H.B. No. 2529
1-1 AN ACT
1-2 relating to the conservation of credit unions.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 10.01, Texas Credit Union Act (Article
1-5 2461-10.01, Vernon's Texas Civil Statutes), is amended to read as
1-6 follows:
1-7 Sec. 10.01. <SUSPENSION AND> CONSERVATION. (a) The
1-8 commissioner may determine in the performance of his duties under
1-9 this Act that the credit union is insolvent or in imminent danger
1-10 of insolvency, or that an officer, director, honorary director,
1-11 advisory director, or employee of a credit union, or the credit
1-12 union itself, acting by and through an officer, director, honorary
1-13 director, advisory director, or employee, has:
1-14 (1) violated this Act, a rule adopted under this Act,
1-15 or any other law, rule, or regulation applicable to credit unions;
1-16 (2) violated, neglected, or refused to comply with a
1-17 duly issued final order of the commissioner or commission;
1-18 (3) refused to submit to examination under oath, or to
1-19 permit examination of the credit union's books, papers, records,
1-20 accounts, and affairs by the commissioner or a duly authorized
1-21 representative of the commissioner;
1-22 (4) failed or refused to authorize and direct any
1-23 other person to permit the inspection and examination of the credit
1-24 union's books, papers, records, or accounts in the other person's
2-1 care, possession, custody, or control by the commissioner or a duly
2-2 authorized representative of the commissioner, after the
2-3 commissioner has requested the granting of that authority and
2-4 direction to the other person; or
2-5 (5) conducted the credit union's business in an
2-6 unsafe, unauthorized, or unlawful manner.
2-7 (b) If the commissioner makes any of these findings and<,
2-8 he may issue an order temporarily suspending the credit union's
2-9 operations for not more than 90 days or, if the commissioner>
2-10 determines that the findings are of such severity that immediate
2-11 affirmative action is needed to prevent further dissipation of the
2-12 assets of the credit union, the commissioner may immediately issue
2-13 an order of conservation and appoint a conservator to manage the
2-14 affairs of the credit union. Service of the order of conservation
2-15 shall be delivered to an officer or director of the credit union by
2-16 the commissioner, the deputy commissioner, or any other authorized
2-17 designee. If no officer or director is available for service on
2-18 the date of issuance, mail delivery is authorized. Service by
2-19 certified or registered mail, addressed to the credit union at the
2-20 last address of its principal office as shown by the records of the
2-21 department <suspension or the order of conservation must be by
2-22 certified or registered mail, addressed to the credit union at the
2-23 last address of its principal office, as shown by the records of
2-24 the department, or by delivery to an officer or director of the
2-25 credit union. Service by mail> is complete on deposit of the
2-26 paper, enclosed in a postpaid, properly addressed wrapper, in a
2-27 post office or official depository under the care and custody of
3-1 the United States Postal Service. The order must clearly state the
3-2 grounds for <suspension or> conservation.
3-3 (c) After a conservation <suspension> order has been served
3-4 on the credit union, the commissioner shall take possession and
3-5 control of the books, records, property, assets, and business of
3-6 the credit union, and the credit union shall cease all operations,
3-7 except those authorized by the commissioner and conducted under his
3-8 supervision. Subject to rules adopted by the commission and under
3-9 the supervision of the commissioner, the conservator may:
3-10 (1) take charge of the books, records, property,
3-11 assets, and business of the credit union and conduct the business
3-12 and affairs of the credit union;
3-13 (2) determine the existence of and the amount of any
3-14 claims and allow proved claims of security, preference, or priority
3-15 or disallow claims of security, preference, or priority not proved;
3-16 (3) repudiate any contract or unexpired lease the
3-17 conservator considers burdensome to the credit union;
3-18 (4) sell or assign assets to himself or herself;
3-19 (5) settle, compromise, or release claims in favor of
3-20 or against the credit union; and
3-21 (6) do all other things that may be necessary in
3-22 connection with the conservation.
3-23 (d) The conservator shall take the steps toward the removal
3-24 of the causes and conditions that have necessitated the order that
3-25 the commissioner directs. During the conservatorship, the
3-26 conservator shall make the reports to the commissioner from time to
3-27 time that the commissioner requires. The conservator may:
4-1 (1) take all necessary measures to preserve, protect,
4-2 and recover the assets or property of the credit union, including
4-3 claims or causes of action belonging to or that may be asserted by
4-4 the credit union;
4-5 (2) deal with that property in his or her own name as
4-6 conservator; and
4-7 (3) file, prosecute, or defend against a suit by or
4-8 against the credit union if the conservator considers this action
4-9 necessary to protect the interested parties or property affected by
4-10 the suit.
4-11 (e) The commissioner shall determine the cost incident to
4-12 the conservatorship. This cost is a charge against the assets and
4-13 funds of the credit union to be allowed and paid as the
4-14 commissioner directs.
4-15 (f) A court may not restrain or affect the exercise of the
4-16 powers or functions of the conservator of a credit union, and no
4-17 court has jurisdiction over claims against the conservator or the
4-18 credit union, until all administrative remedies have been
4-19 exhausted. A suit filed against a credit union or its conservator
4-20 while a conservatorship order is in effect must be brought in a
4-21 court of competent jurisdiction in Travis County. The conservator
4-22 may file suit in a court of competent jurisdiction in Travis County
4-23 against any person for the purpose of preserving, protecting, or
4-24 recovering assets or property of the credit union, including a
4-25 claim or cause of action belonging to or that may be asserted by
4-26 the credit union.
4-27 (g) The conservator shall serve for the period necessary to
5-1 accomplish the purposes of the conservatorship as intended by this
5-2 Act. If the credit union is rehabilitated, it shall be returned to
5-3 the management of the board of directors under the terms that are
5-4 reasonable and necessary to prevent recurrence of the conditions
5-5 that occasioned the conservatorship.
5-6 (h) If the commissioner determines that the credit union in
5-7 conservatorship is not in a condition to continue business and
5-8 cannot be rehabilitated as provided by this section, he may issue
5-9 an order of liquidation appointing a liquidating agent.
5-10 (i) An agreement that tends to diminish or defeat the
5-11 right, title, or interest of the conservator in any asset acquired
5-12 by the conservator under this section, either as security for a
5-13 loan or by purchase, is invalid against the conservator unless the
5-14 agreement is:
5-15 (1) in writing;
5-16 (2) executed by the credit union and each person
5-17 claiming an adverse interest under the agreement, including the
5-18 obligor, contemporaneously with the acquisition of the asset by the
5-19 credit union;
5-20 (3) approved by the board of directors of the credit
5-21 union, with the approval recorded in the minutes of the board; and
5-22 (4) an official record of the credit union
5-23 continuously from the time of its execution.
5-24 (j) Not later than the 30th day after the date an order of
5-25 conservation is served, the board of directors of the credit union
5-26 shall file a written reply to the order. In addition, the credit
5-27 union board of directors may appeal the order to the commission by
6-1 filing with the commissioner a written appeal, including a duly
6-2 certified resolution of the board. If the board of directors files
6-3 an appeal and requests a hearing, the commissioner shall promptly
6-4 request a hearing date from the State Office of Administrative
6-5 Hearings that is not less than 10 or more than 30 days after the
6-6 date of receipt of the request. The commissioner shall give notice
6-7 to the credit union of the date, time, and place of the hearing.
6-8 The filing of an appeal does not suspend the effect of the order of
6-9 conservation, and the order remains in force pending final
6-10 disposition of the appeal by the commission. Not later than the
6-11 45th day after receipt of a proposal for decision from the State
6-12 Office of Administrative Hearings, the commission shall meet to
6-13 consider the proposal for decision <Not later than 15 days after
6-14 the date an order of suspension or conservation is served, the
6-15 board of directors shall file a written reply to the order, and
6-16 may file a written request for a hearing to present to the
6-17 commissioner a plan to continue operations under the control of the
6-18 board of directors setting out proposed corrective actions. If
6-19 under an order of suspension, the board of directors may request
6-20 that a conservator be appointed for the credit union or that the
6-21 credit union be closed and a liquidating agent be appointed and
6-22 waive rights to further appeal, in which event the commissioner may
6-23 immediately appoint a conservator, or order that the credit union
6-24 be liquidated and appoint a liquidating agent. If under an order
6-25 of conservation, the board of directors may consent to the
6-26 conservatorship and waive rights to further appeals.>
6-27 <(d) If the board of directors files its reply and requests
7-1 a hearing as provided by Subsection (c), the commissioner shall
7-2 set and hold the hearing not less than 10 nor more than 30 days
7-3 after the date of receipt of such a request. The commissioner
7-4 shall promptly give notice to the credit union of the date, time,
7-5 and place of the hearing. Not later than 10 days after the earlier
7-6 of the date of conclusion of the hearing or the date on which the
7-7 suspension expires, the commissioner shall adopt the plan to
7-8 continue operations under the control of the board of directors
7-9 presented by the credit union, agree with the credit union on an
7-10 alternative plan to continue operations under the control of the
7-11 board of directors or other appropriate measures, reject the plan
7-12 to continue operations under the control of the board of directors
7-13 and issue an order of conservation appointing a conservator,
7-14 continue a previous order of conservation, or issue an order of
7-15 liquidation ordering that the credit union be closed, ordering that
7-16 its affairs and business be liquidated, and appointing a
7-17 liquidating agent.>
7-18 <(e) If the commissioner rejects the credit union's plan to
7-19 continue operations and determines that it is in the public
7-20 interest and in the best interest of the members, depositors, and
7-21 creditors of the credit union to rehabilitate the credit union, he
7-22 may permit the credit union to operate under his direction and
7-23 control, and shall issue an order of conservation appointing a
7-24 conservator to manage the affairs of the credit union. The
7-25 commissioner shall serve the order of conservation in the same
7-26 manner as provided for service of an order of suspension.>
7-27 <(f) Subject to rules adopted by the commission and under
8-1 the supervision of the commissioner, the conservator may take
8-2 charge of the books, records, property, assets, and business of the
8-3 credit union and conduct the business and affairs of the credit
8-4 union; determine the existence of and the amount of any claims and
8-5 allow proved claims of security, preference, or priority or
8-6 disallow claims of security, preference, or priority not proved;
8-7 repudiate any contract or unexpired lease the conservator considers
8-8 burdensome to the credit union; sell or assign assets to himself;
8-9 settle, compromise, or release claims in favor of or against the
8-10 credit union; and do all other things that may be necessary in
8-11 connection with the conservation. The conservator shall take the
8-12 steps toward the removal of the causes and conditions that have
8-13 necessitated the order that the commissioner directs. During the
8-14 conservatorship, the conservator shall make the reports to the
8-15 commissioner from time to time that the commissioner requires. The
8-16 conservator may take all necessary measures to preserve, protect,
8-17 and recover the assets or property of the credit union, including
8-18 claims or causes of action belonging to or that may be asserted by
8-19 the credit union, may deal with that property in his own name as
8-20 conservator, and may file, prosecute, or defend against a suit by
8-21 or against the credit union if the conservator considers this
8-22 action necessary to protect the interested parties or property
8-23 affected by the suit.>
8-24 <(g) The commissioner shall determine the cost incident to
8-25 the conservatorship. This cost is a charge against the assets and
8-26 funds of the credit union to be allowed and paid as the
8-27 commissioner directs.>
9-1 <(h) No court may restrain or affect the exercise of the
9-2 powers or functions of the conservator of a credit union, and no
9-3 court has jurisdiction over claims against the conservator or the
9-4 credit union, until all administrative remedies have been
9-5 exhausted. A suit filed against a credit union or its conservator
9-6 while a conservatorship order is in effect must be brought in a
9-7 court of competent jurisdiction in Travis County. The conservator
9-8 may file suit in a court of competent jurisdiction in Travis County
9-9 against any person for the purpose of preserving, protecting, or
9-10 recovering assets or property of the credit union, including a
9-11 claim or cause of action belonging to or that may be asserted by
9-12 the credit union.>
9-13 <(i) The conservator shall serve for the period necessary to
9-14 accomplish the purposes of the conservatorship as intended by this
9-15 Act. If the credit union is rehabilitated, it shall be returned to
9-16 the management of the board of directors under the terms that are
9-17 reasonable and necessary to prevent recurrence of the conditions
9-18 that occasioned the conservatorship.>
9-19 <(j) If the commissioner determines that the credit union in
9-20 conservatorship is not in a condition to continue business and
9-21 cannot be rehabilitated as provided by this section, he may issue
9-22 an order of liquidation appointing a liquidating agent.>
9-23 <(k) If, after a hearing under this section, the board of
9-24 directors of the credit union is dissatisfied with the decision of
9-25 the commissioner, the board may appeal to the commission by filing
9-26 with the commissioner a written appeal, including a duly certified
9-27 resolution of the board, not later than 10 days after the day that
10-1 the commissioner's order is served. If an appeal is duly filed,
10-2 the commissioner shall set a date for a hearing on the appeal not
10-3 more than 30 days after the date on which the appeal is filed. The
10-4 commissioner shall promptly give notice of the date, time, and
10-5 place of the hearing to the credit union and any other interested
10-6 party. The filing of an appeal does not suspend the effect of the
10-7 order of conservation and this order remains in force pending
10-8 final disposition of the appeal by the commission. At the
10-9 conclusion of the hearing, the commission may reverse the order of
10-10 the commissioner and adopt and approve the credit union's plan to
10-11 continue operations, affirm the commissioner's order of
10-12 conservation, or order that other appropriate action be taken>.
10-13 (k) <(l)> If the board of directors of the credit union does
10-14 not file a reply to the <order of suspension or an> order of
10-15 conservation as required by this section or fails to request and
10-16 appear at the hearing provided for by this section, the
10-17 commissioner may dispose of the matter as he considers appropriate.
10-18 The credit union is presumed to have consented to this action and
10-19 may not contest it.
10-20 (l) <(m)> The <period of suspension and the> date and time
10-21 of the hearings provided for by this section may be extended by
10-22 agreement of the parties <and the commissioner>.
10-23 (m) <(n) No agreement that tends to diminish or defeat the
10-24 right, title, or interest of the conservator in any asset acquired
10-25 by the conservator under this section, either as security for a
10-26 loan or by purchase, is valid against the conservator unless the
10-27 agreement is:>
11-1 <(1) in writing;>
11-2 <(2) executed by the credit union and each person
11-3 claiming an adverse interest under the agreement, including the
11-4 obligor, contemporaneously with the acquisition of the asset by the
11-5 credit union;>
11-6 <(3) approved by the board of directors of the credit
11-7 union, with the approval recorded in the minutes of the board; and>
11-8 <(4) an official record of the credit union
11-9 continuously from the time of its execution.>
11-10 <(o)> Orders <of suspension, orders> of conservation<,> and
11-11 copies of all notices and correspondence relating to those orders
11-12 are confidential and may not be publicized or revealed to the
11-13 public except in related legal proceedings or as otherwise
11-14 authorized by law.
11-15 SECTION 2. The importance of this legislation and the
11-16 crowded condition of the calendars in both houses create an
11-17 emergency and an imperative public necessity that the
11-18 constitutional rule requiring bills to be read on three several
11-19 days in each house be suspended, and this rule is hereby suspended,
11-20 and that this Act take effect and be in force from and after its
11-21 passage, and it is so enacted.