Substitute House Bill No. 6513
Substitute House Bill No. 6513
PUBLIC ACT NO. 97-160
AN ACT CONCERNING INVOLUNTARY LIQUIDATION OF STATE
BRANCHES AND AGENCIES OF FOREIGN BANKS AND THE
ESTABLISHMENT OF BRANCHES OR OTHER OFFICES BY
OUT-OF-STATE BANKS AND FOREIGN BANKS.
Be it enacted by the Senate and House of
Representatives in General Assembly convened:
Section 1. (NEW) (a) As used in this section:
(1) "Branch or agency net payment
entitlement" means, with respect to a qualified
financial contract, the amount, if any, that would
have been owed by a party to a foreign bank after
netting only those transactions entered into by
the branch or agency of the foreign bank in this
state and such party under such qualified
financial contract.
(2) "Branch or agency net payment obligation"
means, with respect to a qualified financial
contract, the amount, if any, that would have been
owed by the foreign bank to a party after netting
only those transactions entered into by the branch
or agency of the foreign bank in this state and
such party under such qualified financial
contract.
(3) "Business and property in this state"
includes, but is not limited to, all property of
the foreign bank, real, personal or mixed, whether
tangible or intangible, (A) wherever situated,
constituting part of the business of the state
agency or state branch of the foreign bank in this
state and appearing on its books as such, and (B)
situated within this state whether or not
constituting part of the business of such state
agency or state branch in this state or so
appearing on its books.
(4) "Global net payment entitlement" means
the amount, if any, owed by a party or that would
be owed if the relevant agreements provided for
payments to either party, upon termination thereof
under any and all circumstances, to the foreign
bank as a whole after giving effect to the netting
provisions of a qualified financial contract with
respect to all transactions subject to netting
under such qualified financial contract.
(5) "Global net payment obligation" means the
amount, if any, owed by the foreign bank as a
whole to a party after giving effect to the
netting provisions of a qualified financial
contract with respect to all transactions subject
to netting under such qualified financial
contract.
(6) "Qualified financial contract" means any
securities contract, commodity contract, forward
contract, including any spot and forward foreign
exchange contract, repurchase agreement, swap
agreement, and any similar agreement, any option
to enter into any such agreement, including any
combination of the foregoing, any other agreement
determined by the Commissioner of Banking by
regulation or order to be a qualified financial
contract and any master agreement for such
agreements. Such master agreement, together with
all supplements thereto, shall be treated as one
qualified financial contract, provided, such
contract, option or agreement, or combination of
contracts, options or agreements is reflected in
the books, accounts or records of the foreign bank
or a party provides documentary evidence of such
agreement.
(b) The commissioner may, by order,
immediately take possession of the business and
property in this state of any foreign bank with a
state branch or state agency in this state upon
the commissioner's determination that such action
is necessary for the protection of the interests
of the creditors of such foreign bank's business
in this state or for the protection of the public
interest, and that such foreign bank: (1) Has
violated any applicable law, regulation or order;
(2) is conducting its business in an unauthorized
or unsafe manner; (3) is in an unsafe or unsound
condition to transact its business; (4) cannot
with safety and expediency continue business; (5)
has ceased to operate its state branch or state
agency in this state; (6) has an impairment of its
capital; (7) has suspended payment of its
obligations, made an assignment for the benefit of
its creditors, or admitted in writing its
inability to pay its debts as they become due; (8)
has neglected, refused or failed to take or
continue proceedings for voluntary liquidation in
accordance with section 36a-428k of the general
statutes, as amended by section 6 of this act; (9)
is insolvent in that it has ceased to pay its
debts in the ordinary course of business, cannot
pay its debts as they become due, or has
liabilities exceeding its assets; (10) has applied
for an adjudication of bankruptcy, reorganization,
arrangement, or other relief under any bankruptcy,
reorganization, insolvency or moratorium law, or,
that any person has applied for any such relief
under any such law against the foreign bank, and
the foreign bank has by any affirmative act
approved of or consented to such action or such
relief has been granted; (11) is no longer in
existence or its authority to transact banking
business under the laws of the place where it is
domiciled has been suspended or terminated; (12)
is in liquidation, receivership or conservatorship
at its domicile or elsewhere, or that any
proceeding for appointment of a liquidator,
receiver or conservator or any similar proceeding
has been initiated against it, or there is reason
to doubt its ability or willingness to pay in full
the claims of creditors; (13) has otherwise had
its license revoked, suspended, cancelled,
terminated or otherwise not renewed pursuant to
the provisions of section 36a-428j of the general
statutes; or (14) is in a condition, or facts or
circumstances relating to such foreign bank exist,
which, if existing at the time such foreign bank
applied for its license to establish a state
branch or state agency in this state, would have
been grounds for denying such application.
(c) Title to such business and property in
this state of a foreign bank shall vest by
operation of law in the commissioner and his
successors upon taking possession, without the
execution of any instruments of conveyance,
assignment, transfer or endorsement. The
commissioner shall promptly apply to the superior
court for the judicial district of Hartford-New
Britain for appointment as receiver of such
foreign bank with effect from the time of taking
possession, and the superior court shall make such
appointment. Thereafter, except as otherwise
provided in this section, the commissioner shall
liquidate or otherwise deal with such business and
property in this state of a foreign bank in
accordance with the provisions of sections 36a-223
to 36a-239, inclusive, of the general statutes,
provided, (1) "debts", "liabilities", "deposits",
"claims" and other similar terms used in sections
36a-223 to 36a-239, inclusive, of the general
statutes refers to the claims that the
commissioner shall accept pursuant to subsection
(e) of this section; (2) "creditors" and
"depositors", as used in such sections, refers to
the owners of such accepted claims; (3) except as
the context otherwise requires, "Connecticut
bank", as used in such sections, refers to the
state branches or state agencies in this state;
and (4) "officer", as used in such sections,
includes any person in charge of or who is an
officer of such state branches and the agent or
other person in charge of such state agencies.
Notwithstanding any contrary provision of law,
including chapters 55a and 67 of the general
statutes, the commissioner may employ or contract
with such legal counsel and expert assistants
under such titles as the commissioner may assign
to them and may retain such of the officers or
employees of such foreign bank as the commissioner
deems necessary in the liquidation and
distribution of the assets of such foreign bank,
without the prior approval of any other state
agency or elective officers. The commissioner
shall be entitled to the appointment of a single
judge to supervise the liquidation upon request to
the administrative judge of the superior court for
the judicial district of Hartford-New Britain.
Said judge shall have the power to order expedited
or simplified procedures whenever necessary to
resolve a matter in such liquidation.
(d) At any time within ten days after the
commissioner has taken possession of the business
and property in this state of a foreign bank, such
foreign bank may apply to the superior court for
the judicial district of Hartford-New Britain for
an order requiring the commissioner to show cause
why the commissioner should not be enjoined from
continuing such possession. The court may, upon
good cause shown, direct the commissioner to
refrain from further proceedings and to surrender
such possession.
(e) Only the claims of creditors of such
foreign bank arising out of transactions entered
into by such creditors with its state branches or
state agencies in this state, shall be accepted by
the commissioner for payment out of such business
and property in this state of a foreign bank as
provided in this section. Acceptance or rejection
of such claims by the commissioner shall not
prejudice such creditors' rights to otherwise
share in the assets of such foreign bank. The
following claims shall not be accepted by the
commissioner for payment out of such business and
property in this state of a foreign bank: (1)
Claims which would not represent an enforceable
legal obligation against such state branch or
state agency if such branch or agency were a
separate and independent legal entity; and (2)
amounts due and other liabilities to other
offices, agencies, branches and affiliates of such
foreign bank. Whenever the principal amount of any
such claim owed by or owing to such foreign bank
does not exceed fifty thousand dollars, the
commissioner may sell, assign, compromise or
otherwise dispose of the same upon such terms as
the commissioner may deem for the best interest of
such foreign bank without obtaining the approval
of the court otherwise having jurisdiction of the
matter. All wages actually owing to the employees
of a foreign bank in the possession of the
commissioner for services rendered within three
months prior to the date when possession was
taken, not exceeding two thousand dollars to each
employee, shall be paid prior to the payment of
every other debt or claim, and in the discretion
of the commissioner may be paid as soon as
practicable after taking possession, except that
at all times the commissioner shall reserve such
funds as will in the commissioner's opinion be
sufficient for the expenses of administration.
(f) Whenever the accepted claims, together
with interest thereon, and the expenses of the
liquidation have been paid in full or properly
provided for, the commissioner, upon the order of
the superior court for the judicial district of
Hartford-New Britain, shall turn over the
remaining assets to the principal office of such
foreign bank, or to the duly appointed domiciliary
liquidator or receiver of such foreign bank.
(g) After taking possession of the business
and property in this state of any foreign bank:
(1) The commissioner shall immediately give notice
of such fact to all persons known to the
commissioner to hold any assets of such foreign
bank. No person having notice or knowledge that
the commissioner has taken possession of the
business and property in this state of such
foreign bank, shall have a lien or charge for any
payment, advance or clearance thereafter made
against any of the assets of such foreign bank for
liability thereafter incurred. (2) Upon the
written demand of the commissioner, any person
holding assets of such foreign bank shall deliver
such assets to the commissioner and shall
thereupon be discharged from liability with
respect to any claim upon such assets, provided,
such demand shall not affect the right of a
secured creditor with a perfected security
interest, or other valid lien or security interest
enforceable against third parties, to retain
collateral, including any right of such secured
creditor under any security arrangement related to
a qualified financial contract to retain
collateral and apply such collateral in accordance
with this section. Nothing in this section shall
affect any right of setoff permitted under
applicable law, provided, no person may set off
the business and property in this state of a
foreign bank against liabilities of such foreign
bank other than those that arise out of
transactions entered into by such person with the
state branch or state agency of the foreign bank
in this state, which liabilities shall be deemed
to include in the case of qualified financial
contracts the lesser of the two amounts calculated
with respect to any such qualified financial
contract pursuant to subdivision (2) of subsection
(i) of this section.
(h)(1) The commissioner shall, after taking
possession of the business and property in this
state of a foreign bank, cause to be mailed to
each person claiming to be, or appearing upon the
books of such foreign bank to be (A) the owner of
any personal property in the custody or possession
of such foreign bank as bailee or depositary for
hire or otherwise, including securities, whether
held in custody directly or in book-entry form by
such foreign bank, its nominee, subcustodian,
clearing corporation or similar entity, and the
contents of any safe, vault or box opened for
nonpayment of rental in accordance with the
provisions of this subsection, or (B) the lessee
of any safe, vault or box, a notice in writing
sent by registered mail to such person at such
person's last address as it appears on the books
of such foreign bank or at such person's 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 such 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
subsection and any regulations that may be adopted
under this section by the commissioner pursuant to
chapter 54 of the general statutes. The contract
of bailment or of deposit for hire, or the lease
of such safe, vault or box, if any, between the
person to whom such notice is mailed and such
foreign bank shall terminate upon the date for
removal fixed in such notice. Such person shall
have a claim against such foreign bank for the
amount of unearned rent or charges, if any, paid
by such person from the date fixed in such notice
if the property or contents are removed on or
before such date, or from the date of actual
removal if the property or contents are removed
after such date.
(2) If such property or contents are not
removed, and all accrued rental or storage and
other charges, if any, are not paid, within the
time fixed by such notice, the commissioner shall
inventory and deal with such property and contents
in accordance with any regulations that may be
adopted under this section by the commissioner
pursuant to chapter 54 of the general statutes.
The commissioner shall deal with such property and
contents at the expense and risk of the person in
whose name it stands. The commissioner shall be
held harmless and shall not be liable to any
subsequent claimant for any delivery or transfer
made by the commissioner in good faith to the
claimant appearing to be entitled to such property
from the records available to the commissioner. If
the commissioner is in doubt concerning the person
entitled to property in the possession of the
commissioner, or there are conflicting claims
thereto, the commissioner may require of the
claimant an order of the superior court of the
judicial district of Hartford-New Britain
authorizing and directing the delivery of such
property.
(3) After the expiration of one year from the
date of mailing the notice required by subdivision
(1) of this subsection, the commissioner may apply
to the superior court for the judicial district of
Hartford-New Britain for an order authorizing the
commissioner to sell, destroy or otherwise dispose
of any personal property which had been in the
custody or possession of such foreign bank as
bailee or depositary for hire or otherwise and
which remains in the possession of the
commissioner. The court may require that the
commissioner provide notice to the person in whose
name such property stands and to any other person
claiming or appearing to have an interest therein,
by publication, mailing or in such other manner as
the court may prescribe. Whenever the commissioner
is given the power to sell such property, such
power to sell shall be deemed a power to sell in
satisfaction of a lien for nonpayment of accrued
rental or storage charges and all other charges
and expenses paid or incurred to the date of sale
with respect to such property. Such power to sell,
destroy or otherwise dispose of, when authorized
pursuant to this subsection or any regulations
that may be adopted under this section by the
commissioner pursuant to chapter 54 of the general
statutes, shall be deemed to include the power to
sell, destroy or otherwise dispose of 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 the power to transfer such title or interest,
and any sale of such securities or properties
pursuant to this subsection shall vest good title
thereto in the purchaser thereof.
(4) The provisions of this subsection shall
not (A) affect or preclude any other remedy, by
civil action or otherwise, for the enforcement of
the claims or rights of the commissioner or of
such foreign bank against the person in whose name
any property, or any safe, vault, box, package,
parcel or receptacle stands, or (B) affect or bar
the right of the commissioner or the foreign bank
to recover, before sale, any debt or claim due the
commissioner or such foreign bank, or, after sale,
the portion of the debt or claim that was not paid
by the proceeds of the sale.
(i)(1) Except as otherwise provided in this
subsection, after taking possession of the
business and property in this state of a foreign
bank, the commissioner may assume or repudiate any
contract, including an unexpired lease, of such
foreign bank, relating to the business and
property in this state of such foreign bank and to
which such foreign bank is a party, the
performance of which the commissioner determines
to be burdensome and the repudiation of which the
commissioner determines will promote the orderly
administration of the foreign bank's affairs in
this state. After the expiration of ninety days
from the date that the commissioner takes
possession, any party to a contract with the
foreign bank relating to the business and property
in this state of such foreign bank may demand in
writing that the commissioner assume or repudiate
such contract. If the commissioner has not assumed
or repudiated the contract within fifteen days
from the date of receipt of the demand, the
affected party may bring an action in the superior
court for the judicial district of Hartford-New
Britain to obtain an order requiring the
commissioner to decide whether to assume or
repudiate such contract. If the commissioner has
not assumed or repudiated a contract not later
than one month before the last date for filing
claims against such foreign bank established
pursuant to section 36a-225 of the general
statutes, such contract shall be deemed
repudiated. Notwithstanding the provisions of this
subdivision, with respect to an unexpired lease of
the foreign bank for the rental of real property
under which the foreign bank was a lessee, if the
commissioner remains in possession of the
leasehold, the commissioner shall not be required
to assume or repudiate such lease and may continue
in possession of such leasehold for the remainder
of the term of the lease in accordance with the
terms of the lease, provided, if the commissioner
later repudiates the lease before the end of the
lease term, any amounts that may be due the lessor
as a result of such repudiation shall be
calculated according to the provisions of
subparagraph (A) of subdivision (3) of this
subsection. Notwithstanding any contrary provision
of this subsection, in liquidating a state branch
or state agency of a foreign bank in this state,
the commissioner shall not assume or repudiate any
qualified financial contract that such state
branch or state agency entered into which is
subject to a multi-branch netting agreement or
arrangement that provides for netting present or
future payment obligations or payment
entitlements, including termination or close-out
values relating to the obligations or
entitlements, among the parties to the contract,
agreement or arrangement, and the commissioner
shall not be required to assume or repudiate any
other qualified financial contract that such state
branch or state agency entered into, provided,
upon any repudiation of any qualified financial
contract or the termination or liquidation of any
qualified financial contract in accordance with
its terms, the liability under such qualified
financial contract shall be determined in
accordance with subparagraph (B) of subdivision
(2) of this subsection.
(2) (A) Except as otherwise provided in this
subsection, upon the repudiation or termination of
any contract pursuant to subdivision (1) of this
subsection, liability shall be limited to the
actual direct compensatory damages of the parties
to the contract, determined as of the date the
commissioner took possession. The commissioner
shall not be liable for any future wages, other
than reasonable severance payments, or for
payments for future services, costs of cover, any
consequential, punitive or exemplary damages,
damages for lost profits or lost opportunity, or
any other damages except as allowed by this
subparagraph.
(B) Except as otherwise provided in this
subsection, the liability of the commissioner upon
the repudiation of any qualified financial
contract, or in connection with the termination or
liquidation of any qualified financial contract in
accordance with the terms thereof, shall be
limited as provided in subparagraph (A) of this
subdivision, except that compensatory damages
shall be deemed to include normal and reasonable
costs of cover or other reasonable measures of
damages utilized among participants in the market
for qualified financial contract claims,
calculated as of the date of repudiation or the
date of the termination of such qualified
financial contract in accordance with its terms.
Upon the repudiation of any qualified financial
contract or in connection with the termination or
liquidation of any qualified financial contract in
accordance with the terms thereof, if the
commissioner is entitled to damages, such damages
shall be paid by the party to the commissioner
upon written demand pursuant to subdivision (2) of
subsection (g) of this section, notwithstanding
any provision in any such contract that purports
to effect a forfeiture of such damages.
(C) In the case of the liquidation of a state
branch or state agency of a foreign bank by the
commissioner, with respect to qualified financial
contracts subject to netting agreements or
arrangements that provide for netting present or
future payment obligations or payment
entitlements, including termination or close-out
values relating to the obligations or
entitlements, among the parties to the contracts
and agreements or arrangements, the liability of
the commissioner to any party to any such
qualified financial contract upon repudiation or
in connection with the termination or liquidation
of such qualified financial contract in accordance
with the terms thereof, shall be calculated as of
the date of repudiation or the date of the
termination of such qualified financial contract
in accordance with its terms and shall be limited
to the lesser of (i) the global net payment
obligation or (ii) the branch or agency net
payment obligation. The liability of the
commissioner under this subparagraph shall be
reduced by any amount otherwise paid to or
received by the party in respect of the global net
payment obligation pursuant to such qualified
financial contract which, if added to the
liability of the commissioner under this
subdivision, would exceed the global net payment
obligation. The liability of the commissioner
under this subparagraph to a party to a qualified
financial contract also shall be reduced by the
fair market value or the amount of any proceeds of
collateral that secures and has been applied to
satisfy the obligations of the foreign bank to the
party pursuant to such qualified financial
contract. In the event that netting under any
applicable netting agreement or arrangement
results in a branch or agency net payment
entitlement, notwithstanding any provision in any
such contract that purports to effect a forfeiture
of such entitlement, the commissioner may make
written demand upon the party to such contract
under subdivision (2) of subsection (g) of this
section for an amount not to exceed the lesser of
the global net payment entitlement or the branch
or agency net payment entitlement. The liability
of the party under this subparagraph shall be
reduced by any amount otherwise paid to or
received by the commissioner or any other
liquidator or receiver of the foreign bank with
respect to the global net payment entitlement
pursuant to such qualified financial contract
which, if added to the liability of the party
under this subparagraph, would exceed the global
net payment entitlement. The liability of the
party under this subparagraph to the commissioner
pursuant to such qualified financial contract
shall also be reduced by the fair market value or
the amount of any proceeds of collateral that
secures and has been applied to satisfy the
obligations of the party to the foreign bank
pursuant to such qualified financial contract.
(D) A party to a qualified financial contract
with the state branch or state agency in this
state of the foreign bank, which party has a
perfected security interest in collateral, or
other valid lien or security interest in
collateral enforceable against third parties
pursuant to a security arrangement related to such
qualified financial contract, may retain all such
collateral and, upon repudiation or termination of
that qualified financial contract in accordance
with its terms, apply such collateral in
satisfaction of any claims secured by the
collateral, provided the total amount so applied
to such claims shall not exceed the global net
payment obligation, if any.
(3)(A) If the commissioner repudiates a lease
of the foreign bank for the rental of real or
personal property under which the foreign bank was
a lessee, the lessor under such lease shall be
entitled to file a claim with the commissioner for
whichever is the least of: (i) The amount
designated as liquidated damages contained in the
agreement between the foreign bank and the lessor,
(ii) an amount equal to one year's rent under the
terms of the repudiated lease, or (iii) an amount
equal to the rent for the remaining term of the
lease.
(B) If the commissioner repudiates a lease of
the foreign bank for the rental of real property
under which the foreign bank was a lessor, and the
lessee was not in default at the time of
repudiation, the lessee under such repudiated
lease may either (i) treat the lease as terminated
by such repudiation and vacate the premises, or
(ii) remain in possession of the leasehold
interest for the balance of the term of the lease,
and for any renewal or extension of such term that
is enforceable by such lessee under applicable law
other than any law relating to insolvency, unless
the lessee defaults under the terms of the lease
after the date of such repudiation. If the lessee
remains in possession of the leasehold interest,
the lessee shall continue to pay to the
commissioner the contractual rent pursuant to the
terms of the lease after the date of the
repudiation of such lease and may offset against
such rent payment any damages which may accrue due
to the nonperformance of any obligation of the
foreign bank under the lease after the date of
repudiation. The commissioner shall not be liable
to the lessee for any damages arising after such
date as a result of the repudiation other than the
amount of any offset allowed under this
subdivision. Nothing in this subsection shall
prohibit the commissioner from entering into a new
contract with the lessee for the rental of the
leasehold which was the subject of the repudiated
lease.
(4) Except as otherwise provided in this
subsection, notwithstanding any provision in an
unexpired lease or other contract and
notwithstanding any applicable law to the
contrary, a contract or unexpired lease of the
foreign bank that is subject to assumption or
repudiation by the commissioner under this
subsection may not be terminated or modified by
any party other than the commissioner without the
concurrence of the commissioner. Any right or
obligation under such contract or lease may not be
terminated or modified, at any time after the
commissioner takes possession, solely pursuant to
a provision in such contract or lease that is
conditioned on (A) the commissioner taking
possession, or (B) the insolvency, financial
condition or liquidation of the foreign bank.
(5) Nothing in this subsection shall affect
the right of a party to a contract of a foreign
bank to seek performance of such contract or
damages thereon in any other jurisdiction,
provided, the commissioner shall not be liable for
the performance of such contract or damages
thereon in any other jurisdiction.
(6) The rights granted in this subsection are
in addition to any other rights available to the
commissioner under any other law.
(j) Where, by any agreement, a period of
limitation is fixed for instituting an action upon
any claim or for presenting or filing any claim,
proof of claim, proof of loss, demand, notice or
the like, or where, in any action or by statute or
ordinance, a period of limitation is fixed for
serving or filing any claim or pleading, taking
any appeal or doing any other act, and where in
any such case such period had not expired as of
the date the commissioner took possession of the
business and property in this state of the foreign
bank, the commissioner may for the benefit of such
foreign bank institute any such action, serve or
file any such claim or pleading, take any such
appeal, or do any such other act, required or
permitted to such foreign bank within a period of
one year subsequent to the date of taking
possession, or within such further period as may
be permitted by the agreement, or in the action,
or by statute or ordinance, as the case may be.
(k) (1) Except as provided in this
subsection, the commissioner's taking possession
of the business and property in this state of a
foreign bank shall operate as a stay of and as an
injunction against the following, as of the date
the commissioner takes possession: (A) The
commencement or continuation, including the
issuance or employment of process, of a judicial,
administrative or other action or proceeding
against the foreign bank that was or could have
been commenced before the taking of possession, or
to recover a claim against the foreign bank that
arose before the taking of possession; (B) the
enforcement against the foreign bank or its
business and property in this state of a judgment
obtained before the taking of possession; (C) any
act to obtain possession of property of the
foreign bank or of property from the foreign bank
or to exercise control over property of the
foreign bank; (D) any act to create, perfect, or
enforce any lien against property of the foreign
bank, including any lien that secures a claim that
arose before the taking of possession; and (E) any
act to collect, assess, or recover a claim against
the foreign bank that arose before the taking of
possession.
(2) The commissioner's taking possession of
the business and property in this state of a
foreign bank shall not operate as a stay of or as
injunction against: (A) The filing of a claim
pursuant to subsection (e) of this section in the
liquidation of the foreign bank; the making of a
demand upon the commissioner pursuant to
subsection (i) of this section to decide whether
to assume or repudiate a contract of the foreign
bank; the exercise of any setoff otherwise
permissible under applicable law except as limited
by subdivision (2) of subsection (g) of this
section; the right of any secured creditor with a
perfected security interest or other valid lien or
security interest enforceable against third
parties to retain collateral, including any right
of such secured creditor under any security
arrangement related to a qualified financial
contract, to retain collateral and to apply such
collateral in accordance with subparagraph (D) of
subdivision (2) of subsection (i) of this section;
any automatic termination in accordance with the
terms of any qualified financial contract or any
right to cause the termination or liquidation of
any qualified financial contract, in accordance
with the terms thereof; any right to offset or net
out any termination value, payment amount, or
other transfer obligation arising under or in
connection with one or more such qualified
financial contracts; or the commencement of an
action under subsection (d) of this section or any
other action relating to the liquidation before
the superior court judge overseeing the
liquidation of the foreign bank; (B) the
commencement or continuation of a criminal action
or proceeding against the foreign bank; (C) the
commencement or continuation of an action or
proceeding by a governmental unit to enforce such
governmental unit's police or regulatory power;
(D) the enforcement of a judgment, other than a
money judgment, obtained in an action or
proceeding by a governmental unit to enforce such
governmental unit's police or regulatory power;
(E) the issuance to the foreign bank by a
governmental unit of a notice of tax deficiency;
and (F) the commencement or continuation of a
judicial action or proceeding by a secured
creditor with a perfected security interest, or
other valid lien or security interest enforceable
against third parties, including any right of such
secured creditor under any security arrangement
related to a qualified financial contract, to
enforce such security interest or lien.
(3) Except as otherwise provided in this
subsection: (A) The stay or enjoining of an act
against property of the foreign bank under this
subsection shall continue until such property is
no longer the property of the commissioner in
possession of the foreign bank; and (B) the stay
or enjoining of any other act under this
subsection shall continue until the commissioner
has concluded the liquidation.
(4) For good cause shown, on request of a
party in interest and after notice and a hearing,
the superior court judge overseeing the
liquidation may grant relief from the stay or
injunction provided under this subsection by
terminating, annulling, modifying or conditioning
such stay or injunction.
(5) In the case of any wilful violation of a
stay or injunction provided in this subsection by
any person or entity who has knowledge of the
commissioner taking possession of the business and
property in this state of a foreign bank that is
the subject of the stay or injunction, the
commissioner shall recover actual damages,
including costs and reasonable attorneys' fees
and, in appropriate circumstances, may recover
punitive damages.
(l) The commissioner shall not accept any
claim based on an agreement with the foreign bank
unless the agreement is either reflected on the
accounts, books or records of the foreign bank or
a creditor provides documentary evidence of such
agreement.
Sec. 2. Section 36a-3 of the general statutes
is repealed and the following is substituted in
lieu thereof:
Other definitions applying to this title or
to specified parts thereof and the sections in
which they appear are:
"Account". Sections 36a-155 and 36a-365.
"Advance fee". Sections 36a-510, 36a-485 and
36a-615.
"Agency bank". Section 36a-285.
"Alternative mortgage loan". Section 36a-265.
"Amount financed". Section 36a-690.
"Annual percentage rate". Section 36a-690.
"Annual percentage yield". Section 36a-316.
"Applicant". Section 36a-736.
"Associate". Section 36a-184.
"Bank". Section 36a-30.
"Bankers' bank". Section 36a-70.
"Banking business". Section 36a-425.
"Billing cycle". Section 36a-565.
"Bona fide nonprofit organization". Section
36a-655.
"Branch". Sections 36a-145 and 36a-410.
"BRANCH OR AGENCY NET PAYMENT ENTITLEMENT".
SECTION 1 OF THIS ACT.
"BRANCH OR AGENCY NET PAYMENT OBLIGATION".
SECTION 1 OF THIS ACT.
"Broker". Section 36a-510.
"Business and Industrial Development
Corporation". Section 36a-626.
"BUSINESS AND PROPERTY IN THIS STATE".
SECTION 1 OF THIS ACT.
"Cash advance". Section 36a-564.
"Cash price". Section 36a-770.
"Certificate of organization". Section
36a-435.
"Collective managing agency account". Section
36a-365.
"Commercial vehicle". Section 36a-770.
"Connecticut holding company". Section
36a-410.
"Consumer". Sections 36a-155, 36a-676 and
36a-695.
"Consumer Credit Protection Act". Section
36a-676.
"Consumer debtor" and "debtor". Sections
36a-645 and 36a-800.
"Consumer collection agency". Section
36a-800.
"Controlling interest". Section 36a-276.
"Credit". Sections 36a-645 and 36a-676.
"Creditor". Sections 36a-676, 36a-695 and
36a-800.
"Credit card", "cardholder" and "card
issuer". Section 36a-676.
"Credit clinic". Section 36a-695.
"Credit rating agency". Section 36a-695.
"Credit report". Section 36a-695.
"Credit sale". Section 36a-676.
"De novo branch". Section 36a-410.
"Debt". Section 36a-645.
"Debt adjustment". Section 36a-655.
"Debt mutual fund". Section 36a-275.
"Debt securities". Section 36a-275.
"Deliver". Section 36a-316.
"Deposit". Section 36a-316.
"Deposit account". Section 36a-316.
"Deposit account charge". Section 36a-316.
"Deposit account disclosures". Section
36a-316.
"Deposit contract". Section 36a-316.
"Deposit services". Section 36a-425.
"Depositor". Section 36a-316.
"Earning period". Section 36a-316.
"Eligible account holder". Section 36a-136.
"Eligible collateral". Section 36a-330.
"Equity mutual fund". Section 36a-276.
"Federal Home Mortgage Disclosure Act".
Section 36a-736.
"Fiduciary". Section 36a-365.
"Filing fee". Section 36a-770.
"Finance charge". Sections 36a-690 and
36a-770.
"Financial institution". Sections 36a-41,
36a-155, 36a-316, 36a-330 and 36a-736.
"Financial records". Section 36a-41.
"First mortgage loan". Sections 36a-485,
36a-705 and 36a-715.
"Fiscal year". Section 36a-435.
"Foreign banking corporation". Section
36a-425.
"General facility". Section 36a-580.
"GLOBAL NET PAYMENT ENTITLEMENT". SECTION 1
OF THIS ACT.
"GLOBAL NET PAYMENT OBLIGATION". SECTION 1 OF
THIS ACT.
"Goods". Sections 36a-535 and 36a-770.
"Graduated payment mortgage loan". Section
36a-265.
"Groups having a common bond of occupation or
association". Section 36a-435.
"Guardian". Section 36a-365.
"Holder". Section 36a-596.
"Home banking services". Section 36a-170.
"Home banking terminal". Section 36a-170.
"Home improvement loan". Section 36a-736.
"Home purchase loan". Section 36a-736.
"Home state". Section 36a-410.
"Immediate family". Section 36a-435.
"Instalment loan contract". Sections 36a-535
and 36a-770.
"Instrument". Section 36a-596.
"Insurance bank". Section 36a-285.
"Insurance department". Section 36a-285.
"Interest". Section 36a-316.
"Interest rate". Section 36a-316.
"Lender". Sections 36a-510 and 36a-770.
"Lessor". Section 36a-676.
"License". Section 36a-626.
"Licensee". Sections 36a-510, 36a-596 and
36a-626.
"Limited branch". Section 36a-145.
"Limited facility". Section 36a-580.
"Loan broker". Section 36a-615.
"Loss". Section 36a-330.
"Made in this state". Section 36a-770.
"Managing agent". Section 36a-365.
"Member". Section 36a-435.
"Membership share". Section 36a-435.
"Money order". Section 36a-596.
"Mortgage broker". Section 36a-485.
"Mortgage insurance". Section 36a-725.
"Mortgage lender". Sections 36a-485 and
36a-705.
"Mortgage loan". Sections 36a-261 and
36a-265.
"Mortgage rate lock-in". Section 36a-705.
"Mortgage servicing company". Section
36a-715.
"Mortgagor". Section 36a-715.
"Motor vehicle". Section 36a-770.
"Municipality". Section 36a-800.
"Net worth". Section 36a-596.
"Network". Section 36a-155.
"Note account". Sections 36a-301 and 36a-445.
"Office". Section 36a-316.
"Open-end credit plan". Section 36a-676.
"Open-end loan". Section 36a-565.
"Organization". Section 36a-800.
"Out-of-state holding company". Section
36a-410.
"Outstanding". Section 36a-596.
"Passbook savings account". Section 36a-316.
"Periodic statement". Section 36a-316.
"Permissible investment". Section 36a-596.
"Person". Section 36a-184.
"Post". Section 36a-316.
"Prime quality". Section 36a-596.
"Principal amount of the loan". Section
36a-510.
"Principal officer". Section 36a-485.
"Processor". Section 36a-155.
"Public deposit". Section 36a-330.
"Purchaser". Section 36a-596.
"QUALIFIED FINANCIAL CONTRACT". SECTION 1 OF
THIS ACT.
"Qualified public depository" and
"depository". Section 36a-330.
"Records". Section 36a-17.
"Relocate". Section 36a-145.
"Residential property". Section 36a-485.
"Retail buyer". Sections 36a-535 and 36a-770.
"Retail credit transaction". Section 42-100b.
"Retail instalment contract". Sections
36a-535 and 36a-770.
"Retail instalment sale". Sections 36a-535
and 36a-770.
"Retail seller". Sections 36a-535 and
36a-770.
"Reverse annuity mortgage loan". Section
36a-265.
"Sales finance company". Sections 36a-535 and
36a-770.
"Savings department". Section 36a-285.
"Savings deposit". Section 36a-316.
"Secondary mortgage loan". Section 36a-510.
"Security convertible into a voting
security". Section 36a-184.
"Share". Section 36a-435.
"Social purpose investment". Section 36a-277.
"Standard mortgage loan". Section 36a-265.
"Tax and loan account". Sections 36a-301 and
36a-445.
"The Savings Bank Life Insurance Company".
Section 36a-285.
"Time account". Section 36a-316.
"Transaction". Section 36a-215.
"Travelers check". Section 36a-596.
"Troubled financial institution". Section
36a-215.
"Unsecured loan". Section 36a-615.
Sec. 3. Section 36a-410 of the general
statutes is repealed and the following is
substituted in lieu thereof:
As used in sections 36a-410 to 36a-413,
inclusive, unless the context otherwise requires:
(1) "Branch" means a domestic branch as
defined in 12 USC Section 1813, as from time to
time amended, EXCEPT THAT "BRANCH" INCLUDES ANY
BRANCH BANK, BRANCH OFFICE, BRANCH AGENCY,
ADDITIONAL OFFICE, OR ANY BRANCH PLACE OF BUSINESS
AT WHICH FIDUCIARY OR TRUST POWERS ARE EXERCISED;
(2) "Connecticut holding company" means any
holding company whose home state is this state;
(3) "De novo branch" means a branch of a bank
or an out-of-state bank other than a foreign bank,
which:
(A) Is originally established by such bank or
out-of-state bank; and
(B) Does not become a branch of such bank or
out-of-state bank as the result of (i) the
acquisition by the bank or out-of-state bank of an
insured depository institution or a branch of an
insured depository institution; or (ii) the
conversion, merger or consolidation of any such
institution or branch;
(4) "Home state" means: (A) With respect to a
federally-chartered bank, the state in which the
main office of the bank is located; (B) with
respect to a foreign bank, the state which is the
home state of the foreign bank under the
International Bank Act of 1978, 12 USC Section
3101 et seq., as from time to time amended, if
any, or the foreign country by which such bank is
chartered; (C) with respect to a state-chartered
bank, the state by which such bank is chartered;
(D) with respect to a bank holding company, the
state in which the total deposits of all banking
subsidiaries of such company are the largest on
the later of July 1, 1966, or the date on which
the company became a bank holding company under
the federal Bank Holding Company Act of 1956, 12
USC Section 1841 et seq., as from time to time
amended, and in the case of any such company that
holds a banking subsidiary that functions solely
in a trust or fiduciary capacity, the state in
which the total of such trust or fiduciary assets
of such subsidiaries were the largest on the date
such company became a bank holding company; and
(E) with respect to a savings and loan holding
company, the state in which the total deposits of
all savings and loan association subsidiaries of
such company were the largest on the date on which
the company became a savings and loan holding
company;
(5) "Out-of-state holding company" means any
holding company whose home state is a state other
than this state or whose home state is a foreign
country.
Sec. 4. Subsection (c) of section 36a-425 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(c) The provisions of subsection (b) of this
section shall not apply to: (1) An office of a
bank; (2) an office established or maintained for
the purpose of managing or controlling a bank; (3)
an office of a subsidiary of a bank, which
subsidiary is limited to carrying on one or more
of the functions which such bank may carry on
directly in the exercise of its express or implied
powers; (4) an office of a holding company or
subsidiary of a holding company or banking
corporation which required and which had received
all requisite state and federal authorization and
was open for business prior to June 1, 1984,
provided such office may not engage in any
activities other than those for which it had
authorization and in which it was actually engaged
on June 1, 1984; (5) an office established or
maintained pursuant to subsection (d) of this
section; (6) an office of a foreign bank that is a
federal branch [, provided such foreign bank
elects this state as its home state under the
International Banking Act of 1978, 12 USC Section
3101 et seq., as from time to time amended, or an
office of a foreign bank that is] OR a federal
agency; or (7) an office of a subsidiary of a
foreign bank that [has elected this state as its
home state under the International Banking Act of
1978, 12 USC 3101 et seq., as from time to time
amended, and] has a federal branch or a state
branch in this state, which subsidiary is limited
to carrying on one or more of the functions which
such branch of such foreign bank may carry on
directly.
Sec. 5. Section 36a-428 of the general
statutes is repealed and the following is
substituted in lieu thereof:
A foreign bank [that has elected this state
as its home state under the International Banking
Act of 1978, 12 USC Section 3101 et seq., as from
time to time amended,] may establish and maintain
in this state one or more state branches upon
receipt of a license for each such branch from the
commissioner at the location specified in such
license. A foreign bank may establish and maintain
in this state one or more state agencies upon
receipt of a license for each such agency from the
commissioner at the location specified in such
license. Such licensed foreign bank shall be
deemed to transact business or conduct affairs in
this state for the purposes of section 33-920 or
subsection (a) of section 33-1210 and shall comply
with the requirements of said sections. In
establishing and maintaining a state branch or
state agency, a foreign bank shall be subject to
such regulations and orders as the commissioner
considers appropriate to carry out the purposes of
sections 36a-428 to 36a-428l, inclusive, AS
AMENDED BY THIS ACT.
Sec. 6. Section 36a-428k of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) Any foreign bank which (1) has been
licensed to establish and maintain a state branch
or state agency in this state the assets of which
in this state exceed the liabilities of its state
branches or state agencies in this state,
including any such foreign bank whose license has
expired or been surrendered or revoked, and (2)
intends to cease transacting the business of any
of its state branches or state agencies in this
state, shall commence proceedings for the
voluntary liquidation of the business and property
IN THIS STATE of such state branches or state
agencies, provided, [the commissioner has not been
appointed receiver for such business and property]
NO SUCH PROCEEDINGS SHALL BE COMMENCED WHILE THE
COMMISSIONER IS IN POSSESSION OF SUCH BUSINESS AND
PROPERTY IN THIS STATE UNLESS SUCH FOREIGN BANK
SHALL HAVE FIRST RECEIVED THE WRITTEN APPROVAL OF
THE COMMISSIONER. IN ANY SUCH LIQUIDATION, THE
CLAIMS OF CREDITORS OF SUCH FOREIGN BANK ARISING
OUT OF TRANSACTIONS ENTERED INTO BY SUCH CREDITORS
WITH THE FOREIGN BANK'S STATE BRANCHES OR STATE
AGENCIES IN THIS STATE SHALL BE ACCORDED THE SAME
PREFERENCE ACCORDED TO SIMILAR CLAIMS IN A
LIQUIDATION UNDER SECTION 1 OF THIS ACT.
(b) To effect such a voluntary liquidation, a
foreign bank shall file with the commissioner a
written notice of its intention to liquidate
together with a plan of liquidation. The notice
shall specify the date of commencement of the
liquidation, and on or before such date such
foreign bank shall cease to transact business at
such state branches or agencies.
(c) The commissioner may approve the plan and
issue an order prescribing the notice to be given
to (1) creditors whose claims arise out of
transactions with such branches or agencies, and
(2) owners of personal property in the custody or
possession of such branches or agencies, to
present their claims for payment.
(d) When such foreign bank has given the
notice prescribed by the commissioner under
subsection (c) of this section, it shall proceed
with the liquidation in accordance with the plan.
Upon completion of the liquidation, such foreign
bank shall make a verified statement from its
books of the names of all creditors and owners of
personal property described in subsection (c) of
this section who have not claimed or have not
received the amounts due them, and shall file such
statement with the commissioner 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 prices
obtained therefor and the amount deducted and
retained from the proceeds. Such foreign bank
shall thereupon pay such unclaimed amounts to the
commissioner as trustee for the persons entitled
to receive them.
(e) If the commissioner [has reason to doubt
a foreign bank's ability or willingness to pay in
full the claims of the creditors described in
subsection (c) of this section, the commissioner
may take] SHALL AT ANY TIME FIND THAT ANY OF THE
REASONS ENUMERATED IN SECTION 1 OF THIS ACT FOR
TAKING possession of the business and property in
this state of [any] A FOREIGN BANK EXISTS, THE
COMMISSIONER MAY TAKE POSSESSION OF THE BUSINESS
AND PROPERTY IN THIS STATE OF such foreign bank IN
ACCORDANCE WITH SECTION 1 OF THIS ACT,
notwithstanding that such foreign bank may have
previously commenced proceedings for voluntary
liquidation under this section. [Thereafter, the
commissioner shall liquidate or otherwise deal
with such business and property in accordance with
regulations adopted by the commissioner. Upon
taking possession of the business and property of
such foreign bank, the commissioner shall possess,
with respect to such property and business, the
powers the commissioner possesses as a receiver of
a Connecticut bank. As used in this subsection,
"business and property in this state" includes,
but is not limited to, all property of the foreign
bank, whether tangible or intangible, (1) wherever
situated, constituting part of the business of the
state branch or state agency and appearing on its
books as such, and (2) situated within this state
whether or not constituting part of the business
of the state branch or state agency or so
appearing on its books.] AS USED IN THIS SECTION,
"BUSINESS AND PROPERTY IN THIS STATE" SHALL HAVE
THE SAME MEANING AS PROVIDED IN SUBSECTION (a) OF
SECTION 1 OF THIS ACT.
[(f) At any time within ten days after the
commissioner has taken possession of the property
and business of such foreign bank, such foreign
bank may apply to the superior court in the
judicial district of Hartford-New Britain* for an
order requiring the commissioner to show cause why
the commissioner should not be enjoined from
continuing such possession. The court may, upon
good cause shown, direct the commissioner to
refrain from further proceedings and to surrender
such possession.]
Sec. 7. This act shall take effect from its
passage.
Approved June 24, 1997