrative Hearings a hearing date that is

not earlier than the 11th day nor later than the 30th day after

the date on which the appeal is received.

date, time, and place of the hearing.

(d) The filing of an appeal does not suspend the order, and the

order remains in effect until the commission's final disposition

of the appeal.

(e) Not later than the 45th day after a proposal for decision is

received from the State Office of Administrative Hearings, the

commission shall meet to consider the proposal.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.106. FAILURE TO FILE REPLY OR REQUEST HEARING. (a) If

the board does not file a reply to the conservatorship order as

required by Section 126.104 or fails to request and appear at the

hearing provided for by Section 126.105, the commissioner may

dispose of the conservatorship matter as the commissioner

considers appropriate.

(b) The credit union is presumed to have consented to the

commissioner's disposition action and may not contest it.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.107. EXTENSION OF DATE AND TIME FOR HEARING. The

parties may agree to extend the date and time of the hearing.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.108. CONFIDENTIALITY; DISCLOSURE. A conservatorship

order and a copy of a notice, correspondence, transcript,

pleading, or other document relating to the order are

confidential and may be disclosed only in a related legal

proceeding or as otherwise authorized by law. The commissioner

may release to the public information regarding the existence of

an order if the commissioner concludes that release of the

information would enhance effective enforcement of the order.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2003, 78th Leg., ch. 533, Sec. 48, eff. Sept. 1,

2003.

SUBCHAPTER D. ADMINISTRATION OF CONSERVATORSHIP

Sec. 126.151. CONSERVATOR SUBJECT TO COMMISSION CONTROL. A

conservator shall exercise the powers authorized under Sections

126.152-126.154 subject to commission rules and under the

commissioner's supervision.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.152. GENERAL POWERS OF CONSERVATOR. The conservator

may:

(1) take possession and control of the books, records, property,

assets, and business of the credit union;

(2) conduct the business and affairs of the credit union;

(3) sell or assign assets to the conservator; and

(4) perform any other action as necessary in connection with the

conservatorship.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.153. POWERS RELATING TO CLAIMS. The conservator may:

(1) determine the existence and amount of claims;

(2) allow proved claims of security, preference, or priority;

(3) disallow unproved claims of security, preference, or

priority; and

(4) settle or release a claim in favor of or against the credit

union.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.154. POWER TO REPUDIATE BURDENSOME TRANSACTION. The

conservator may repudiate a contract or unexpired lease the

conservator considers burdensome to the credit union.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.155. POWER TO PROTECT, PRESERVE, AND RECOVER PROPERTY.

(a) The conservator may take measures necessary to preserve,

protect, and recover the assets or property of the credit union,

including filing a lawsuit against any person.

(b) An asset or property of the credit union includes a claim or

cause of action that belongs to or that may be asserted by the

credit union.

of conservator.

(d) The conservator may file, prosecute, or defend a suit

brought by or against the credit union if the conservator

considers it necessary to protect the interested party or

property affected by the suit.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.156. DUTIES OF CONSERVATOR. The conservator shall:

(1) take actions as directed by the commissioner to remove the

causes and conditions that made the conservatorship necessary;

and

(2) report to the commissioner from time to time during the

conservatorship as required by the commissioner.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.157. TERM OF CONSERVATOR. The conservator shall serve

until the purposes of the conservatorship are accomplished.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.158. TRANSFER OF MANAGEMENT OF REHABILITATED CREDIT

UNION. If the credit union is rehabilitated, the conservator

shall return the management of the credit union to the board

under terms that are reasonable and necessary to prevent a

recurrence of the conditions that created the need for

conservatorship.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.159. COST OF CONSERVATORSHIP. (a) The commissioner

shall determine and approve any reasonable expenses attributable

to the service of a conservator, including costs incurred by the

department and the compensation and expenses of the conservator

and any professional employees appointed to represent or assist

the conservator. The commissioner or an employee of the

department may not receive compensation in addition to salary for

serving as conservator, but the department may receive

reimbursement for the fully allocated personnel cost associated

with the service of the commissioner or the employee as

conservator.

(b) All approved expenses shall be paid by the credit union. The

department has a lien against the assets and money of the credit

union to secure payment of approved expenses. The lien has a

higher priority than any other lien against the credit union.

attorneys and hire other persons to assist the credit union in

contesting or satisfying the requirements of an order of

conservatorship. The commissioner shall authorize the payment of

reasonable fees and expenses for the attorneys and other persons

as expenses of the conservatorship.

(d) The commissioner may waive or defer collection of assessment

or examination fees by the department from the credit union

during a period of conservatorship if the waiver or deferral

would appear to benefit the prospects for rehabilitation. As a

condition of release from conservatorship, the commissioner may

require the rehabilitated credit union to pay or develop a

reasonable plan for payment of any deferred fees.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2003, 78th Leg., ch. 533, Sec. 49, eff. Sept. 1,

2003.

Sec. 126.160. JURISDICTION AND VENUE. (a) A suit filed against

a credit union while the credit union is under conservatorship,

or against a person in connection with an action taken or

decision made by that person as a conservator of a credit union,

must be brought in Travis County regardless of whether the credit

union remains under conservatorship.

(b) A suit filed by the conservator under Section 126.155 may be

brought in Travis County.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2003, 78th Leg., ch. 533, Sec. 50, eff. Sept. 1,

2003.

Sec. 126.161. EXHAUSTION OF ADMINISTRATIVE REMEDIES.

Administrative remedies must be exhausted before a court may:

(1) assert jurisdiction over a claim against the conservator or

the credit union; or

(2) restrain or otherwise affect the exercise of the powers or

functions of the conservator.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER E. LIQUIDATION ORDER; INJUNCTION

Sec. 126.201. LIQUIDATION ORDER; APPOINTMENT OF LIQUIDATING

AGENT. After the commissioner has issued a conservatorship order

and provided an opportunity for hearing, the commissioner by

liquidation order may appoint a liquidating agent and direct that

the credit union be liquidated if:

(1) the board requests issuance of a liquidation order and

liquidation of the credit union;

(2) the credit union otherwise consents to the liquidation; or

(3) the commissioner:

(A) finds that the closing of the credit union and the

liquidation of the credit union's assets are in the public

interest and the best interest of the credit union's members,

depositors, and creditors; and

(B) determines that the credit union is not in a condition to

continue business and cannot be rehabilitated as provided by this

chapter.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.202. SERVICE OF ORDER. The commissioner shall serve a

liquidation order in the same manner provided for service of a

conservatorship order.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.203. SUIT FOR INJUNCTION. (a) Not later than the

fifth day after the date on which the liquidation order is

served, a credit union that has not requested or consented to a

liquidation order may, if authorized by certified board

resolution, sue to enjoin the commissioner from liquidating the

credit union.

(b) The suit must be brought in the district court of the county

in which the credit union's principal office is located.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.204. ACTION PENDING INJUNCTION HEARING. (a) The

court, without notice or hearing, may restrain the commissioner

from liquidating the credit union's assets until after a hearing

on the suit is held.

(b) If the court restrains the commissioner, the court shall

instruct the commissioner to hold the credit union's assets in

the commissioner's possession and control until disposition of

the suit.

or proper action to prevent loss or depreciation in the value of

the assets.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.205. HEARING ON INJUNCTION; APPEAL. (a) The court, as

soon as possible, shall hear the suit and shall enter a judgment

enjoining or refusing to enjoin the commissioner from liquidating

the credit union's assets.

(b) The commissioner, regardless of the judgment entered by the

trial court or any supersedeas bond filed, shall retain

possession and control of the credit union's assets until final

disposition of any appeal of the judgment.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.206. NATIONAL CREDIT UNION ADMINISTRATION AS

LIQUIDATING AGENT. (a) The commissioner may tender a credit

union that has been closed for liquidation to the National Credit

Union Administration or its successor as liquidating agent if the

shares and deposits of the credit union were insured by the

National Credit Union Share Insurance Fund or its successor on

the date of closing.

(b) After acceptance of tender of the credit union, the National

Credit Union Administration or its successor, as liquidating

agent of the credit union, shall perform the acts and duties that

it considers necessary or desirable and that are permitted or

required by federal law or this chapter. The National Credit

Union Administration, as liquidating agent, is not subject to

commission control.

insured share and deposit liabilities of a credit union that is

being liquidated under this subchapter, the National Credit Union

Administration is subrogated, to the extent of the payment, to

all rights that the owners of the share or deposit accounts have

against the credit union.

Added by Acts 2003, 78th Leg., ch. 533, Sec. 51, eff. Sept. 1,

2003.

SUBCHAPTER F. ADMINISTRATION OF LIQUIDATION

Sec. 126.251. PERMISSIBLE ACTIVITIES IN LIQUIDATION. (a) A

credit union in liquidation continues in existence to discharge

debts, collect and distribute assets, and wind up the credit

union's business.

(b) The credit union may sue and be sued to enforce debts and

obligations until its affairs are fully adjusted.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.252. COMPENSATION OF CREDIT UNION EMPLOYEES AND

OFFICERS. (a) This chapter does not prevent compensation of a

salaried employee or officer of a credit union during the credit

union's liquidation.

(b) The compensation is considered an incidental expense of the

liquidation.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.253. LIQUIDATING AGENT SUBJECT TO COMMISSION CONTROL.

The liquidating agent shall perform the duties required by the

following sections subject to commission rules and under the

commissioner's supervision:

(1) Sections 126.254-126.258; and

(2) Sections 126.301, 126.302, 126.304, 126.305, and 126.306.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.254. POSSESSION, CONSOLIDATION, AND DISPOSITION OF

ASSETS. The liquidating agent shall:

(1) receive and take possession of the books, records, assets,

and property of the credit union;

(2) sell, enforce collection of, and liquidate assets and

property; and

(3) sell or assign assets to the liquidating agent subject to

Section 126.353.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.36, eff. Sept. 1,

1999.

Sec. 126.255. COMPOUND DEBTS. The liquidating agent shall

compound all bad or doubtful debts.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.256. COURT ACTION BY LIQUIDATING AGENT. The

liquidating agent shall:

(1) sue in the name of the liquidating agent or may sue in the

name of the credit union; and

(2) defend an action brought against the liquidating agent or

the credit union.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.257. REPUDIATION OF BURDENSOME TRANSACTIONS. The

liquidating agent shall repudiate a contract or unexpired lease

the liquidating agent considers burdensome to the credit union.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.258. EXECUTION OF DOCUMENTS; OTHER NECESSARY ACTS. The

liquidating agent may execute any document and perform any other

action that:

(1) the liquidating agent considers necessary or desirable to

discharge the liquidating agent's duties; and

(2) may be necessary under this subchapter and Subchapter G.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.259. JURISDICTION AND VENUE. (a) A suit against a

credit union or its liquidating agent while a liquidation order

is in effect must be brought in Travis County.

(b) The liquidating agent may file suit in Travis County to

preserve, protect, or recover the credit union's assets or

property.

cause of action that belongs to or that may be asserted by the

credit union.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.260. EXHAUSTION OF ADMINISTRATIVE REMEDIES. Except as

provided by Subchapter E, administrative remedies must be

exhausted before a court may:

(1) assert jurisdiction over a claim against the liquidating

agent or the credit union; or

(2) restrain or otherwise affect the exercise of the powers or

functions of the liquidating agent.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER G. CLAIMS RELATING TO CREDIT UNION IN LIQUIDATION

Sec. 126.301. CLAIMS AGAINST CREDIT UNION. The liquidating

agent shall:

(1) determine the existence and amount of claims;

(2) allow proved claims of security, preference, or priority;

(3) settle or release a claim in favor of or against the credit

union;

(4) disallow unproved claims of security, preference, or

priority; and

(5) make distributions to and pay creditors and members of the

credit union as their interests appear.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.302. NOTICE TO CREDITORS AND MEMBERS. (a) The

liquidating agent shall give notice to creditors and members to

present and prove their claims.

(b) The notice must be published once a week for three

successive weeks in a newspaper of general circulation in each

county in which the credit union maintained an office or branch

to transact business on the date the credit union ceased

unrestricted operations.

the credit union being liquidated is less than $10,000, the

commissioner shall declare the credit union to be a "no

publication" liquidation, and publication of notice to creditors

and members under this section is not required.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.303. PRIORITY OF CLAIMS. The liquidating agent shall

use the credit union's assets to pay, in the following order:

(1) secured creditors to the extent of the value of their

collateral;

(2) liquidation expenses, including a surety bond if required;

(3) depositors;

(4) general creditors, including secured creditors to the extent

that their claims exceed the value of their collateral; and

(5) distributions to members in proportion to the shares held by

each member.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.304. LIQUIDATION DIVIDENDS. (a) The liquidating agent

from time to time shall make a ratable liquidation dividend on

claims that have been:

(1) proved to the satisfaction of the board or the liquidating

agent; or

(2) adjusted by a court.

(b) After the credit union's assets have been liquidated, the

liquidating agent shall make further liquidation dividends on

claims previously proved or adjusted.

Subsection (b), the liquidating agent may accept the statement of

an amount due a claimant as shown on the credit union's books and

records instead of a formal proof of claim filed on the

claimant's behalf.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.305. PAYMENT OF CLAIMS IN "NO PUBLICATION" LIQUIDATION.

(a) In a "no publication" liquidation, the liquidating agent

shall determine from all sources available, and within the limits

of the credit union's available money, the amounts due to

creditors and members.

(b) Not earlier than the 61st day after the date on which the

liquidating agent is appointed, the liquidating agent shall

distribute the credit union's money to creditors and members

ratably and as their interests appear.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.306. BARRED CLAIMS. (a) A claim not filed before the

liquidating agent pays the final liquidation dividend is barred.

(b) A claim rejected by the liquidating agent is barred unless

suit to appeal the liquidating agent's rejection is filed within

three months after the date of notice of rejection.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER H. LIQUIDATING AGENT

Sec. 126.351. REMOVAL OF LIQUIDATING AGENT. (a) On finding

that the liquidating agent has failed to properly perform the

liquidating agent's duties in a timely and efficient manner or

has violated this subtitle or a rule adopted under this subtitle,

the commissioner by removal order may take possession and control

of the books, records, property, assets, and business of the

credit union.

(b) The removal order must:

(1) remove the liquidating agent and appoint a successor

liquidating agent to complete the liquidation and the winding up

of the credit union's affairs subject to the commissioner's

supervision and control; and

(2) be served on the liquidating agent being removed.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.352. REPLACEMENT OF LIQUIDATING AGENT. The

commissioner shall appoint another liquidating agent on a

liquidating agent's resignation, death, illness, removal,

desertion, or incapacity to function.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.353. CONFLICT OF INTEREST. (a) The liquidating agent

may not acquire an asset of the credit union in liquidation or

purchase a loan of the credit union without the commissioner's

prior written approval.

(b) A liquidating agent may not obtain from the liquidation

compensation or profit for:

(1) direct or indirect personal benefit;

(2) the benefit of a family member of or a person associated

with the liquidating agent; or

(3) the benefit of a business enterprise with which the

liquidating agent is associated, other than the credit union.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.354. COMPENSATION. (a) A liquidating agent is

entitled to receive reasonable compensation during the

liquidation.

(b) The compensation is considered an incidental expense of the

liquidation.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER I. COMPLETION OF LIQUIDATION

Sec. 126.401. CERTIFICATE OF LIQUIDATION AND DISTRIBUTION. The

commissioner shall prescribe the form of a certificate to be

completed by the liquidating agent attesting that distribution

has been made and liquidation is complete.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.402. CANCELLATION OF CERTIFICATE OF INCORPORATION. The

commissioner, on receipt and approval of the certificate executed

under Section 126.401, shall cancel the credit union's

certificate of incorporation.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.403. WINDING UP OF CREDIT UNION BUSINESS. During the

three-year period following cancellation of the credit union's

certificate of incorporation, the credit union continues to exist

and the liquidating agent, or a successor or other person

designated by the commissioner, may act on the credit union's

behalf to:

(1) pay, satisfy, or discharge an existing liability or

obligation;

(2) collect and distribute assets; and

(3) act as required to adjust and wind up the credit union's

business and affairs, including suing or being sued in the credit

union's corporate name.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER J. VOLUNTARY LIQUIDATION

Sec. 126.451. BOARD RESOLUTION. Unless the commissioner has

issued a liquidation order, the board may adopt a resolution

recommending voluntary dissolution of the credit union and

directing submission of the question of liquidation to the

members of the credit union.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.452. NOTIFICATION TO COMMISSIONER OF PROPOSED

LIQUIDATION. Not later than the fifth day after the date on

which the board's resolution recommending voluntary dissolution

is adopted, the board's presiding officer shall notify the

commissioner in writing of the reasons for the proposed

liquidation.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.453. NOTICE OF MEETING TO LIQUIDATE. Notice of the

special meeting to consider voluntary liquidation shall be mailed

by first-class mail to each member of the credit union and the

commissioner not later than the 10th day before the date of the

meeting.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.454. CREDIT UNION OPERATIONS BEFORE AND AFTER VOTE.

Immediately after notice under Section 126.453 is mailed, the

commissioner may restrict control or give direction with respect

to the continued business of the credit union pending

consideration of voluntary liquidation by the members. During

that period, no member shall withdraw an aggregate amount in

excess of the share insurance covered by the credit union. No new

extensions of credit shall be funded during the period between

the board of directors' adoption of the resolution recommending

voluntary liquidation and the membership meeting called to

consider voluntary liquidation, except for the issuance of loans

fully secured by a pledge of shares and the funding of

outstanding loan commitments approved before adoption of the

resolution. If the vote to dissolve and liquidate the credit

union is affirmative, the credit union may conduct only business

incidental to liquidation.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2003, 78th Leg., ch. 533, Sec. 52, eff. Sept. 1,

2003.

Sec. 126.455. VOTE ON VOLUNTARY LIQUIDATION. At a special

meeting called to consider the proposed liquidation, a majority

of the credit union members, but not less than a quorum, may vote

to dissolve and liquidate the credit union. Those members casting

votes by mail or at the meeting constitute a quorum for the

transaction of business at the special meeting, notwithstanding a

bylaw provision to the contrary.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2003, 78th Leg., ch. 533, Sec. 53, eff. Sept. 1,

2003.

Sec. 126.456. NOTICE TO COMMISSIONER OF AFFIRMATIVE VOTE TO

LIQUIDATE. (a) The board's presiding officer or president and

the secretary shall notify the commissioner of the intention to

liquidate not later than the fifth day after the affirmative vote

to dissolve and liquidate.

(b) The person notifying the commissioner must include a list of

the names and addresses of the credit union's officers and

directors with the notice.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 126.457. APPOINTMENT OF LIQUIDATING AGENT. (a) If the

members approve the liquidation, the board shall appoint a

liquidating agent to:

(1) conserve and collect the credit union's assets;

(2) wind up the credit union's affairs;

(3) discharge the credit union's debts;

(4) distribute the credit union's assets; and

(5) take any other action necessary and incidental to

liquidating the credit union.

(b) The National Credit Union Administration or other insuring

organization has the right of first refusal to be appointed as

liquidating agent of any credit union that it insures.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2003, 78th Leg., ch. 533, Sec. 54, eff. Sept. 1,

2003.

Sec. 126.458. APPLICATION OF LAW TO CREDIT UNION IN VOLUNTARY

LIQUIDATION. A credit union in the process of voluntary

dissolution and liquidation remains subject to this subtitle and

Chapter 15, including provisions for examination by the

commissioner, and the credit union shall furnish reports as

required by the commissioner.

Added by Acts 2003, 78th Leg., ch. 533, Sec. 55, eff. Sept. 1,

2003.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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