By:  Montford                                         S.B. No. 1214
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to priority of claims in distribution of the assets of a
    1-2  trust company on its liquidation.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Article 2, Chapter XI, The Texas Banking Code
    1-5  (Article 342-1102, Vernon's Texas Civil Statutes), is amended to
    1-6  read as follows:
    1-7        Art. 2.  APPLICABILITY OF STATE BANKING CODE.  Unless
    1-8  otherwise provided in this chapter, a trust company is subject to
    1-9  the provisions of Chapters I, II, III, IV, V, VIII, and IX of this
   1-10  code as if the trust company were a state bank; provided, however,
   1-11  that Article 1, Chapter III, relating to banking powers, Article
   1-12  11a, Chapter IV, relating to securities law exemption, Article 4a,
   1-13  Chapter VIII, relating to priority of distribution in liquidation,
   1-14  and Article 3, Chapter IX, relating to limited branch banking shall
   1-15  not apply.
   1-16        SECTION 2.  Chapter XI, The Texas Banking Code (Article
   1-17  342-1102 et seq., Vernon's Texas Civil Statutes), is amended by
   1-18  adding Article 14 to read as follows:
   1-19        Art. 14.  PRIORITY OF CLAIMS.
   1-20        Sec. 1.  On liquidation of a trust company, claims for
   1-21  payment against that trust company have the following priority:
   1-22              (1)  obligations incurred by the Banking Commissioner,
   1-23  fees and assessments due to the Banking Department, and expenses of
    2-1  liquidation, including any taxes due, all of which may be covered
    2-2  by a proper reserve of funds;
    2-3              (2)  claims of trust account holders having an approved
    2-4  claim against the general liquidating account of the trust company;
    2-5              (3)  claims of salaried employees of the trust company
    2-6  for salaries that are earned but unpaid at the time the trust
    2-7  company is closed;
    2-8              (4)  claims of general creditors having an approved
    2-9  claim against the general liquidating account of the trust company;
   2-10              (5)  claims otherwise proper that were not filed within
   2-11  the time prescribed by this code;
   2-12              (6)  approved claims of subordinated creditors; and
   2-13              (7)  claims of stockholders of the trust company.
   2-14        Sec. 2.  The receiver shall make a ratable distribution
   2-15  within the priority of the funds of the liquidation on all such
   2-16  claims that have been approved if there are insufficient funds to
   2-17  satisfy the claims fully.
   2-18        SECTION 3.  The change in law made by this Act applies only
   2-19  to the liquidation of a trust company that begins on or after the
   2-20  effective date of this Act.
   2-21        SECTION 4.  The importance of this legislation and the
   2-22  crowded condition of the calendars in both houses create an
   2-23  emergency and an imperative public necessity that the
   2-24  constitutional rule requiring bills to be read on three several
   2-25  days in each house be suspended, and this rule is hereby suspended.