CHAPTER 186. DISSOLUTION AND RECEIVERSHIP

State Codes and Statutes

Statutes > Texas > Finance-code > Title-3-financial-institutions-and-businesses > Chapter-186-dissolution-and-receivership

FINANCE CODE

TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES

SUBTITLE F. TRUST COMPANIES

CHAPTER 186. DISSOLUTION AND RECEIVERSHIP

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 186.001. DEFINITION. In this chapter, "administrative

expense" means:

(1) an expense designated as an administrative expense by

Subchapter C or D;

(2) court costs and expenses of operation and liquidation of a

state trust company estate;

(3) wages owed to an employee of a state trust company for

services rendered within three months before the date the state

trust company was closed for liquidation and not exceeding:

(A) $2,000 to each employee; or

(B) another amount set by rules adopted under this subtitle;

(4) current wages owed to a state trust company employee whose

services are retained by the receiver for services rendered after

the date the state trust company is closed for liquidation;

(5) an unpaid expense of supervision or conservatorship of the

state trust company before its closing for liquidation; and

(6) any unpaid fees or assessments owed to the department.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.002. REMEDIES EXCLUSIVE. (a) Unless the banking

commissioner so requests, a court may not:

(1) order the closing or suspension of operation of a state

trust company; or

(2) appoint for a state trust company a receiver, supervisor,

conservator, or liquidator, or other person with similar

responsibility.

(b) A person may not be designated receiver, supervisor,

conservator, or liquidator without the voluntary approval and

concurrence of the banking commissioner.

state.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.003. FEDERAL DEPOSIT INSURANCE CORPORATION AS

LIQUIDATOR. (a) The banking commissioner without court action

may tender a state trust company that has been closed for

liquidation to the Federal Deposit Insurance Corporation or its

successor as receiver and liquidating agent if the trust deposits

of the state trust company were insured by the Federal Deposit

Insurance Corporation or its successor on the date of closing.

(b) After acceptance of tender of the state trust company, the

Federal Deposit Insurance Corporation or its successor shall

perform the acts and duties as receiver of the state trust

company that it considers necessary or desirable and that are

permitted or required by federal law or this chapter.

successor refuses to accept tender of the state trust company,

the banking commissioner shall act as receiver.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.004. APPOINTMENT OF INDEPENDENT RECEIVER. (a) On

request of the banking commissioner, the court in which a

liquidation proceeding is pending may:

(1) appoint an independent receiver; and

(2) require a suitable bond of the independent receiver.

(b) On appointment of an independent receiver, the banking

commissioner is discharged as receiver and remains a party to the

liquidation proceeding with standing to initiate or contest any

motion. The views of the banking commissioner are entitled to

deference unless they are inconsistent with the plain meaning of

this chapter.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.005. SUCCESSION OF TRUST POWERS. (a) If a state trust

company in the process of voluntary or involuntary dissolution

and liquidation is acting as trustee, guardian, executor,

administrator, or escrow agent, or in another fiduciary or

custodial capacity, the banking commissioner may authorize the

sale of the state trust company's administration of fiduciary

accounts to a successor entity with fiduciary powers.

(b) The successor entity, without the necessity of action by a

court or the creator or a beneficiary of the fiduciary

relationship, shall:

(1) continue the office, trust, or fiduciary relationship; and

(2) perform all the duties and exercise all the powers connected

with or incidental to the fiduciary relationship as if the

successor entity had been originally designated as the fiduciary.

including a trust established for the benefit of a minor by court

order under Section 142.005, Property Code. This section does not

affect any right of a court or a party to the instrument

governing the fiduciary relationship to subsequently designate

another trustee as the successor fiduciary.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

SUBCHAPTER B. VOLUNTARY DISSOLUTION

Sec. 186.101. INITIATING VOLUNTARY DISSOLUTION. (a) A state

trust company may initiate voluntary dissolution and surrender

its charter as provided by this subchapter:

(1) with the approval of the banking commissioner;

(2) after complying with the provisions of the Business

Organizations Code regarding board and shareholder approval for

voluntary dissolution; and

(3) by filing the notice of dissolution as provided by Section

186.102.

(b) The shareholders or participants of a state trust company

initiating voluntary dissolution by resolution shall appoint one

or more persons to act as liquidating agent or committee. The

liquidating agent or committee shall conduct the liquidation as

provided by law and under the supervision of the board. The

board, in consultation with the banking commissioner, shall

require the liquidating agent or committee to give a suitable

bond.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

237, Sec. 76, eff. September 1, 2007.

Sec. 186.102. FILING RESOLUTIONS WITH BANKING COMMISSIONER.

After resolutions to dissolve and liquidate a state trust company

have been adopted by the board and shareholders or participants,

a majority of the directors, managers, or managing participants

shall verify and file with the banking commissioner certified

copies of:

(1) the resolutions of the shareholders or participants that:

(A) are adopted at a meeting for which proper notice was given

or by unanimous written consent; and

(B) approve the dissolution and liquidation of the state trust

company;

(2) the resolutions of the board approving the dissolution and

liquidation of the state trust company if the trust company is

operated by a board of directors or managers;

(3) the notice to the shareholders or participants informing

them of the meeting described by Subdivision (1)(A); and

(4) a plan of liquidation.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

735, Sec. 18, eff. September 1, 2007.

Sec. 186.103. BANKING COMMISSIONER INVESTIGATION AND CONSENT.

The banking commissioner shall review the documentation submitted

under Section 186.102 and conduct any necessary investigation or

examination. If the proceedings appear to have been properly

conducted and the bond to be given by the liquidating agent or

committee is adequate for its purposes, the banking commissioner

shall consent to dissolution and direct the state trust company

to publish notice of its pending dissolution.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.104. NOTICE OF PENDING DISSOLUTION. (a) A state trust

company shall publish notice of its pending dissolution in a

newspaper of general circulation in each community where its home

office or an additional trust office is located:

(1) at least once each week for eight consecutive weeks; or

(2) at other times specified by the banking commissioner or

rules adopted under this subtitle.

(b) The notice must:

(1) be in the form and include the information required by the

banking commissioner; and

(2) state that:

(A) the state trust company is liquidating;

(B) clients, depositors, and creditors must present their claims

for payment on or before a specific date; and

with the state trust company should remove their property on or

before a specified date.

Subsection (b) must:

(1) be approved by the banking commissioner;

(2) allow the affairs of the state trust company to be wound up

as quickly as feasible; and

(3) allow creditors, clients, and owners of property adequate

time for presentation of claims, withdrawal of accounts, and

redemption of property.

(d) The banking commissioner may adjust the dates under

Subsection (b) with or without republication of notice if

additional time appears needed for the activities to which the

dates pertain.

(e) At the time of or promptly after publication of the notice,

the state trust company shall mail to each of the state trust

company's known clients, depositors, creditors, safe deposit box

holders, and bailors of property left with the state trust

company, at the mailing address shown on the state trust

company's records, an individual notice containing:

(1) the information required in a notice under Subsection (b);

and

(2) specific information pertinent to the account or property of

the addressee.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.

6.019(a), eff. Sept. 1, 2001.

Sec. 186.105. SAFE DEPOSITS AND OTHER BAILMENTS. (a) A

contract between the state trust company and a person for

bailment, of deposit for hire, or for the lease of a safe, vault,

or box, ceases on the date specified in the notice as the date

for removal of property or a later date approved by the banking

commissioner. A person who has paid rental or storage charges for

a period extending beyond the date designated for removal of

property has an unsecured claim against the state trust company

for a refund of the unearned amount paid.

(b) If the property is not removed by the date the contract

ceases, an officer of the state trust company shall inventory the

property. In making the inventory, the officer may open a safe,

vault, box, package, parcel, or receptacle in the custody or

possession of the state trust company. The inventory must be made

in the presence of a notary public who is not an officer or

employee of the state trust company and who is bonded in an

amount and by sureties approved by the banking commissioner. The

property shall be marked to identify, to the extent possible, its

owner or the person who left it with the state trust company.

trust company's custody and control has been inventoried, a

master list certified by the state trust company officer and the

notary public shall be furnished to the banking commissioner. The

master list shall be kept in a place and dealt with in a manner

the banking commissioner specifies pending delivery of the

property to its owner or to the comptroller as unclaimed

property.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.106. OFFICES TO REMAIN OPEN. Unless the banking

commissioner directs or consents otherwise, the home office and

all additional trust offices of a state trust company initiating

voluntary dissolution shall remain open for business during

normal business hours until the last date specified in published

notices for presentation of claims, withdrawal of accounts, and

redemption of property.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.

6.020(a), eff. Sept. 1, 2001.

Sec. 186.107. FIDUCIARY ACTIVITIES. (a) As soon as practicable

after publication of the notice of dissolution, the state trust

company shall:

(1) terminate all fiduciary positions it holds;

(2) surrender all property held by it as a fiduciary; and

(3) settle its fiduciary accounts.

(b) Unless all fiduciary accounts are settled and transferred by

the last date specified in published notices or by the banking

commissioner and unless the banking commissioner directs

otherwise, the state trust company shall mail a notice to each

trustor and beneficiary of any remaining trust, escrow

arrangement, or other fiduciary relationship. The notice must

state:

(1) the location of an office open during normal business hours

where administration of the remaining fiduciary accounts will

continue until settled or transferred; and

(2) a telephone number at that office.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.108. FINAL LIQUIDATION. (a) After the state trust

company has taken all of the actions specified by Sections

186.102, 186.104, 186.105, and 186.107, paid all its debts and

obligations, and transferred all property for which a legal

claimant has been found after the time for presentation of claims

has expired, the state trust company shall make a list from its

books of the names of each depositor, creditor, owner of personal

property in the state trust company's possession or custody, or

lessee of any safe, vault, or box, who has not claimed or has not

received a deposit, debt, dividend, interest, balance, or other

amount or property due to the person. The list must be sworn to

or affirmed by a majority of the board or managing participants

of the state trust company.

(b) The state trust company shall:

(1) file the list and any necessary identifying information with

the banking commissioner;

(2) pay any unclaimed money and deliver any unclaimed property

to the comptroller as provided by Chapter 74, Property Code; and

(3) certify to the banking commissioner that the unclaimed money

has been paid and unclaimed property has been delivered to the

comptroller.

reconciled the unclaimed cash and property with the amounts of

money and property reported and transferred to the comptroller,

the banking commissioner shall allow the state trust company to

distribute the state trust company's remaining assets, if any,

among its shareholders, participants, or participant-transferees

as their ownership interests appear.

(d) After distribution of all remaining assets under Subsection

(c), the state trust company shall file with the department:

(1) an affidavit and schedules sworn to or affirmed by a

majority of the board or managing participants, showing the

distribution to each shareholder, participant, or

participant-transferee;

(2) all copies of reports of examination of the state trust

company in its possession;

(3) its original charter or an affidavit stating that the

original charter is lost; and

(4) any certificates of authority for additional trust offices.

(e) After verifying the submitted information and documents, the

banking commissioner shall issue a certificate canceling the

charter of the state trust company.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.

6.021(a), eff. Sept. 1, 2001.

Sec. 186.109. APPLICATION OF LAW TO STATE TRUST COMPANY IN

DISSOLUTION. A state trust company in the process of voluntary

dissolution and liquidation remains subject to this subtitle,

including provisions for examination by the banking commissioner,

and the state trust company shall furnish reports required by the

banking commissioner.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.110. AUTHORIZATION OF DEVIATION FROM PROCEDURES. The

banking commissioner may authorize a deviation from the

procedures for voluntary dissolution provided by this subchapter

if the banking commissioner determines that the interests of

claimants are not jeopardized by the deviation.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.111. CLOSURE BY BANKING COMMISSIONER FOR INVOLUNTARY

DISSOLUTION AND LIQUIDATION. The banking commissioner may close

the state trust company for involuntary dissolution and

liquidation under this chapter if the banking commissioner

determines that:

(1) the voluntary liquidation is:

(A) being conducted in an improper or illegal manner; or

(B) not in the best interests of the state trust company's

clients and creditors; or

(2) the state trust company is insolvent or imminently

insolvent.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.112. APPLICATION FOR NEW CHARTER. After a state trust

company's charter has been voluntarily surrendered and canceled,

the state trust company may not resume business or reopen except

on application for and approval of a new charter.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

SUBCHAPTER C. INVOLUNTARY DISSOLUTION AND LIQUIDATION

Sec. 186.201. ACTION TO CLOSE STATE TRUST COMPANY. (a) The

banking commissioner may by written order close and liquidate a

state trust company on finding that:

(1) the interests of its clients and creditors are jeopardized

by the state trust company's insolvency or imminent insolvency;

and

(2) the best interests of clients and creditors would be served

by requiring that the state trust company be closed and its

assets liquidated.

(b) A majority of the state trust company's directors, managers,

or managing participants may voluntarily close the state trust

company and place it with the banking commissioner for

liquidation.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 412, Sec. 3.12,

eff. Sept. 1, 2001.

Sec. 186.202. NOTICE AND EFFECT OF CLOSURE; APPOINTMENT OF

RECEIVER. (a) After closing a state trust company under Section

186.201, the banking commissioner shall attach to or otherwise

display at its main entrance a copy of the written closing order

issued under Section 186.201(a) and containing the findings on

which the closing of the state trust company is based. A

correspondent bank of the closed state trust company may not pay

an item drawn on the account of the closed state trust company

that is presented for payment after the correspondent has

received actual notice of closing unless it previously certified

the item for payment.

(b) As soon as practicable after posting the closing order at

the state trust company's main entrance, the banking commissioner

shall tender the state trust company to the Federal Deposit

Insurance Corporation as provided by Section 186.003 or initiate

a receivership proceeding by filing a certified copy of the

closing order in district court in Travis County, subject to

Subsection (c). The court in which the closing order is filed

shall docket it as a case styled, "In re liquidation of ____"

(inserting the name of the state trust company). When the closing

order is filed, the court has constructive custody of all the

state trust company's assets and any action that seeks to

directly or indirectly affect state trust company assets is

considered an intervention in the receivership proceeding and

subject to this subchapter and Subchapter D.

intervene in the liquidation of a state trust company is in

Travis County, except that on motion filed and served

concurrently with or before the filing of the answer, the court

may, on a finding of good cause, transfer the action to the

county of the state trust company's home office.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 412, Sec. 3.13,

eff. Sept. 1, 2001.

Sec. 186.203. NATURE AND DURATION OF RECEIVERSHIP. (a) The

court may not require a bond from the banking commissioner as

receiver.

(b) A reference in this chapter to the receiver is a reference

to the banking commissioner as receiver and to any successors in

office, the Federal Deposit Insurance Corporation if acting as

receiver as provided by Section 186.003 and federal law, or an

independent receiver appointed at the request of the banking

commissioner as provided by Section 186.004.

managing participants, officers, and shareholders or participants

of the state trust company as necessary to support an action

taken on behalf of the state trust company.

(d) The receiver and all employees and agents acting on behalf

of the receiver are acting in an official capacity and are

protected by Section 12.106. An act of the receiver is an act of

the state trust company in liquidation. This state or a political

subdivision of this state is not liable and may not be held

accountable for any debt or obligation of a state trust company

in receivership.

(e) Section 64.072, Civil Practice and Remedies Code, applies to

the receivership of a state trust company except as provided by

this subsection. A state trust company receivership shall be

administered continuously for the length of time necessary to

complete its purposes, and a period prescribed by other law

limiting the time for the administration of a receivership or of

corporate affairs generally, including Section 64.072(d), Civil

Practice and Remedies Code, does not apply.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.204. CONTEST OF LIQUIDATION. (a) A state trust

company, acting through a majority of its directors, managers, or

managing participants, may intervene in an action filed by the

banking commissioner closing a state trust company to challenge

the banking commissioner's closing of the state trust company and

to enjoin the banking commissioner or other receiver from

liquidating its assets. The state trust company must file the

intervention not later than the second business day after the

closing of the state trust company, excluding legal holidays. The

court may issue an ex parte order restraining the receiver from

liquidating state trust company assets pending a hearing on the

injunction. The receiver shall comply with the restraining order

but may petition the court for permission to liquidate an asset

as necessary to prevent its loss or diminution pending the

outcome of the injunction action.

(b) The court shall hear an action under Subsection (a) as

quickly as possible and shall give it priority over other

business.

judgment as in other civil cases, except that the receiver shall

retain all state trust company assets pending a final appellate

court order even if the banking commissioner does not prevail in

the trial court. If the banking commissioner prevails in the

trial court, liquidation of the state trust company may proceed

unless the trial court or appellate court orders otherwise. If

liquidation is enjoined or stayed pending appeal, the trial court

retains jurisdiction to permit liquidation of an asset as

necessary to prevent its loss or diminution pending the outcome

of the appeal.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.205. NOTICE OF STATE TRUST COMPANY CLOSING. (a) As

soon as reasonably practicable after initiation of the

receivership proceeding, the receiver shall publish notice, in a

newspaper of general circulation in each community where the

state trust company's home office or any additional trust office

is located. The notice must state that:

(1) the state trust company has been closed for liquidation;

(2) clients and creditors must present their claims for payment

on or before a specific date; and

(3) all safe deposit box holders and bailors of property left

with the state trust company should remove their property not

later than a specified date.

(b) A date that the receiver selects under Subsection (a):

(1) may not be earlier than the 121st day after the date of the

notice; and

(2) must allow:

(A) the affairs of the state trust company to be wound up as

quickly as feasible; and

(B) creditors, clients, and owners of property adequate time for

presentation of claims, withdrawal of accounts, and redemption of

property.

the approval of the court and with or without republication of

notice if additional time appears needed for those activities.

(d) As soon as reasonably practicable given the state of state

trust company records and the adequacy of staffing, the receiver

shall mail to each of the state trust company's known clients,

creditors, safe deposit box holders, and bailors of property left

with the state trust company, at the mailing address shown on the

state trust company's records, an individual notice containing

the information required in a notice under Subsection (a) and

specific information pertinent to the account or property of the

addressee.

(e) The receiver may determine the form and content of notices

under this section.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.

6.022(a), eff. Sept. 1, 2001.

Sec. 186.206. INVENTORY. As soon as reasonably practicable

given the state of state trust company records and the adequacy

of staffing, the receiver shall prepare a comprehensive inventory

of the state trust company's assets for filing with the court.

The inventory is open to inspection.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.207. RECEIVER'S TITLE AND PRIORITY. (a) The receiver

has the title to all the state trust company's property,

contracts, and rights of action, wherever located, beginning on

the date the state trust company is closed for liquidation.

(b) The rights of the receiver have priority over a contractual

lien or statutory landlord's lien under Chapter 54, Property

Code, judgment lien, attachment lien, or voluntary lien that

arises after the date of the closing of the state trust company

for liquidation.

office of this state gives the same notice that would be given by

a deed, bill of sale, or other evidence of title filed or

recorded by the state trust company in liquidation. The recording

clerk shall index a recorded receivership order in the records to

which the order relates.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.208. RIGHTS FIXED. The rights and liabilities of the

state trust company in liquidation and of a client, creditor,

officer, director, manager, managing participant, employee,

shareholder, participant, participant-transferee, agent, or other

person interested in the state trust company's estate are fixed

on the date of closing of the state trust company for liquidation

except as otherwise directed by the court or as expressly

provided otherwise by this subchapter or Subchapter D.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.209. DEPOSITORIES. (a) The receiver may deposit money

collected on behalf of the state trust company estate in:

(1) the Texas Treasury Safekeeping Trust Company in accordance

with procedures established by the comptroller; or

(2) one or more depository institutions in this state, the

deposits of which are insured by the Federal Deposit Insurance

Corporation or its successor, if the receiver, using sound

financial judgment, determines that it would be advantageous to

do so.

(b) If receivership money deposited in an account at a state

bank exceeds the maximum insured amount, the receiver shall

require the excess deposit to be adequately secured through

pledge of securities or otherwise, without approval of the court.

The depository bank may secure the deposits of the state trust

company in liquidation on behalf of the receiver, notwithstanding

any other provision of this subtitle.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.210. PENDING LAWSUIT. (a) A judgment or order of a

court of this state or of another jurisdiction in an action

pending by or against the state trust company, rendered after the

date the state trust company was closed for liquidation, is not

binding on the receiver unless the receiver was made a party to

the suit.

(b) Before the first anniversary of the date the state trust

company was closed for liquidation, the receiver may not be

required to plead to any suit pending against the state trust

company in a court in this state on the date the state trust

company was closed for liquidation and in which the receiver is a

proper plaintiff or defendant.

Remedies Code, do not apply to a state trust company estate being

administered under this subchapter and Subchapter D.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.211. NEW LAWSUIT. (a) Except as otherwise provided by

this section, the court in which a receivership proceeding is

pending under this subchapter has exclusive jurisdiction to hear

and determine all actions or proceedings instituted by or against

the state trust company or receiver after the receivership

proceeding begins.

(b) The receiver may file in any jurisdiction an ancillary suit

that may be helpful to obtain jurisdiction or venue over a person

or property.

proceeding instituted against the receiver or the receiver's

employee, including an employee of the department, that asserts

personal liability on the part of the receiver or employee.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.212. OBTAINING RECORD OR OTHER PROPERTY IN POSSESSION

OF OTHER PERSON. (a) Each state trust company affiliate,

officer, director, manager, managing participant, employee,

shareholder, participant, participant-transferee, trustee, agent,

servant, employee, attorney, attorney-in-fact, or correspondent

shall immediately deliver to the receiver, without cost to the

receiver, any record or other property of the state trust company

or that relates to the business of the state trust company.

(b) If by contract or otherwise a record or other property that

can be copied is the property of a person listed in Subsection

(a), it shall be copied and the copy shall be delivered to the

receiver. The owner shall retain the original until notification

by the receiver that it is no longer required in the

administration of the state trust company's estate or until

another time the court, after notice and hearing, directs. The

copy is considered to be a record of the state trust company in

liquidation under Section 186.225.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.213. INJUNCTION IN AID OF LIQUIDATION. (a) On

application by the receiver, the court with or without notice may

issue an injunction:

(1) restraining each state trust company officer, director,

manager, managing participant, employee, shareholder,

participant, participant-transferee, trustee, agent, servant,

employee, attorney, attorney-in-fact, accountant or accounting

firm, correspondent, or other person from transacting the state

trust company's business or wasting or disposing of its property;

(2) requiring the delivery of the state trust company's property

or assets to the receiver subject to the further order of the

court.

(b) At any time during a proceeding under this subchapter, the

court may issue another injunction or order considered necessary

or desirable to prevent:

(1) interference with the receiver or the proceeding;

(2) waste of the assets of the state trust company;

(3) the beginning or prosecution of an action;

(4) the obtaining of a preference, judgment, attachment,

garnishment, or other lien; or

(5) the making of a levy against the state trust company or

against its assets.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.214. SUBPOENA. (a) The receiver may request the court

ex parte to issue a subpoena to compel the attendance and

testimony of a witness before the receiver and the production of

a record relating to the receivership estate. For that purpose

the receiver or the receiver's designated representative may

administer an oath or affirmation, examine a witness, or receive

evidence. The court has statewide subpoena power and may compel

attendance and production of a record before the receiver at the

state trust company, the office of the receiver, or another

location.

(b) A person served with a subpoena under this section may file

a motion with the court for a protective order as provided by

Rule 166b, Texas Rules of Civil Procedure. In a case of

disobedience of a subpoena or the contumacy of a witness

appearing before the receiver or the receiver's designated

representative, the receiver may request and the court may issue

an order requiring the person subpoenaed to obey the subpoena,

give evidence, or produce a record relating to the matter in

question.

entitled to receive:

(1) reimbursement for mileage, in the amount for travel by a

state employee, for traveling to or returning from a proceeding

that is more than 25 miles from the witness's residence; and

(2) a fee for each day or part of a day the witness is

necessarily present as a witness in an amount set by the receiver

with the approval of the court of not less than $10 a day and not

more than an amount equal to the per diem travel allowance of a

state employee.

(d) A payment of fees under Subsection (c) is an administrative

expense.

(e) The receiver may serve the subpoena or have it served by the

receiver's authorized agent, a sheriff, or a constable. The

sheriff's or constable's fee for serving a subpoena must be the

same as the fee paid the sheriff or constable for similar

services.

(f) A subpoena issued under this section to a financial

institution is not subject to Section 59.006.

(g) On certification by the receiver under official seal, a

record produced or testimony taken as provided by this section

and held by the receiver is admissible in evidence in any case

without proof of its correctness or other proof, except the

certificate of the receiver that the record or testimony was

received from the person producing the record or testifying. The

certified record or a certified copy of the record is prima facie

evidence of the facts it contains. This section does not limit

another provision of this subchapter, Subchapter D, or another

law that provides for the admission of evidence or its

evidentiary value.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.

6.103(f), eff. Sept. 1, 2001.

Sec. 186.215. EXECUTORY CONTRACT; ORAL AGREEMENT. (a) Not

later than six months after the date the receivership proceeding

begins, the receiver may terminate any executory contract to

which the state trust company is a party or any obligation of the

state trust company as a lessee. A lessor who receives notice of

the receiver's election to terminate the lease before the 60th

day before the termination date is not entitled to rent or

damages for termination, other than rent accrued to the date of

termination.

(b) An agreement that tends to diminish or defeat the interest

of the estate in a state trust company asset is not valid against

the receiver unless the agreement:

(1) is in writing;

(2) was executed by the state trust company and any person

claiming an adverse interest under the agreement, including the

obligor, when the state trust company acquired the asset;

(3) was approved by the board of the state trust company or its

designated committee, and the approval is reflected in the

minutes of the board or committee; and

(4) has been continuously since its execution an official record

of the state trust company.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.216. PREFERENCES. (a) A transfer of or lien on the

property or assets of a state trust company is voidable by the

receiver if the transfer or lien:

(1) was made or created after:

(A) four months before the date the state trust company is

closed for liquidation; or

(B) one year before the date the state trust company is closed

for liquidation if the receiving creditor was at the time an

affiliate, officer, director, manager, managing participant,

principal shareholder, or participant of the state trust company

or an affiliate of the trust company;

(2) was made or created with the intent of giving to a creditor

or depositor, or enabling a creditor or depositor to obtain, a

greater percentage of the claimant's debt than is given or

obtained by another claimant of the same class; and

(3) is accepted by a creditor or depositor having reasonable

cause to believe that a preference will occur.

(b) Each state trust company officer, director, manager,

managing participant, employee, shareholder, participant,

participant-transferee, trustee, agent, servant, employee,

attorney-in-fact, or correspondent, or other person acting on

behalf of the state trust company, who has participated in

implementing a voidable transfer or lien, and each person

receiving property or the benefit of property of the state trust

company as a result of the voidable transfer or lien, is

personally liable for the property or benefit received and shall

account to the receiver for the benefit of the clients and

creditors of the state trust company.

or assets of a state trust company that a client, creditor,

shareholder, participant, or participant-transferee of the state

trust company could have avoided and may recover the property

transferred or its value from the person to whom it was

transferred or from a person who has received it unless the

transferee or recipient was a bona fide holder for value before

the date the state trust company was closed for liquidation.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.217. EMPLOYEES OF RECEIVER. The receiver may employ

agents, legal counsel, accountants, appraisers, consultants, and

other personnel the receiver considers necessary to assist in the

performance of the receiver's duties. The receiver may use

personnel of the department if the receiver considers the use to

be advantageous or desirable. The expense of employing those

persons is an administrative expense.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.218. DISPOSAL OF PROPERTY; SETTLING OF CLAIM. (a) In

liquidating a state trust company, the receiver on order of the

court entered with or without hearing may:

(1) sell all or part of the property of the state trust company;

(2) borrow money and pledge all or part of the assets of the

state trust company to secure the debt created, except that the

receiver may not be held personally liable to repay borrowed

funds;

(3) compromise or compound a doubtful or uncollectible debt or

claim owed by or owing to the state trust company; and

(4) enter another agreement on behalf of the state trust company

that the receiver considers necessary or proper to the

management, conservation, or liquidation of its assets.

(b) If the amount of a debt or claim owed by or owing to the

state trust company or the value of an item of property of the

trust company does not exceed $20,000, excluding interest, the

receiver may compromise or compound the debt or claim or sell the

property on terms the receiver considers to be in the best

interest of the state trust company estate without obtaining the

approval of the court.

offer or agree to sell an asset of the state trust company, other

than a fiduciary asset, to a depositor or creditor of the state

trust company. Payment may be in whole or in part out of

distributions payable to the purchasing creditor or depositor on

account of an approved claim against the state trust company's

estate. On application by the receiver, the court may designate

one or more representatives to act for certain clients or

creditors as a class in the purchase, holding, and management of

assets purchased by the class under this section, and the

receiver may with the approval of the court advance the expenses

of the appointed representative against the security of the

claims of the class.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.219. COURT ORDER; NOTICE AND HEARING. If the court

requires notice and hearing before entering an order, the court

shall set the time and place of the hearing and prescribe whether

the notice is to be given by service on specific parties, by

publication, or by a combination of those methods. The court may

not enter an order requested by a person other than the receiver

without notice to the receiver and an opportunity for the

receiver to be heard.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.220. RECEIVER'S REPORTS; EXPENSES. (a) The receiver

shall file with the court:

(1) a quarterly report showing the operation, receipts,

expenditures, and general condition of the state trust company in

liquidation; and

(2) a final report regarding the liquidated state trust company

showing all receipts and expenditures and giving a full

explanation and a statement of the disposition of all assets of

the state trust company.

(b) The receiver shall pay all administrative expenses out of

money or other assets of the state trust company. Each quarter

the receiver shall swear to and submit to the court an itemized

report of those expenses. The court shall approve the report

unless an objection is filed before the 11th day after the date

it is submitted. An objection may be made only by a party in

interest and must specify each item objected to and the ground

for the objection. The court shall set the objection for hearing

and notify the parties of this action. The objecting party has

the burden of proof to show that the item objected to is

improper, unnecessary, or excessive.

report is to be given by service on specific parties, by

publication, or by a combination of those methods.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.221. COURT-ORDERED AUDIT. (a) The court may order an

audit of the books and records of the receiver that relate to the

receivership. A report of an audit ordered under this section

shall be filed with the court. The receiver shall make the books

and records relating to the receivership available to the auditor

as required by the court order.

(b) The receiver shall pay the expenses of an audit ordered

under this section as an administrative expense.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.222. SAFE DEPOSITS AND OTHER BAILMENTS. (a) A

contract between the state trust company and another person for

bailment, of deposit for hire, or for the lease of a safe, vault,

or box ceases on the date specified for removal of property in

the notices that were published and mailed or a later date

approved by the receiver or the court. A person who has paid

rental or storage charges for a period extending beyond the date

designated for removal of property has a claim against the state

trust company estate for a refund of the unearned amount paid.

(b) If the property is not removed by the date the contract

ceases, the receiver shall inventory the property. In making the

inventory, the receiver may open a safe, vault, or box, or any

package, parcel, or receptacle, in the custody or possession of

the receiver. The property shall be marked to identify, to the

extent possible, its owner or the person who left it with the

state trust company. After all property belonging to others that

is in the receiver's custody and control has been inventoried,

the receiver shall compile a master list that is divided for each

office of the state trust company that received property that

remains unclaimed. The receiver shall publish, in a newspaper of

general circulation in each community in which the state trust

company had an office that received property that remains

unclaimed, the list and the names of the owners of the property

as shown in the state trust company's records. The published

notice shall specify a procedure for claiming the property unless

the court, on application of the receiver, approves an alternate

procedure.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.223. FIDUCIARY ACTIVITIES. (a) As soon after

beginning the receivership proceeding as is practicable, the

receiver shall:

(1) terminate all fiduciary positions the state trust company

holds;

(2) surrender all property held by the state trust company as a

fiduciary; and

(3) settle the state trust company's fiduciary accounts.

(b) The receiver shall release all segregated and identifiable

fiduciary property held by the state trust company to successor

fiduciaries.

administration of all or substantially all remaining fiduciary

accounts to one or more successor fiduciaries on terms that

appear to be in the best interest of the state trust company's

estate and the persons interested in the fiduciary accounts.

(d) If commingled fiduciary money held by the state trust

company as trustee is insufficient to satisfy all fiduciary

claims to the commingled money, the receiver shall distribute

commingled money pro rata to all fiduciary claimants of

commingled money based on their proportionate interests after

payment of administrative expenses related solely to the

fiduciary claims. The fictional tracing rule does not apply.

(e) The receiver may require a fiduciary claimant to file a

proof of claim if the records of the state trust company are

insufficient to identify the claimant's interest.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.224. DISPOSITION AND MAINTENANCE OF RECORDS. (a) On

approval by the court, the receiver may dispose of records of the

state trust company in liquidation that are obsolete and

unnecessary to the continued administration of the receivership

proceeding.

(b) The receiver may devise a method for the effective,

efficient, and economical maintenance of the records of the state

trust company and of the receiver's office. The methods may

include maintaining those records on any medium approved by the

records management division of the Texas State Library.

company after the closing of the receivership proceeding, the

receiver may reserve assets of an estate, deposit them in an

account, and use them for maintenance, storage, and disposal of

records in closed receivership estates.

(d) Records of a liquidated state trust company are not

government records for any purpose, including Chapter 552,

Government Code, but shall be preserved and disposed of as if

they were records of the department under Chapter 441, Government

Code. Those records are confidential as provided by:

(1) Section 59.006;

(2) Subchapter D, Chapter 181; and

(3) rules adopted under this subtitle.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.

6.103(g), eff. Sept. 1, 2001.

Sec. 186.225. RECORDS ADMITTED. (a) A record of a state trust

company in liquidation obtained by the receiver and held in the

course of the receivership proceeding or a certified copy of the

record under the official seal of the receiver is admissible in

evidence in all cases without proof of correctness or other

proof, except the certificate of the receiver that the record was

received from the custody of the state trust company or found

among its effects.

(b) The receiver may certify the correctness of a record of the

receiver's office, including a record described by Subsection

(a), and may certify any fact contained in the record. The record

is admissible in evidence in all cases in which the original

would be evidence.

prima facie evidence of the facts it contains.

(d) A copy of an original record or another record that is

maintained on a medium approved by the records management

division of the Texas State Library, within the scope of this

section, and produced by the receiver or the receiver's

authorized representative under this section:

(1) has the same effect as the original record; and

(2) may be used the same as the original record in a judicial or

administrative proceeding in this state.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.226. RESUMPTION OF BUSINESS. (a) A state trust

company closed under Section 186.201 may not be reopened without

the approval of the banking commissioner unless a contest of

liquidation under Section 186.204 is finally resolved adversely

to the banking commissioner and the court authorizes its

reopening.

(b) The banking commissioner may place temporary limits on the

right of withdrawals by, or payments to, individual clients and

creditors of a state trust company reopened under this section,

in accordance with applicable law.

company, this state or a political subdivision of this state may

agree to temporary limits that the banking commissioner places on

payments or withdrawals.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.227. ASSETS DISCOVERED AFTER CLOSE OF RECEIVERSHIP.

(a) The banking commissioner shall report to the court discovery

of an asset having value that:

(1) the banking commissioner discovers after the receivership

was closed by final order of the court; and

(2) was abandoned as worthless or unknown during receivership.

(b) The court may reopen the receivership proceeding for

continued liquidation if the value of the after-discovered assets

justifies the reopening.

concerning after-disclosed assets may have been intentionally or

fraudulently concealed, the banking commissioner shall notify

appropriate civil and criminal authorities to determine any

applicable penalties.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

SUBCHAPTER D. CLAIMS AGAINST RECEIVERSHIP ESTATE

Sec. 186.301. FILING CLAIM. (a) This section applies only to a

claim by a person, other than a shareholder, participant, or

participant-transferee acting in that capacity, who has a claim

against a state trust company in liquidation, including a

claimant with a secured claim or a claimant under a fiduciary

relationship that has been ordered by the receiver to file a

claim pursuant to Section 186.223.

(b) To receive payment of a claim, the person must present proof

of the claim to the receiver:

(1) at a place specified by the receiver; and

(2) within the period specified by the receiver under Section

186.205.

condition precedent to the payment of the claim.

(d) A claim that is not filed within the period specified by the

receiver may not participate in a distribution of the assets by

the receiver, except that, subject to court approval, the

receiver may accept a claim filed not later than the 180th day

after the date notice of the claimant's right to file a proof of

claim is mailed to the claimant.

(e) A claim accepted under this section and approved is

subordinate to an approved claim of a general creditor.

(f) Interest does not accrue on a claim after the date the state

trust company is closed for liquidation.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.302. PROOF OF CLAIM. (a) A proof of claim must be in

writing, be signed by the claimant, and include:

(1) a statement of the claim;

(2) a description of the consideration for the claim;

(3) a statement of whether collateral is held or a security

interest is asserted against the claim and, if so, a description

of the collateral or security interest;

(4) a statement of any right of priority of payment for the

claim or other specific right asserted by the claimant;

(5) a statement of whether a payment has been made on the claim

and, if so, the amount and source of the payment, to the extent

known by the claimant;

(6) a statement that the amount claimed is justly owed by the

state trust company in liquidation to the claimant; and

(7) any other matter that is required by the court.

(b) The receiver may designate the form of the proof of claim. A

proof of claim must be filed under oath unless the oath is waived

by the receiver. A proof of claim filed with the receiver is

considered filed in an official proceeding for purposes of

Chapter 37, Penal Code.

instrument, unless lost or destroyed, must be filed with the

proof of claim. After the instrument is filed, the receiver may

permit the claimant to substitute a copy of the instrument until

the final disposition of the claim. If the instrument is lost or

destroyed, a statement of that fact and of the circumstances of

the loss or destruction must be filed under oath with the claim.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.303. JUDGMENT AS PROOF OF CLAIM. (a) A judgment

entered against a state trust company in liquidation before the

date the state trust company was closed for liquidation may not

be given higher priority than a claim of an unsecured creditor

unless the judgment creditor in a proof of claim proves the

allegations supporting the judgment to the receiver's

satisfaction.

(b) A judgment against the state trust company taken by default

or by collusion before the date the state trust company was

closed for liquidation may not be considered as conclusive

evidence of the liability of the state trust company to the

judgment creditor or of the amount of damages to which the

judgment creditor is entitled.

date the state trust company was closed for liquidation may not

be considered as evidence of liability or of the amount of

damages.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.304. SECURED CLAIM. (a) The owner of a secured

deposit may file a claim as a creditor against a state trust

company in liquidation. The value of security shall be determined

under supervision of the court by converting the security into

money.

(b) The owner of a secured claim against a state trust company

in liquidation may:

(1) surrender the security and file a claim as a general

creditor; or

(2) apply the security to the claim and discharge the claim.

under Subsection (b), any deficiency shall be treated as a claim

against the general assets of the state trust company on the same

basis as a claim of an unsecured creditor. The amount of the

deficiency shall be determined as provided by Section 186.305,

except that if the amount of the deficiency has been adjudicated

by a court in a proceeding in which the receiver has had notice

and an opportunity to be heard, the court's decision is

conclusive as to the amount.

(d) The value of security held by a secured creditor shall be

determined under supervision of the court by:

(1) converting the security into money according to the terms of

the agreement under which the security was delivered to the

creditor; or

(2) agreement, arbitration, compromise, or litigation between

the creditor and the receiver.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.305. UNLIQUIDATED OR UNDETERMINED CLAIM. (a) A claim

based on an unliquidated or undetermined demand shall be filed

within the period provided by Subchapter C for the filing of a

claim. The claim may not share in any distribution to claimants

until the claim is definitely liquidated, determined, and

allowed. After the claim is liquidated, determined, and allowed,

the claim shares ratably with the claims of the same class in all

subsequent distributions.

(b) For the purposes of this section, a demand is considered

unliquidated or undetermined if the right of action on the demand

accrued while a state trust company was closed for liquidation

and the liability on the demand has not been determined or the

amount of the demand has not been liquidated.

close the receivership proceeding, the proposed closing is

sufficient grounds for the rejection of any remaining claim based

on an unliquidated or undetermined demand. The receiver shall

notify the claimant of the intention to close the proceeding. If

the demand is not liquidated or determined before the 61st day

after the date of the notice, the receiver may reject the claim.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.306. SET-OFF. (a) Mutual credits and mutual debts

shall be set off and only the balance allowed or paid, except

that a set-off may not be allowed in favor of a person if:

(1) the obligation of a state trust company to the person on the

date the state trust company was closed for liquidation did not

entitle the person to share as a claimant in the assets of the

state trust company;

(2) the obligation of the state trust company to the person was

purchased by or transferred to the person after the date the

state trust company was closed for liquidation or for the purpose

of increasing set-off rights; or

(3) the obligation of the person or the state trust company is

as a trustee or fiduciary.

(b) On request, the receiver shall provide a person with an

accounting statement identifying each debt that is due and

payable. A person who owes a state trust company an amount that

is due and payable against which the person asserts set-off of

mutual credits that may become due and payable from the state

trust company in the future shall promptly pay to the receiver

the amount due and payable. The receiver shall promptly refund,

to the extent of the person's prior payment, mutual credits that

become due and payable to the person by the state trust company

in liquidation.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 186.307. ACTION ON CLAIM. (a) Not later than six months

after the last day permitted for the filing of claims or a later

date allowed by the court, the receiver shall accept or reject in

whole or in part each claim filed against the state trust company

in liquidation, except for an unliquidate

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

Loading..

Loading, Please Wait!