1-1 By: Marchant (Senate Sponsor - Lucio) H.B. No. 2529
1-2 (In the Senate - Received from the House April 21, 1995;
1-3 April 24, 1995, read first time and referred to Committee on
1-4 Economic Development; May 22, 1995, reported favorably by the
1-5 following vote: Yeas 7, Nays 0; May 22, 1995, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the conservation of credit unions.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 SECTION 1. Section 10.01, Texas Credit Union Act (Article
1-11 2461-10.01, Vernon's Texas Civil Statutes), is amended to read as
1-12 follows:
1-13 Sec. 10.01. <SUSPENSION AND> CONSERVATION. (a) The
1-14 commissioner may determine in the performance of his duties under
1-15 this Act that the credit union is insolvent or in imminent danger
1-16 of insolvency, or that an officer, director, honorary director,
1-17 advisory director, or employee of a credit union, or the credit
1-18 union itself, acting by and through an officer, director, honorary
1-19 director, advisory director, or employee, has:
1-20 (1) violated this Act, a rule adopted under this Act,
1-21 or any other law, rule, or regulation applicable to credit unions;
1-22 (2) violated, neglected, or refused to comply with a
1-23 duly issued final order of the commissioner or commission;
1-24 (3) refused to submit to examination under oath, or to
1-25 permit examination of the credit union's books, papers, records,
1-26 accounts, and affairs by the commissioner or a duly authorized
1-27 representative of the commissioner;
1-28 (4) failed or refused to authorize and direct any
1-29 other person to permit the inspection and examination of the credit
1-30 union's books, papers, records, or accounts in the other person's
1-31 care, possession, custody, or control by the commissioner or a duly
1-32 authorized representative of the commissioner, after the
1-33 commissioner has requested the granting of that authority and
1-34 direction to the other person; or
1-35 (5) conducted the credit union's business in an
1-36 unsafe, unauthorized, or unlawful manner.
1-37 (b) If the commissioner makes any of these findings and<,
1-38 he may issue an order temporarily suspending the credit union's
1-39 operations for not more than 90 days or, if the commissioner>
1-40 determines that the findings are of such severity that immediate
1-41 affirmative action is needed to prevent further dissipation of the
1-42 assets of the credit union, the commissioner may immediately issue
1-43 an order of conservation and appoint a conservator to manage the
1-44 affairs of the credit union. Service of the order of conservation
1-45 shall be delivered to an officer or director of the credit union by
1-46 the commissioner, the deputy commissioner, or any other authorized
1-47 designee. If no officer or director is available for service on
1-48 the date of issuance, mail delivery is authorized. Service by
1-49 certified or registered mail, addressed to the credit union at the
1-50 last address of its principal office as shown by the records of the
1-51 department <suspension or the order of conservation must be by
1-52 certified or registered mail, addressed to the credit union at the
1-53 last address of its principal office, as shown by the records of
1-54 the department, or by delivery to an officer or director of the
1-55 credit union. Service by mail> is complete on deposit of the
1-56 paper, enclosed in a postpaid, properly addressed wrapper, in a
1-57 post office or official depository under the care and custody of
1-58 the United States Postal Service. The order must clearly state the
1-59 grounds for <suspension or> conservation.
1-60 (c) After a conservation <suspension> order has been served
1-61 on the credit union, the commissioner shall take possession and
1-62 control of the books, records, property, assets, and business of
1-63 the credit union, and the credit union shall cease all operations,
1-64 except those authorized by the commissioner and conducted under his
1-65 supervision. Subject to rules adopted by the commission and under
1-66 the supervision of the commissioner, the conservator may:
1-67 (1) take charge of the books, records, property,
1-68 assets, and business of the credit union and conduct the business
2-1 and affairs of the credit union;
2-2 (2) determine the existence of and the amount of any
2-3 claims and allow proved claims of security, preference, or priority
2-4 or disallow claims of security, preference, or priority not proved;
2-5 (3) repudiate any contract or unexpired lease the
2-6 conservator considers burdensome to the credit union;
2-7 (4) sell or assign assets to himself or herself;
2-8 (5) settle, compromise, or release claims in favor of
2-9 or against the credit union; and
2-10 (6) do all other things that may be necessary in
2-11 connection with the conservation.
2-12 (d) The conservator shall take the steps toward the removal
2-13 of the causes and conditions that have necessitated the order that
2-14 the commissioner directs. During the conservatorship, the
2-15 conservator shall make the reports to the commissioner from time to
2-16 time that the commissioner requires. The conservator may:
2-17 (1) take all necessary measures to preserve, protect,
2-18 and recover the assets or property of the credit union, including
2-19 claims or causes of action belonging to or that may be asserted by
2-20 the credit union;
2-21 (2) deal with that property in his or her own name as
2-22 conservator; and
2-23 (3) file, prosecute, or defend against a suit by or
2-24 against the credit union if the conservator considers this action
2-25 necessary to protect the interested parties or property affected by
2-26 the suit.
2-27 (e) The commissioner shall determine the cost incident to
2-28 the conservatorship. This cost is a charge against the assets and
2-29 funds of the credit union to be allowed and paid as the
2-30 commissioner directs.
2-31 (f) A court may not restrain or affect the exercise of the
2-32 powers or functions of the conservator of a credit union, and no
2-33 court has jurisdiction over claims against the conservator or the
2-34 credit union, until all administrative remedies have been
2-35 exhausted. A suit filed against a credit union or its conservator
2-36 while a conservatorship order is in effect must be brought in a
2-37 court of competent jurisdiction in Travis County. The conservator
2-38 may file suit in a court of competent jurisdiction in Travis County
2-39 against any person for the purpose of preserving, protecting, or
2-40 recovering assets or property of the credit union, including a
2-41 claim or cause of action belonging to or that may be asserted by
2-42 the credit union.
2-43 (g) The conservator shall serve for the period necessary to
2-44 accomplish the purposes of the conservatorship as intended by this
2-45 Act. If the credit union is rehabilitated, it shall be returned to
2-46 the management of the board of directors under the terms that are
2-47 reasonable and necessary to prevent recurrence of the conditions
2-48 that occasioned the conservatorship.
2-49 (h) If the commissioner determines that the credit union in
2-50 conservatorship is not in a condition to continue business and
2-51 cannot be rehabilitated as provided by this section, he may issue
2-52 an order of liquidation appointing a liquidating agent.
2-53 (i) An agreement that tends to diminish or defeat the
2-54 right, title, or interest of the conservator in any asset acquired
2-55 by the conservator under this section, either as security for a
2-56 loan or by purchase, is invalid against the conservator unless the
2-57 agreement is:
2-58 (1) in writing;
2-59 (2) executed by the credit union and each person
2-60 claiming an adverse interest under the agreement, including the
2-61 obligor, contemporaneously with the acquisition of the asset by the
2-62 credit union;
2-63 (3) approved by the board of directors of the credit
2-64 union, with the approval recorded in the minutes of the board; and
2-65 (4) an official record of the credit union
2-66 continuously from the time of its execution.
2-67 (j) Not later than the 30th day after the date an order of
2-68 conservation is served, the board of directors of the credit union
2-69 shall file a written reply to the order. In addition, the credit
2-70 union board of directors may appeal the order to the commission by
3-1 filing with the commissioner a written appeal, including a duly
3-2 certified resolution of the board. If the board of directors files
3-3 an appeal and requests a hearing, the commissioner shall promptly
3-4 request a hearing date from the State Office of Administrative
3-5 Hearings that is not less than 10 or more than 30 days after the
3-6 date of receipt of the request. The commissioner shall give notice
3-7 to the credit union of the date, time, and place of the hearing.
3-8 The filing of an appeal does not suspend the effect of the order of
3-9 conservation, and the order remains in force pending final
3-10 disposition of the appeal by the commission. Not later than the
3-11 45th day after receipt of a proposal for decision from the State
3-12 Office of Administrative Hearings, the commission shall meet to
3-13 consider the proposal for decision <Not later than 15 days after
3-14 the date an order of suspension or conservation is served, the
3-15 board of directors shall file a written reply to the order, and
3-16 may file a written request for a hearing to present to the
3-17 commissioner a plan to continue operations under the control of the
3-18 board of directors setting out proposed corrective actions. If
3-19 under an order of suspension, the board of directors may request
3-20 that a conservator be appointed for the credit union or that the
3-21 credit union be closed and a liquidating agent be appointed and
3-22 waive rights to further appeal, in which event the commissioner may
3-23 immediately appoint a conservator, or order that the credit union
3-24 be liquidated and appoint a liquidating agent. If under an order
3-25 of conservation, the board of directors may consent to the
3-26 conservatorship and waive rights to further appeals.>
3-27 <(d) If the board of directors files its reply and requests
3-28 a hearing as provided by Subsection (c), the commissioner shall
3-29 set and hold the hearing not less than 10 nor more than 30 days
3-30 after the date of receipt of such a request. The commissioner
3-31 shall promptly give notice to the credit union of the date, time,
3-32 and place of the hearing. Not later than 10 days after the earlier
3-33 of the date of conclusion of the hearing or the date on which the
3-34 suspension expires, the commissioner shall adopt the plan to
3-35 continue operations under the control of the board of directors
3-36 presented by the credit union, agree with the credit union on an
3-37 alternative plan to continue operations under the control of the
3-38 board of directors or other appropriate measures, reject the plan
3-39 to continue operations under the control of the board of directors
3-40 and issue an order of conservation appointing a conservator,
3-41 continue a previous order of conservation, or issue an order of
3-42 liquidation ordering that the credit union be closed, ordering that
3-43 its affairs and business be liquidated, and appointing a
3-44 liquidating agent.>
3-45 <(e) If the commissioner rejects the credit union's plan to
3-46 continue operations and determines that it is in the public
3-47 interest and in the best interest of the members, depositors, and
3-48 creditors of the credit union to rehabilitate the credit union, he
3-49 may permit the credit union to operate under his direction and
3-50 control, and shall issue an order of conservation appointing a
3-51 conservator to manage the affairs of the credit union. The
3-52 commissioner shall serve the order of conservation in the same
3-53 manner as provided for service of an order of suspension.>
3-54 <(f) Subject to rules adopted by the commission and under
3-55 the supervision of the commissioner, the conservator may take
3-56 charge of the books, records, property, assets, and business of the
3-57 credit union and conduct the business and affairs of the credit
3-58 union; determine the existence of and the amount of any claims and
3-59 allow proved claims of security, preference, or priority or
3-60 disallow claims of security, preference, or priority not proved;
3-61 repudiate any contract or unexpired lease the conservator considers
3-62 burdensome to the credit union; sell or assign assets to himself;
3-63 settle, compromise, or release claims in favor of or against the
3-64 credit union; and do all other things that may be necessary in
3-65 connection with the conservation. The conservator shall take the
3-66 steps toward the removal of the causes and conditions that have
3-67 necessitated the order that the commissioner directs. During the
3-68 conservatorship, the conservator shall make the reports to the
3-69 commissioner from time to time that the commissioner requires. The
3-70 conservator may take all necessary measures to preserve, protect,
4-1 and recover the assets or property of the credit union, including
4-2 claims or causes of action belonging to or that may be asserted by
4-3 the credit union, may deal with that property in his own name as
4-4 conservator, and may file, prosecute, or defend against a suit by
4-5 or against the credit union if the conservator considers this
4-6 action necessary to protect the interested parties or property
4-7 affected by the suit.>
4-8 <(g) The commissioner shall determine the cost incident to
4-9 the conservatorship. This cost is a charge against the assets and
4-10 funds of the credit union to be allowed and paid as the
4-11 commissioner directs.>
4-12 <(h) No court may restrain or affect the exercise of the
4-13 powers or functions of the conservator of a credit union, and no
4-14 court has jurisdiction over claims against the conservator or the
4-15 credit union, until all administrative remedies have been
4-16 exhausted. A suit filed against a credit union or its conservator
4-17 while a conservatorship order is in effect must be brought in a
4-18 court of competent jurisdiction in Travis County. The conservator
4-19 may file suit in a court of competent jurisdiction in Travis County
4-20 against any person for the purpose of preserving, protecting, or
4-21 recovering assets or property of the credit union, including a
4-22 claim or cause of action belonging to or that may be asserted by
4-23 the credit union.>
4-24 <(i) The conservator shall serve for the period necessary to
4-25 accomplish the purposes of the conservatorship as intended by this
4-26 Act. If the credit union is rehabilitated, it shall be returned to
4-27 the management of the board of directors under the terms that are
4-28 reasonable and necessary to prevent recurrence of the conditions
4-29 that occasioned the conservatorship.>
4-30 <(j) If the commissioner determines that the credit union in
4-31 conservatorship is not in a condition to continue business and
4-32 cannot be rehabilitated as provided by this section, he may issue
4-33 an order of liquidation appointing a liquidating agent.>
4-34 <(k) If, after a hearing under this section, the board of
4-35 directors of the credit union is dissatisfied with the decision of
4-36 the commissioner, the board may appeal to the commission by filing
4-37 with the commissioner a written appeal, including a duly certified
4-38 resolution of the board, not later than 10 days after the day that
4-39 the commissioner's order is served. If an appeal is duly filed,
4-40 the commissioner shall set a date for a hearing on the appeal not
4-41 more than 30 days after the date on which the appeal is filed. The
4-42 commissioner shall promptly give notice of the date, time, and
4-43 place of the hearing to the credit union and any other interested
4-44 party. The filing of an appeal does not suspend the effect of the
4-45 order of conservation and this order remains in force pending
4-46 final disposition of the appeal by the commission. At the
4-47 conclusion of the hearing, the commission may reverse the order of
4-48 the commissioner and adopt and approve the credit union's plan to
4-49 continue operations, affirm the commissioner's order of
4-50 conservation, or order that other appropriate action be taken>.
4-51 (k) <(l)> If the board of directors of the credit union does
4-52 not file a reply to the <order of suspension or an> order of
4-53 conservation as required by this section or fails to request and
4-54 appear at the hearing provided for by this section, the
4-55 commissioner may dispose of the matter as he considers appropriate.
4-56 The credit union is presumed to have consented to this action and
4-57 may not contest it.
4-58 (l) <(m)> The <period of suspension and the> date and time
4-59 of the hearings provided for by this section may be extended by
4-60 agreement of the parties <and the commissioner>.
4-61 (m) <(n) No agreement that tends to diminish or defeat the
4-62 right, title, or interest of the conservator in any asset acquired
4-63 by the conservator under this section, either as security for a
4-64 loan or by purchase, is valid against the conservator unless the
4-65 agreement is:>
4-66 <(1) in writing;>
4-67 <(2) executed by the credit union and each person
4-68 claiming an adverse interest under the agreement, including the
4-69 obligor, contemporaneously with the acquisition of the asset by the
4-70 credit union;>
5-1 <(3) approved by the board of directors of the credit
5-2 union, with the approval recorded in the minutes of the board; and>
5-3 <(4) an official record of the credit union
5-4 continuously from the time of its execution.>
5-5 <(o)> Orders <of suspension, orders> of conservation<,> and
5-6 copies of all notices and correspondence relating to those orders
5-7 are confidential and may not be publicized or revealed to the
5-8 public except in related legal proceedings or as otherwise
5-9 authorized by law.
5-10 SECTION 2. The importance of this legislation and the
5-11 crowded condition of the calendars in both houses create an
5-12 emergency and an imperative public necessity that the
5-13 constitutional rule requiring bills to be read on three several
5-14 days in each house be suspended, and this rule is hereby suspended,
5-15 and that this Act take effect and be in force from and after its
5-16 passage, and it is so enacted.
5-17 * * * * *