N.Y. Banking Law § 605: Voluntary liquidation; sale of assets; forfeiture of charter by non-user

§ 605. Voluntary liquidation; sale of assets; forfeiture of charter by

non-user. 1. Any corporate banking organization, the assets of which

have a value at least equal to its liabilities, exclusive of any

liability to shareholders or stockholders, as such, may voluntarily wind

up its affairs; but no banking organization of which the superintendent

has taken possession in accordance with the provisions of section six

hundred six of this chapter shall take any steps for such voluntary

dissolution until it has received the written approval of the

superintendent.

2. To effect a voluntary dissolution of any corporation, a meeting of

the stockholders or shareholders of such corporation having full voting

rights, and if applicable any other stockholders or shareholders

authorized by the organization certificate or by-laws of such

corporation to vote on a resolution to effect a voluntary dissolution,

shall be held upon not less than twenty days' written notice to each

such stockholder or shareholder, either served personally or mailed to

the stockholder or shareholder at the address appearing upon the books

of the corporation, and containing a statement of the purpose for which

such meeting is called. Proof by affidavit of due service of such notice

shall be filed in the office of the corporation before or at the time of

such meeting.

In the case of a mutual savings bank, a meeting of its board of

trustees shall be held upon like notice. Proof by affidavit of due

service of such notice shall be filed in the office of the savings bank

before or at the time of such meeting.

3. At such a meeting of stockholders or mutual shareholders, such

stockholders or mutual shareholders may, by a vote of the owners of at

least two-thirds in amount of such stock, or of the capital of such

mutual corporation, direct that the corporation be closed and its

business wound up. The proceedings of such meeting shall be entered in

the minutes of such corporation.

At such a meeting of the board of trustees of a savings bank, the

trustees may by vote of not less than two-thirds of their whole number,

direct by resolution that the savings bank be closed and its business

wound up. The vote on such resolution shall be recorded with the

resolution in the minutes of the board of trustees.

A copy of the minutes of such meeting of stockholders or mutual

shareholders or board of trustees, verified by the presiding officer and

by the secretary of such meeting, shall be filed in the office of the

superintendent within five days after the date of such meeting.

4. Within three months after the date of any such meeting, application

may be made to the supreme court, after due notice to the

superintendent, for an order declaring the business of such corporation

closed. In a proper case, the court shall make such order which shall

prescribe the notice to be given to creditors and depositors to present

their claims to the corporation for payment. In the closing order, the

court shall set a date certain by which claims must be presented to the

corporation for payment. The corporation need not consider any claims

submitted after that date. Within five days after the making of such

order, a certified copy thereof shall be filed in the office of the

superintendent. Upon the entry of such order such corporation shall

cease to do business and shall wind up its affairs, pay its creditors

and depositors, if any, and, except in the case of a mutual savings

bank, distribute any remaining assets among its shareholders or

stockholders according to their respective rights and interests. The

corporation or any creditor or depositor thereof, upon due notice, may

apply to the court that issued the closing order for a determination as

to any disputed claim or for any other relief necessary to effectuate

the liquidation and dissolution of the corporation. Any petition,

application, or motion to vacate, set aside, modify or amend such order

so as to permit the corporation to resume business shall have

incorporated therein a certificate of the superintendent certifying that

after investigation the superintendent has found that the public

convenience and advantage will be promoted by the granting of said

petition, application or motion.

4-a. (a) Such corporation may, at any time after entry of the order

described in subdivision four of this section, cause to be mailed to

each person claiming to be, or appearing upon the books of such

corporation to be

(1) the owner of any personal property in the custody or possession of

such corporation as bailee or depositary for hire or otherwise,

including the contents of any safe, vault or box theretofore opened for

non-payment of rental in accordance with the provisions of this chapter,

or

(2) the lessee of any safe, vault or box, a notice in writing directed

by registered mail to such person at his last address as the same

appears on the books of such corporation or at his last known address if

no address appears on such books, notifying such person to remove all

such property or the contents of any such safe, vault or box, within a

period stated in said notice, which period shall be not less than sixty

days from the date of such notice, and further notifying such person of

the terms and provisions of this subdivision. The contract of bailment

or of deposit for hire, or lease of safe, vault or box, if any, between

the person to whom such notice is mailed and such corporation shall

cease and determine upon the date for removal fixed in such notice. Such

person shall have a claim against such corporation for the amount of the

unearned rent or charges, if any, paid by such person from the date

fixed in such notice, if the property or contents is removed on or

before such date, or from the date of actual removal, if the property or

contents is removed after such date.

(b) If such property or contents shall not be removed, and all rent or

storage and other charges theretofore accrued, if any, shall not be

paid, within the time fixed by such notice, such corporation shall,

within thirty days thereafter, cause such property to be inventoried, or

such safe, vault or box, or any package, parcel or receptacle in the

custody or possession of such corporation as bailee or depositary for

hire or otherwise, to be opened and the contents, if any, to be removed

and inventoried, in the presence of an officer of such corporation and

of a notary public, not an officer or employee thereof. Such property or

contents shall thereupon be sealed up by such notary public in a package

distinctly marked by him with the name of the person in whose name such

property or such safe, vault, box, package, parcel or receptacle stands

upon the books of such corporation, and a copy of the inventory of the

property therein shall be certified and attached thereto by such notary

public. Such package may be kept in such place as the corporation, with

the approval of the superintendent, may determine, at the expense and

risk of the person in whose name it stands until delivered to such

person or until sold, destroyed or otherwise disposed of as hereinafter

provided. Such package may, from time to time, pending final disposition

of its contents, be opened in the presence of an officer of such

corporation and of a notary public, not an officer or employee thereof,

for inspection or appraisal, or to enable such corporation to exercise

any of the powers conferred or duties imposed by this article. Whenever

such package is opened, the notary shall endorse on the outside thereof

the date of opening and re-sealing, and shall certify and attach thereto

a list of the articles, if any, removed therefrom, or placed or replaced

therein, and an affidavit of the officer in whose presence it was opened

showing the reason for opening the same.

(c) At any time prior to the sale, destruction or other disposition of

the contents thereof, the person in whose name such package stands may

require the delivery thereof upon payment of all rental or storage

charges accrued, and all other charges or expenses paid or incurred to

the date of delivery with respect to such package or the contents

thereof, including the cost of inventorying or of opening and

inventorying, the fees of the notary public, the cost of preparing and

mailing the notice, and advertising, if any. If the principal of, or

interest, income, or dividends on any bonds, stock certificates,

promissory notes, choses in action or other securities contained in such

package, is or becomes due and payable while it is in the possession of

such corporation, it may at its election collect such principal,

interest, income or dividends, and from the proceeds thereof may deduct

all such sums due for rental and other charges, until the time of such

collection. The balance, if any, of the amount or amounts so collected

shall be disposed of as hereafter in paragraph (e) of this subdivision

and in subdivision five hereof provided.

(d) After the expiration of one year from the time of mailing the

notice in paragraph (a) of this subdivision described, such corporation

may apply to the supreme court for an order authorizing such corporation

to sell, destroy or otherwise dispose of the contents of such package.

In a proper case, the court shall make such order upon such terms and

conditions as justice may require. The application for an order of the

supreme court pursuant to this paragraph shall be made upon an order to

show cause, which shall provide that notice thereof to the person in

whose name such package stands and to any other person claiming or

appearing to have an interest therein, shall be published, mailed or

given in such other manner as the court may prescribe. Whenever,

pursuant to the provisions of this paragraph, a corporation is given the

power to sell the contents of any package, such power to sell shall be

deemed a power to sell in satisfaction of a lien for non-payment of

rental or storage charges accrued, and all other charges and expenses

paid or incurred to the date of sale with respect to such package and

the contents thereof, including the charges and expenses described in

paragraph (c) hereof. Such power to sell, or the power to destroy or

otherwise dispose of, when authorized pursuant to the provisions of this

paragraph, shall be deemed to include the power to sell, destroy or

otherwise dispose of, as the case may be, any bonds, stock certificates,

promissory notes, choses in action, or other securities, and any other

tangible or intangible property contained in any package, regardless of

whether or not it shall appear from such securities or properties that

the person in whose name the package stands, possesses title to or

interest in such securities or other properties, or power to transfer

such title or interest, and any sale of such securities or properties,

pursuant to this paragraph, shall vest good title thereto in the

purchaser thereof.

(e) From the proceeds of any sale, such corporation shall deduct all

rental or storage charges accrued, and all other charges and expenses

paid or incurred to the date of sale, including the charges and expenses

described in paragraph (c) hereof, and the expenses of sale. The balance

of such proceeds, if any, shall be credited to the person in whose name

such package stood and, unless sooner paid over to the superintendent

pursuant to subdivision five hereof, shall be paid over to such person,

his assignee or legal representative on satisfactory evidence of

identity.

(f) The provisions of this subdivision do not affect or preclude any

other remedy by action or otherwise for the enforcement of the claims or

rights of such corporation against the person in whose name any

property, or any safe, vault, box, package, parcel or receptacle stands,

nor affect, nor bar the right of such corporation to recover, before

sale, any debt or claim due it or, after sale, so much of the debt or

claim as shall not be paid by the proceeds of the sale.

(g) The procedure prescribed in this subdivision may be followed by

any corporation winding up its affairs in accordance with the provisions

of this section, notwithstanding the fact that such corporation may have

commenced proceedings to open, or may have opened, any safe, vault or

box for non-payment of rental in accordance with other provisions of

this chapter and notwithstanding the contents of any notice that may

have been given by such corporation in accordance with any requirement

of this section.

5. When such corporation shall have given the notice to creditors and

depositors to present their claims as prescribed in the order entered in

accordance with the provisions of subdivision four hereof, and shall

have paid all its debts and obligations for which a legal claimant has

been found, and shall have complied with the provisions of subdivision

four-a hereof, it shall, before applying to court for a release upon

final accounting or for a final order of dissolution, make a verified

transcript or statement from its books of the names of all depositors,

creditors, stockholders, shareholders, owners of personal property in

the custody or possession of such corporation as bailee, depositary for

hire or otherwise, or lessees of any safe, vault or box, who have not

claimed or have not received the deposits, debts, dividends, interest

balances or other amounts due them, and shall file such transcript or

statement with the superintendent together with all identifying

information, including, in the case of unclaimed proceeds of any sale

pursuant to subdivision four-a hereof, a certified copy of the

inventory, and an affidavit showing compliance with the provisions of

said subdivision, a list of the articles sold, the price or prices

obtained therefor, and the amount or amounts deducted and retained from

the proceeds and such corporation shall thereupon pay over such

unclaimed amounts to the superintendent as trustee for the persons

entitled to receive them, as provided in article two of this chapter.

6. Upon the petition of such corporation showing

(a) that all its debts and obligations have been discharged except

those for which no legal claimant has been found,

(b) that notice was given to creditors and depositors to present their

claims as prescribed by the court and that any period prescribed by the

court for the presentation of such claims has expired,

(c) that the provisions of subdivision four-a hereof, if applicable,

have been complied with and

(d) that all unclaimed amounts referred to in subdivision five hereof

have been paid over to the superintendent, and on notice to the

comptroller and the superintendent and such further notice as the court

may prescribe, the court may, on such terms as justice requires, make an

order affirming such disposition of such unclaimed amounts and declaring

such corporation dissolved and its corporate existence terminated.

7. On filing with the superintendent a certified copy of the order of

dissolution described in the last preceding subdivision of this section,

the corporation shall cease to exist.

8. Unless the superintendent shall otherwise provide, any corporate

banking organization that, pursuant to an agreement, sells or conveys

more than fifty per centum of its assets without the written approval of

the superintendent shall take the proceedings for voluntary dissolution

herein prescribed and, within six months from the date of such sale or

conveyance, shall file with the superintendent a certified copy of the

closing order in the form prescribed by subdivision four of this

section. The corporate banking organization, upon making written

application to the superintendent for approval of the sale or conveyance

of more than fifty per centum of its assets, shall pay an investigation

fee as prescribed pursuant to section eighteen-a of this chapter. If a

closing order is required to be filed pursuant to this subdivision and

such order is not filed within the time prescribed, the superintendent

shall have the power, in the superintendent's discretion, to take

possession of the business and property of such corporation and proceed

with the liquidation thereof under the provisions of this article.

9. If the superintendent shall certify that any corporate banking

organization is deemed by him to have abandoned and forfeited its

charter by non-user and to be virtually in process of liquidation, such

corporation, if its assets have a value at least equal to its

liabilities, exclusive of any liability to shareholders or stockholders,

as such, shall take the proceeding for voluntary dissolution herein

prescribed and, within six months from the date of such certificate,

shall file with the superintendent a certified copy of the closing order

in the form prescribed by subdivision four of this section. If such

order is not filed within the time prescribed, the superintendent shall

have the power, in his discretion, to take possession of the business

and property of such corporation and proceed with the liquidation

thereof under the provisions of this article.

10. (a) Upon the petition of the superintendent showing

(1) that any corporate banking organization has ceased to transact

business, or has commenced but failed to complete proceedings for its

voluntary dissolution in accordance with the banking law, or for any

other reason is deemed by the superintendent to have abandoned and

forfeited its charter by non-user, and

(2) that all of its assets have been distributed, or that the

superintendent has no knowledge as to the existence of any such assets,

the supreme court in the judicial district where such banking

organization maintained its principal place of business may make an

order declaring such corporation dissolved and the corporate existence

thereof terminated. Upon the filing of a certified copy of such order in

the office of the superintendent the existence of such corporation shall

cease and determine.

(b) If the petition of the superintendent shall show, in addition to

the allegations required by the provisions of subparagraph (1) of

paragraph (a) of this subdivision, that such banking organization

(1) has undistributed assets and it appears that in the opinion of the

superintendent the cost of taking possession of and liquidating such

assets in accordance with the provisions of this article will exceed the

fair value of such assets, and

(2) has failed, for a period of two years after ceasing to transact

business or commencing proceedings for its voluntary dissolution, to

complete such proceedings or to produce proof satisfactory to the

superintendent that it has complied with or is in the process of

complying with the provisions of the banking law, the court may, upon

such notice as it may prescribe, make an order declaring such

corporation dissolved and the corporate existence thereof terminated,

and further declaring that such assets have been abandoned and providing

for the payment, delivery or transfer thereof to the superintendent in

such manner and at such time as the court may direct. Upon the filing of

a certified copy of such order in the office of the superintendent the

existence of such corporation shall cease and determine. At any time

within six months after the entry of such order, the court may upon good

cause shown and upon such terms as justice may require, vacate or modify

such order. At the expiration of such six-month period or such further

period as the court may prescribe, the superintendent shall sell, redeem

or otherwise dispose of such assets and from the proceeds thereof may

retain and pay all costs, disbursements and legal fees allowed by the

court and any assessments, penalties or forfeitures incurred by such

banking organization under the banking law. The remaining proceeds if

any shall forthwith be paid into the state treasury for the use and

benefit of the state.

11. (a) Any foreign banking corporation which has been licensed

pursuant to article two of this chapter to engage in business in this

state, including any such corporation whose license has been surrendered

or revoked, may, if it so desires, take proceedings for the voluntary

liquidation of its business and property in this state in accordance

with the provisions of paragraph (b) of this subdivision; but no such

liquidation shall be commenced while the superintendent is in possession

of such business and property unless such corporation shall have first

received the written approval of the superintendent. In any such

liquidation the claims of creditors of such corporation arising out of

transactions had by them with its New York agency or agencies or branch

or branches shall be accorded the same preference accorded to similar

claims in a liquidation under subdivision four of section six hundred

six of this article.

(b) To effect such a voluntary liquidation, a foreign corporation

shall subscribe, acknowledge and file with the superintendent at his

office a written notice of its intention so to liquidate, which notice

shall specify the date of commencement of the liquidation, and upon such

date, such corporation shall forthwith cease to transact business in

this state if it has not already done so, and shall proceed to wind up

its affairs in this state. Within thirty days after such date, such

corporation shall make application to the supreme court, after due

notice to the superintendent, for an order prescribing the notice to be

given to the preferred creditors hereinabove described to present their

claims for payment. Every such corporation shall, in the course of such

liquidation, comply with the provisions of subdivisions four-a, five and

six of this section, except that an order entered pursuant to

subdivision six of this section shall affirm the disposition of the

unclaimed amounts therein referred to and shall authorize the turn-over

of all of the assets remaining after payment of the preferred creditors

to the principal office of such corporation. Within five days after the

making of any order described in this paragraph a certified copy thereof

shall be filed in the office of the superintendent.

(c) Any foreign banking corporation which has been licensed pursuant

to article two of this chapter to engage in business in this state,

which shall liquidate its business and property in this state without

electing to comply with the provisions of paragraphs (a) and (b) of this

subdivision, shall, upon completion of the liquidation, make a verified

transcript or statement from its books of the names of all creditors

whose claims arise out of transactions had by them with its New York

agency or agencies, or its New York branch or branches and of all owners

of personal property in the custody or possession of such agency or

agencies or branch or branches as bailee, depositary for hire or

otherwise, who have not claimed or have not received the debts or other

amounts due them, and shall file such transcript or statement with the

superintendent together with all identifying information, including, in

the case of unclaimed proceeds of any sale of personal property, a list

of the articles sold, the price or prices obtained therefor, and the

amount or amounts deducted and retained from the proceeds, and such

corporation shall thereupon pay over such unclaimed amounts to the

superintendent as trustee for the persons entitled to receive them, as

provided in article two of this chapter. Any such corporation so

liquidating its business and property in this state may, if it so

desires, follow the procedures for the disposition of personal property

in the custody or possession of, and exercise the same powers and

privileges with respect thereto accorded to, banking organizations in

subdivision four-a of this section. To effectuate the purposes of this

chapter, the superintendent may impose additional requirements and

procedures for the foreign banking corporation to follow with respect to

the dissolution of the licensed office.

(d) For the purposes of this subdivision, the words "debts",

"obligations" and "deposits", as used in subdivisions four-a, five and

six of this section, shall be deemed to refer to the preferred claims

hereinabove described, the words "creditors" and "depositors" shall be

deemed to refer to the owners of such preferred claims, the references

in subdivisions four-a and five of this section to the order entered in

accordance with subdivision four of this section shall be deemed to

refer to the like order entered in accordance with the provisions of

this subdivision, and, except when the context shall otherwise require,

the word "corporation" shall be deemed to refer to the New York agency

or agencies, or branch or branches and the word "officer" shall include

the agent or other person in charge of such agency or agencies and any

person in charge of or who is an officer of such branch or branches or

of the liquidation.

12. If the superintendent shall at any time find that any of the

reasons enumerated in section six hundred six of this article for

takeover of the business and property of a banking organization or of

the business and property in this state of a foreign banking corporation

shall exist, he may, in his discretion, forthwith take possession of

such business and property in accordance with the provisions of such

section notwithstanding that such banking organization or corporation

may have theretofore commenced proceedings for the voluntary liquidation

of such business and property in accordance with this section.