The deputy director can take over a credit union’s business and property if certain violations or unsafe conditions are found, and the court may then order receivership and liquidation.
6-585 - Involuntary dissolution 6-585 . Involuntary dissolution A. The deputy director may forthwith take possession and control of the business and property of any credit union to which this chapter is applicable whenever the deputy director finds on examination or investigation that such credit union has committed one or more of the following violations: 1. Is in violation of an order issued pursuant to section 6-137. 2. Is conducting its business in an unauthorized or unsafe manner or in violation of the bylaws of the credit union. 3. Is insolvent. 4. Has an impairment of its capital. 5. Cannot with safety and expediency continue business. 6. Has suspended payment of its obligations. 7. Is, through its officers, refusing to submit its books, papers and records of affairs for inspection to any examiner. 8. Is, through its officers, refusing to be examined regarding its affairs. 9. Has been examined by its own supervisory committee and the majority of the committee requested in writing that the deputy director take possession and control. 10. In a proceeding for voluntary dissolution has, through its liquidating agent, failed to make reasonable progress in the liquidation of its affairs and distribution of its assets. B. The deputy director on taking possession and control of the credit union, its business and operation, together with the furniture, fixtures, books, records and assets of every description, shall determine whether it is practicable and feasible to reorganize the credit union to continue in business or merge the credit union with another operating credit union. If the deputy director determines that the credit union cannot be reorganized or merged with another operating credit union, the deputy director may allow the credit union to operate under the deputy director's direction and control, or if the deputy director determines that the credit union should be liquidated through receivership, the deputy director shall petition the superior court for authority to liquidate such credit union, and the superior court shall immediately appoint the deputy director as the receiver of the credit union without bond, and shall make such other orders, judgments and decrees as are necessary to liquidate such credit union. The receiver shall take possession of and, for the purpose of receivership, title to the books, records and assets of every description of such credit union, shall proceed to collect all debts, dues and claims belonging to it, may sell or compound all bad or doubtful debts and may sell the real and personal property of such credit union, on such terms as the court may direct. C. Such receiver may sue and defend in the receiver's own name with respect to the affairs, assets, claims, debts, and choses in action of such credit union. D. The receiver shall hold all records of such receivership for a period of two years after the close of the receivership, and at the termination of the two years, the records may then be destroyed. E. All expenses of such receivership, including reasonable receiver and attorney fees, shall be paid out of the assets of such credit union, and all expenses of any preliminary or other examinations into the condition of any such credit union or receivership, and all expenses incident to and in connection with the possession and control of any credit union office, furniture and fixtures, books, records and assets of every description of such credit union by the receiver for the purpose of reorganization or liquidation through receivership, shall be paid out of the assets of such credit union. F. Notwithstanding the provisions of subsections A, B, C and D of this section, if such credit union is a federally insured state credit union, the court shall first tender the appointment as receiver to the national credit union administration, or any succeeding organization, which is authorized to qualify and act without bond. If the national credit union administration or succeeding organization accepts the appointment, it shall have all of the powers, privileges and duties as such receiver provided by the laws of this state.