AN
ACT Relating to share insurance for credit unions; amending RCW 31.12A.007,
31.12.407, and 31.12.408; adding new sections to chapter 31.12A RCW; adding a
new section to chapter 31.12 RCW; and providing expiration dates.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
31.12A.007 and 1996 c 5 s 4 are each amended to read as follows:
(1)
Members with a composite capital, asset quality, management, earnings, and
liquidity rating by the department of three, four, or five shall, by September
1, 1996, file a:
(a)
Completed application for insurance of share accounts with the national credit
union administration to become insured under the federal share insurance
program, with a copy promptly forwarded to the director by the applicant;
(b)
Completed application to merge into a credit union with the director under RCW
((31.12.695)) 31.12.461; or
(c)
Detailed notice of liquidation of the credit union with the director under RCW
((31.12.725)) 31.12.474.
Members
with a composite capital adequacy, asset quality, management, earnings, and
liquidity rating of one or two shall accomplish one of the acts set forth in
(a) through (c) of this subsection by December 1, 1996.
Each
member shall promptly forward a copy of the application or notice to the
association.
If
a member fails to file the application or notice as required by this section
the failure will constitute an unsafe and unsound condition or practice that
seriously jeopardizes the interests of the member's depositors and
shareholders. The failure shall constitute grounds for the director to issue a
temporary order under RCW 31.12.595 requiring the member to complete the
application or notice and to take such other action as the director deems
necessary, and shall constitute grounds for the director to issue a notice of
charges under RCW 31.12.585.
(2)
The association's guarantee of a member credit union will cease upon the earlier
of: (a) The member's completion of conversion to insurance of share
accounts under the federal share insurance program, or merger into a federally
insured credit union, or liquidation, as applicable; or (b) December 31,
1998.
(3)
If a member whose application for insurance of share accounts is approved by
the national credit union administration fails to complete the insurance
conversion in the time allowed by the national credit union administration, the
failure will constitute an unsafe and unsound condition or practice that
seriously jeopardizes the interests of the member's depositors and
shareholders. The failure shall constitute grounds for the director to issue a
temporary order under RCW 31.12.595 requiring the member to complete the
insurance conversion and to take such other action as the director deems
necessary, and shall constitute grounds for the director to issue a notice of
charges under RCW 31.12.585. The authority granted to the director under this
subsection may be exercised only after January 1, 1998.
(4)
In addition to the action authorized in subsection (3) of this section, if a
member fails to obtain federal share insurance, merge into a federally insured
credit union, or liquidate by December 31, 1998, the director may appoint a
liquidating agent, conservator, or receiver for ((the involuntary
liquidation of)) the member under ((RCW 31.12.675 and 31.12.685)) chapter
31.12 RCW as if the member were insolvent, unless the member is insured or
guaranteed by an interim share insurance or guaranty program approved by the
director under section 7 of this act.
(5)
Members that obtain share insurance under the federal share insurance program
or merge with a credit union insured under the federal share insurance program
shall continue to maintain their contingency reserve under RCW 31.12A.050, and
capital reserve required by the association, and shall continue to be liable
for assessments under RCW 31.12A.090, as if they were members, until December
31, 1998. The amount of these reserves is based on the member's
guaranteeable outstanding share and deposit balances as of December 31st of the
year prior to the conversion or merger, as appropriate.
(6)
The contingency and capital reserve required by the association shall be
included as capital for determining composite capital adequacy, asset quality,
management, and earnings and liquidity ratings by regulatory authorities.
NEW
SECTION. Sec. 2. A
new section is added to chapter 31.12A RCW to read as follows:
(1)
Definition. As used in this chapter, "qualified former member" means
a member as of December 31, 1995.
(2)
Dissolution‑-Liquidation. The association shall dissolve effective
December 31, 1998, and be fully liquidated by December 31, 2000, in accordance
with a written plan to be adopted by the association's board of directors and
approved by the director.
(3)
Effect of dissolution. (a) During the period of liquidation, the association
shall continue its existence but may not carry on any business except that
appropriate to wind up and liquidate its business and affairs, including:
(i)
Collecting its assets;
(ii)
Converting to cash its properties that will not be distributed in kind;
(iii)
Discharging or making provision for discharging its debts, liabilities, and
obligations; and
(iv)
Distributing or making provision for the distribution of its property and
assets.
(b)
After discharging or making provision for discharging all debts, liabilities,
and obligations, including but not limited to payment or provision for payment
of all contracted assistance or guarantees, any remaining property and assets
of the association, including but not limited to funds representing the capital
reserves maintained by qualified former members or their successors, shall be
distributed pro rata to qualified former members of the association or their
successors. The pro rata distribution shall be based on guaranteeable
outstanding share and deposit balances of qualified former members as of
December 31, 1995, except to the extent any contracted assistance or guarantees
with a qualified former member or its successor expressly provides otherwise.
(4)
Not affected by dissolution. The association's dissolution does not:
(a)
Transfer title to its property;
(b)
Prevent transfer of its assets;
(c)
Subject its directors or officers to standards of conduct other than those
prescribed in this chapter;
(d)
Change quorum or voting requirements for its board of directors or member
credit unions; change provisions for selection, resignation, or removal of its
directors or officers or both; or change provisions for amending its bylaws;
(e)
Prevent commencement of a proceeding by or against it in its name; or
(f)
Abate or suspend proceedings pending by or against it or to which it is a party
as agent or otherwise on the effective date of dissolution.
(5)
This section expires December 31, 2000.
NEW
SECTION. Sec. 3. A
new section is added to chapter 31.12A RCW to read as follows:
(1)
Notice to creditors‑-Manner. The association shall within thirty days
after the effective date of dissolution give a notice to the association's
creditors informing them of the dissolution and requiring all those with claims
against the association to serve the claim on the association within one
hundred twenty days after the date of the first publication of the notice,
known and referred to as the one hundred twenty-day limitation period. This
notice shall be given as follows:
(a)
The association will give actual notice, as provided in subsection (3) of this
section, to the creditors that it knows of and to those creditors who become
known to the association within the one hundred twenty-day limitation period;
and
(b)
The association will cause the notice to be published once in each week for
three successive weeks in a legal newspaper of general circulation in the
county in which the association's principal place of business is located.
Except
as otherwise provided in subsection (3) of this section, any claim not filed
within the one hundred twenty-day limitation period is forever barred, if not
already barred by any otherwise applicable statute of limitations.
(2)
Known and ascertainable creditors. The association shall exercise due
diligence within the one hundred twenty-day limitation period to discover
reasonably ascertainable creditors of the association. The association will have
exercised due diligence in ascertaining creditors upon (a) conducting, within
the one hundred twenty-day limitation period, a reasonable review of the
association's books, records, accounts, resolutions, minutes, and
correspondence, including correspondence received after the effective date of
dissolution, and financial records, including checkbooks, bank statements,
etc., that are in the association's possession or are reasonably available to
it, and (b) having made reasonable inquiry of the association's directors,
officers, employees, and agents regarding claimants. If the association
conducts the review and makes the inquiry, it is presumed to have exercised
reasonable diligence to ascertain creditors of the association and creditors
not ascertained in the review or in an inquiry are presumed not reasonably
ascertainable. These presumptions may be rebutted only by clear, cogent, and
convincing evidence. In any proceeding against the association involving a
late claim, the association may, in addition to any other methods of proof
available under the rules of evidence, prove the review and inquiry by filing
an affidavit or declaration to that effect in the proceeding.
(3)
Notice to creditors‑-Time limits. The actual notice described in
subsection (1)(a) of this section, as to creditors known and those becoming
known to the association within the one hundred twenty-day limitation period,
shall be given to the creditors by personal service or regular first class
mail, addressed to the creditor's last known address, postage prepaid. The
actual notice shall be given before the later of the expiration of the one
hundred twenty-day limitation period or thirty days after any creditor became
known to the association within the one hundred twenty-day limitation period.
Any known creditor is barred unless the creditor has filed a claim, as
otherwise provided in this section, within the one hundred twenty-day
limitation period or within thirty days following the date of actual notice to
that creditor, whichever is later. If notice is given by mail, the date of
mailing shall be the date of notice.
(4)
Claims against the association‑-Time limits. Whether or not notice under
subsection (1) of this section has been given or should have been given, any
person having a claim against the association who has not filed a claim within
twelve months from the effective date of the association's dissolution shall be
forever barred from making a claim against the association, or commencing an
action against the association, if the claim or action is not already barred by
any otherwise applicable statute of limitations. However, the twelve-month
limitation does not apply to any claims where the association has not given the
actual notice described in subsection (1) of this section and during the
twelve-month period following the effective date of the association's
dissolution, partial performance has been made on the obligation underlying the
claim. An otherwise applicable statute of limitations applies without regard
to the tolling provisions of RCW 4.16.190. Any claim filed within twelve
months from the effective date of the association's dissolution and not
otherwise barred under this chapter shall be made in the form and manner
provided under subsection (6) of this section, as if the notice under
subsection (1) of this section had been given.
(5)
Deposit with state treasurer. Association assets that should be transferred to
a creditor or claimant of the association who cannot be found or who is not
competent to receive them may be reduced to cash and deposited with the state
treasurer, and if the creditor or claimant furnishes satisfactory proof of
entitlement to the amount deposited, the state treasurer or other appropriate
state official shall pay that person or that person's representative that
amount.
(6)
Notice‑-Form. Notice under RCW 31.12A.---(1) (subsection (1) of this
section) shall be in substantially the following form:
Washington Credit Union Share Guaranty Association
(hereafter referred to as WCUSGA) has been dissolved by section 2 of this act.
The effective date of dissolution is December 31, 1998. Persons having claims
against WCUSGA must, prior to the time such claims would be barred by any
otherwise applicable statute of limitations, serve their claims on WCUSGA at
the address stated below within one hundred twenty days after the date of first
publication of this notice or, except under those provisions included in RCW
31.12A.---(3) (subsection 3 of this section), the claim will be forever barred.
Claims submitted must contain the information required below.
DATE
OF FIRST
PUBLICATION:..............................
WCUSGA ADDRESS: (Here designate WCUSGA's address
for notice purposes)
INFORMATION
REQUIRED IN CLAIMS:
1.
The name and address of the claimant;
2. The name, business address (if different
from that of the claimant), and nature of authority of any person signing the
claim on behalf of the claimant;
3. A written statement of the facts or
circumstances constituting the basis upon which the claim is submitted;
4. The amount of the claim; and
5. Whether the claim is secured, unliquidated
or contingent, or not yet due; the nature of the security; the nature of any
uncertainty; and the due date of the claim: Provided however, That
failure to describe correctly the security, nature of any uncertainty, or the
due date of a claim not yet due, if such failure is not substantially
misleading, does not invalidate the claim.
(7)
Allowance or rejection of claims‑-Time limitations for rejection‑-Notification
of rejection‑-Requirements‑-Compromise of claim. The association
may accept claims, reject claims, or accept claims in part and reject them in
part.
(a)
If the association rejects a claim, in whole or in part, it shall notify the
claimant of the rejection. If the rejection is for part of the claim, the
notification shall state the amount of the claim rejected and the amount of the
claim accepted. The notification shall be by certified mail, postage prepaid,
addressed to the claimant at the claimant's address stated in the claim; if a
person other than the claimant signed the claim for or on behalf of the
claimant, and that person's business address as stated in the claim is
different from that of the claimant, notification of rejection shall also be
made by certified mail, postage prepaid, upon that person; the date of the
postmark is the date of notification. The notification of rejection shall
advise the claimant, and the person making claim on his, her, or its behalf, if
any, that the claimant must bring suit in the proper court against the association
within thirty days after notification of rejection or before expiration of the
time for serving and filing claims against the association, whichever period is
longer, and that otherwise the claim will be forever barred.
(b)
The association may, either before or after rejection of any claim, compromise
the claim, whether due or not, absolute or contingent, or liquidated or
unliquidated, if it appears to the association that such a compromise is in its
best interests.
(8)
Effect of acceptance. Every claim that has been accepted by the association
shall be ranked among the association's acknowledged debts to be paid in the
course of liquidation.
(9)
Suit on rejected claim. When a claim is rejected by the association, the
holder must bring suit in the proper court against the association within
thirty days after notification of the rejection or before expiration of the
time for serving and filing claims against the association, whichever period is
longer, otherwise the claim is forever barred.
(10)
Outlawed claims. No claim that is barred by the statutes of limitation shall
be accepted by the association or by a court.
(11)
Claims must be presented. A holder of any claim against the association shall
not maintain an action thereon unless the claim has been first presented as
provided in this chapter.
(12)
Partial acceptance of claim‑-Costs. Whenever any claim is presented to
the association and a part thereof is accepted, as reflected in the
association's notice of rejection, and if the claimant rejects the amount so
offered by the association in satisfaction of the claim, the claimant shall
recover no costs in any action brought against the association unless the
claimant's recovery, exclusive of interest and costs, is greater than the
amount accepted by the association.
(13)
Judgment against association‑-Payment. If any judgment has been rendered
against the association prior to the effective date of its dissolution, no
execution shall issue thereon after the effective date of its dissolution. The
claim shall be presented to the association as any other claim, but need not be
supported by the information otherwise required to be included in creditors'
claims. If the claim is justly due and unsatisfied, it shall be paid in due
course of liquidation. If there is a lien on any property of the association,
that property may be sold for the satisfaction of the lien, and the officer
making the sale shall account to the association for any surplus.
(14)
This section expires December 31, 2000.
NEW
SECTION. Sec. 4. A
new section is added to chapter 31.12A RCW to read as follows:
(1)
After the dissolution and liquidation of the association have been completed in
accordance with this chapter, an officer of the association shall execute
articles of dissolution and file the articles with the director. The articles
of dissolution shall set forth:
(a)
The name of the association;
(b)
The approved plan for the dissolution of the association;
(c)
That all debts, liabilities, and obligations of the association have been paid
and discharged or that adequate provision has been made in accordance with this
chapter;
(d)
That all the remaining property and assets of the association have been
transferred, conveyed, or distributed, or that adequate provision has been made
in accordance with this chapter;
(e)
That there are no suits pending against the association in any court or, if any
suits are pending against it, that adequate provision has been made for the
satisfaction of any judgment, order, or decree which may be entered; and
(f)
That a copy of a revenue clearance certificate issued under chapter 82.32 RCW,
if applicable, is included.
Upon
the filing of the articles of dissolution with the director, the dissolution
and liquidation of the association shall be deemed complete.
(2)
This section expires December 31, 2000.
Sec.
5. RCW
31.12.407 and 1996 c 5 s 5 are each amended to read as follows:
Credit unions must be insured by the federal share insurance
program under the national credit union administration, or be insured or
guaranteed by an interim share insurance or guaranty program approved by the
director under section 7 of this act, on or before December 31, 1998.
Sec.
6. RCW
31.12.408 and 1996 c 5 s 6 are each amended to read as follows:
(1)
After December 31, 1998, credit unions must be insured under the federal share
insurance program or an equivalent share insurance program as defined in this
section, or an interim share insurance or guaranty program approved by the
director under section 7 of this act. For the purposes of this section an
equivalent share insurance program is a program that: (a) Holds reserves
proportionately equal to the federal share insurance program; (b) maintains
adequate reserves and access to additional sources of funds through
replenishment features, reinsurance, or other sources of funds; and (c) has
share insurance contracts that reflect a national geographic diversity.
(2)
Before any credit union may insure its share deposits with a share insurance
program other than (a) the federal share insurance program or (b) an
interim share insurance or guaranty program approved under section 7 of this
act, the director must make a finding that the alternative share insurance
program meets the standards set forth in this section, following a public
hearing and a report on the basis for such finding to the appropriate standing
committees of the legislature. All such findings shall be made before December
1st of any year and shall not take effect until the end of the regular
legislative session of the following year.
(3)
Any alternative share insurance program approved under this section shall be
reviewed annually by the director to determine whether the program currently
meets the standards in this section. The director shall prepare a written
report of his or her findings including supporting analysis and forward the
report to the appropriate standing committees of the legislature. If the
director finds that the alternative share insurance program does not currently
meet the standards of this section the director shall notify all credit unions
that insure their shares under the alternative share insurance program, and
shall include notice of a public hearing for the purpose of receiving comment
on the director's finding. Following the hearing the director may either rescind
his or her finding or reaffirm the finding that the alternative share insurance
program does not meet the standards in this section. If the finding is
reaffirmed, the director shall order all credit unions whose shares are insured
with the alternative share insurance program to file, immediately, an
application with the national credit union administration to convert to the
federal share insurance program.
NEW
SECTION. Sec. 7. A
new section is added to chapter 31.12 RCW to read as follows:
(1)
A credit union with a composite capital adequacy, asset quality, management,
earnings, and liquidity rating of one or two, which has filed a completed
application for insurance of share accounts with the national credit union administration
in compliance with RCW 31.12A.007(1), and which has not been approved for such
insurance by September 30, 1998, may obtain a form of interim share insurance
or guaranty substantially similar to the coverage of the federal share
insurance program, with the prior approval of the director, for the period from
December 31, 1998, through July 1, 2001. An interim share insurance or
guaranty program approved by the director under this section is not subject to
RCW 31.12.408.
(2)
If a credit union insured or guaranteed by an interim share insurance or
guaranty program approved by the director under this section fails to obtain
federal share insurance, merge into a federally insured credit union, or
liquidate by July 1, 2001, or fails to obtain insurance under an equivalent
share insurance program under RCW 31.12.408 by July 1, 2001, the director may
appoint a liquidating agent, conservator, or receiver for the credit union
under this chapter as if the credit union were insolvent.
(3)
This section expires September 1, 2001.
NEW
SECTION. Sec. 8.
Section 1 of this act expires December 31, 2000.
NEW SECTION. Sec. 9.
Sections 5 and 6 of this act expire July 1, 2001.
