By: Montford S.B. No. 1214 A BILL TO BE ENTITLED AN ACT 1-1 relating to the priority for the 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 Sec. 1. PRIORITY OF CLAIMS. On liquidation of a trust 1-20 company, claims for payment against that trust company have the 1-21 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.