N.Y. Banking Law § 605-a: Transfer of deposit liabilities of bank or trust company; sale or pledge of assets to facilitate such transfer

§ 605-a. Transfer of deposit liabilities of bank or trust company;

sale or pledge of assets to facilitate such transfer. 1. A bank or trust

company may, pursuant to a plan approved by the superintendent, enter

into an agreement with another bank or trust company, whereby its

liabilities to depositors will be assumed by such other bank or trust

company. To facilitate the consummation of such plan and agreement, such

bank or trust company may borrow money from the Federal Deposit

Insurance Corporation and pledge all or any part of its assets as

security for the money so borrowed, or it may sell all or any part of

its assets to Federal Deposit Insurance Corporation and the money so

borrowed or realized with or without any other assets belonging to such

bank or trust company, may be transferred by it to such other bank or

trust company, in consideration of the latter's agreement to assume and

pay the deposit liabilities of the former. If the superintendent shall

thereafter take possession of the business and property of such bank or

trust company, pursuant to this article, the validity of a claim against

such bank or trust company which was in existence when such plan was

consummated and remains unpaid shall be determined pursuant to the

provisions of section six hundred twenty to six hundred twenty-five

inclusive of this article as though such plan had not been consummated.

Nothing in this section nor in any plan consummated pursuant to this

section shall be deemed to require allowance of any claim if such claim

would not otherwise be allowable in the liquidation proceedings. If such

claim is allowed or ultimately established, the owner thereof shall be

entitled to dividends on his claim as though such plan had not been

consummated, and as though the assets of such bank or trust company had

been taken over for liquidation immediately prior to any sale, pledge or

transfer made pursuant to such plan. If such bank or trust company in

liquidation does not have sufficient other assets to pay such dividends,

the deficiency shall be paid from the proceeds of the sale or

liquidation of the assets sold or pledged by such bank or trust company

to Federal Deposit Insurance Corporation. If such proceeds prove

insufficient to pay such deficiency in full, any remaining deficiency

shall be paid from the proceeds of the sale or liquidation of the assets

transferred by such bank or trust company to such other bank or trust

company, exclusive of cash representing the proceeds of a sale to or a

loan from Federal Deposit Insurance Corporation. The superintendent

shall take such action as he shall deem necessary and appropriate to

protect the interests of the owner of any such claim, but he shall not

be required to obtain possession of any of the assets from the proceeds

of which the deficiency in dividends upon such claim is payable, unless

it shall appear that the amount required for the payment of such

deficiency is not otherwise available. The superintendent may, subject

to the approval of the supreme court in the judicial district where the

principal office of such bank or trust company is located, enter into an

agreement with the Federal Deposit Insurance Corporation and the bank or

trust company to which any assets of such bank or trust company have

been transferred, or either of them, whereby payments shall be made to

him as trustee for the benefit of the person or persons entitled thereto

from time to time as cash is realized from the sale or liquidation of

the assets from the proceeds of which claims are payable. If such

agreement is approved by the supreme court, after notice of a kind which

the court deems to be adequate to all persons whose interests, in the

opinion of the court, may be affected thereby, such agreement shall be

binding upon all such persons. No action may be brought by any such

person to enforce payment of his claim unless it be clearly shown that

the superintendent has refused or failed to take necessary and

appropriate action to protect the interests of such person. No sale,

conveyance or transfer by a bank or trust company of all or any part of

its assets shall be deemed to have been made pursuant to the provisions

of this section unless the plan approved by the superintendent shall

expressly so state. Nothing contained in this section shall be deemed to

repeal, limit, modify or otherwise affect any right or power of a bank

or trust company to sell, convey or transfer all or any part of its

assets pursuant to any other provision of law.

2. A bank or trust company assuming the deposit liabilities of another

bank or trust company in connection with a plan pursuant to this section

may issue preferred shares which, to the extent permitted by the

superintendent, may have a retirable value greater than the amount

received in payment for such shares.