KRS 286.3-260: Liquidation of investment fund.

If any trust company or bank, having established an investment fund as provided in KRS

286.3-240, determines that there is an apparent loss in such fund, over and above the

account to be reserved to cover such loss, then the trust company or bank shall at once

proceed to liquidate the investment fund. In such liquidation the trust company or bank

shall, except as hereinafter provided, distribute pro rata on account of the principal of the

outstanding participation certificates, all principal realized from t he investment fund, and

shall likewise distribute on account of interest all income earned by the fund. Where the

principal and interest on a particular mortgage is not collected in full, then the amount

realized shall, after the payment of any costs incur red in its collection, be first used in

making whole the principal of the mortgage debt, and any balance remaining shall be

applied to interest. In such liquidation the trust company or bank, instead of distributing

pro rata on account of participation certificates all cash realized from the investment fund,

may use a portion of such cash in retiring and canceling participation certificates, but in

retiring and canceling participation certificates under these conditions, the trust company

or bank shall esti mate the apparent loss in principal and interest in the investment fund,

over and above the reserve account to cover such loss, and shall pay for the certificates to

be retired and canceled, the amount invested in such certificates, less the loss as to

principal and interest determined as provided above. Any person entitled to the

distribution in kind of such certificates who is not satisfied with the trust company's or

bank's determination of loss, may demand and receive distribution in kind of such

certificates.