Virginia Law

Article 13. Receiverships.

As used in this article, "insolvent" or "insolvency" means incapable of meeting the current demands of creditors or having liabilities which, in total, exceed the book value of assets.

Code 1950, § 6-114; 1966, c. 584, § 6.1-100; 1983, c. 507; 2010, c. 794; 2018, c. 257.

A. If (i) any bank is approaching insolvency and no reasonable prospect for rehabilitation of the bank exists, (ii) the Commission deems it necessary with respect to any bank for the protection of the public interest, or (iii) any bank has a ratio of tangible equity to total assets that is equal to or less than two percent, the Commission (a) may close immediately the doors of the bank without any notice and (b) by its duly appointed agent shall take charge of the books, assets, and affairs of the bank until the appointment of a receiver as provided by law.

B. If a bank has been closed by the Commission, the Commission may proceed (i) to have a receiver for the closed bank appointed in accordance with § 6.2-916 or (ii) as provided in Article 14 (§ 6.2-925 et seq.) of this chapter.

Code 1950, § 6-114; 1966, c. 584, § 6.1-100; 1983, c. 507; 2010, c. 794; 2018, c. 257.

A. If the Commission finds that a bank is insolvent, that its merger into another bank is desirable for the protection of its depositors, and that an emergency exists, and, if the board of directors of such insolvent bank approves a plan of merger of such bank into another bank, (i) compliance with the requirements of § 13.1-718 shall be dispensed with as to such insolvent bank and (ii) the approval by the Commission of such plan of merger shall be the equivalent of approval by the holders of more than two-thirds of the outstanding shares of such insolvent bank for all purposes of Article 12 (§ 13.1-715.1 et seq.) of Chapter 9 of Title 13.1.

B. If the Commission finds that a bank is insolvent, that the acquisition of its assets by another bank is in the best interests of its depositors, and that an emergency exists, the Commission, with the consent of the boards of directors of both banks as to the terms and conditions of such transfer, including the assumption of all or certain liabilities, may enter an order transferring some or all of the assets of such insolvent bank to such other bank, in which event (i) compliance with the provisions of §§ 13.1-723 and 13.1-724 shall not be required and (ii) §§ 13.1-730 through 13.1-741 shall not be applicable to such transfer.

C. In the case either of a merger as provided in subsection A or of a sale of assets as provided in subsection B, the Commission shall provide that prompt notice of its finding of insolvency and of the merger or sale of assets be sent to the stockholders of record of the insolvent bank for the purpose of providing such shareholders an opportunity to challenge the finding that the bank is insolvent. The relevant books and records of such insolvent bank shall remain intact and be made available to such shareholders for a period of 30 days after such notice is sent. The Commission's finding of insolvency shall become final if a hearing before the Commission is not requested by any such shareholder within such 30-day period.

D. If, after such hearing provided in subsection C, the Commission finds that such bank was solvent, it shall rescind its order entered pursuant to subsection A or B and the merger or transfer of assets shall be rescinded. However, if after such hearing the Commission finds that such bank was insolvent, its order shall be final.

1975, c. 44, § 6.1-100.1; 1983, c. 507; 2005, c. 765; 2010, c. 794.

If, upon the examination of any bank that is designated as a state depository, it appears to the Commission that the bank is insolvent or is unable to meet its obligations and the legal demands upon it in the ordinary course of its business, the Commission shall forthwith notify the State Treasurer, who shall discontinue further deposits therein of state funds and take such action as may be necessary to protect the deposits of the Commonwealth therein.

Code 1950, § 6-115; 1966, c. 584, § 6.1-101; 2010, c. 794.

When, in the judgment of the Commission, it is necessary for the protection of the interests of the Commonwealth or of the depositors and creditors of any bank doing business in the Commonwealth, or of the creditors of any trust company doing business in the Commonwealth, the Commission shall apply to any court in the Commonwealth having jurisdiction to appoint receivers for the appointment of a receiver to take charge of the business affairs and assets, and to wind up the affairs and business, of any such bank or trust company (i) failing to comply with the requirements of the Commission or (ii) found upon examination to be insolvent or unable to meet its obligations and the legal demands made upon it in the ordinary course and conduct of its business.

Code 1950, § 6-116; 1966, c. 584, § 6.1-102; 2010, c. 794.

A. When any receiver is appointed under the provisions of this article for any bank authorized to do a trust business or for any trust company, the receiver may be empowered by the court by which he is appointed:

1. To act for and on behalf of such bank or trust company in the execution of any power of sale conferred upon such bank or trust company by any instrument;

2. When such sale is made, to execute, acknowledge and deliver for and on behalf of such bank or trust company such deed as may be proper under the provisions of such instrument for the conveyance of title to the property conveyed therein; and

3. Upon payment of the amount secured under any such instrument, to execute, acknowledge, and deliver for and on behalf of such bank or trust company a proper release deed for the property conveyed therein.

B. Any such sale made by such receiver and any such deed or release executed by him, when so authorized and empowered, shall be as effective and as binding as if the same had been made or executed by such bank or trust company before the appointment of such receiver.

C. All sales that have been made by any such receivers within the Commonwealth, and all such deeds and release deeds that have been executed by any such receivers within the Commonwealth under the authority of the court by which they were appointed, since June 19, 1936, shall be as effective and as binding as if the same had been made by such bank or trust company before the appointment of such receiver.

Code 1950, § 6-117; 1966, c. 584, § 6.1-103; 2010, c. 794.

Any receiver appointed under the provisions of this article shall be and become assignee of the assets and property of the bank or trust company of which he has been appointed receiver, with power to prosecute and defend, in the name of the bank or trust company or in his name as such receiver or otherwise, in the Commonwealth or elsewhere, all such suits as may be necessary to wind up the affairs and business of such bank or trust company, and to appoint such agents or attorneys for any such purpose as the court may approve.

Code 1950, § 6-118; 1966, c. 584, § 6.1-104; 2010, c. 794.

When an appropriate court, on a proper application therefor, shall appoint a receiver for any bank or trust company, the court may prescribe and direct, by order or decree entered of record, that the rate of interest to be paid by the receiver upon the claims of depositors of the bank or trust company shall not exceed the current or contracted rate of interest paid by the state bank or trust company on deposits. In addition, the court may fix the interest to be so paid at such lower rate as the court may deem proper under all the circumstances of the case. In such event, the court shall also direct that any surplus remaining after the payment in full of the depositors, together with the interest thereon as so prescribed and fixed, shall be distributed pro rata among the shareholders of the bank or trust company as of the date of the appointment of the receiver.

Code 1950, § 6-69; 1966, c. 584, § 6.1-105; 2010, c. 794.

If, in a suit having as its object the administration or liquidation of the assets of an insolvent bank or trust company operating in the Commonwealth, the court orders the payment to creditors of dividends on, or other payments of, claims as therein ascertained and established, and (i) the receiver or other person charged with making the ordered payment to creditors is unable to make the payment by reason of his inability to ascertain the address of any creditor, the failure of any creditor to apply to such disbursing official for payment when so directed by the order of the court, or any other similar reason; or (ii) a trustee engaged in the voluntary liquidation of the assets of an insolvent bank or trust company operating in the Commonwealth, by petition to an appropriate court in the locality wherein the principal office of the insolvent bank or trust company is located, alleges and shows to the satisfaction of the court his inability to make payment to creditors for any of the reasons specified in clause (i), the court, in its discretion, may enter an order directing its receiver or other person charged with the duty of making such payment, or the trustee, to publish at least twice in a newspaper having a general circulation in the locality where the suit or petition is pending a list of creditors to whom dividends or payments are due and unpaid and the amount thereof. The publication shall include a notice that any creditor therein named who fails to apply to the disbursing official for payment of the amount due him within six months from the date of the last publication of such notice will be barred from his right thereafter to receive payment of amounts then due and from participation in any future dividends or payments that may thereafter be ordered.

Code 1950, § 6-58; 1966, c. 584, § 6.1-106; 2010, c. 794.

If any bank or trust company under the circumstances set forth in clause (i) or (ii) of § 6.2-920 is in liquidation for a period of more than 10 years, and more than five years have elapsed since the date of the entry of the last court order directing the payment to creditors of dividends on or other payments of claims as therein ascertained and established, then it shall be unnecessary to publish a list of creditors to whom dividends or payments are due and unpaid and the amount thereof. In such event, it shall only be necessary to publish a notice stating (i) the total amount of dividends ordered paid and unclaimed; (ii) that a list of such creditors may be seen at the office of the receiver, liquidating agent, or other disbursing officer; and (iii) that any creditor who fails to apply to such disbursing official for payment of the amount due him within six months from the date of the last publication of such notice shall be barred from his right thereafter to receive payment of amounts then due and from participation in any future dividends or payments that may thereafter be ordered.

Code 1950, § 6-59; 1966, c. 584, § 6.1-107; 2010, c. 794.

If there are two or more newspapers having general circulation in the locality where a suit or petition described in § 6.2-920 is pending, the court, in its discretion, in lieu of the publication provided for therein or in § 6.2-921, may direct that the list of creditors and the notice, be published once in at least two of the newspapers having general circulation in the locality.

Code 1950, § 6-60; 1966, c. 584, § 6.1-108; 2010, c. 794.

After the lapse of six months from the date of the last publication of the notice prescribed by § 6.2-920, 6.2-921, or 6.2-922, the court shall enter an order barring the claims of all creditors who have not theretofore applied for payment of their claims. Thereafter, (i) no creditor who failed to apply for payment within such period shall bring or maintain any action, suit, or proceeding and (ii) no process shall issue, for the enforcement of any claim to dividends or payments previously ordered paid to such creditor. In addition, no such creditor shall participate in future dividends or payments thereafter ordered in the suit or petition to be paid. The court in which any such suit or petition is pending may, in its discretion, before final distribution and for good cause shown, reinstate any claim barred pursuant to the foregoing provisions of this section.

Code 1950, § 6-61; 1966, c. 584, § 6.1-109; 2010, c. 794.

A. Any court in the Commonwealth that has jurisdiction to appoint receivers, in its discretion, may authorize any receiver appointed by such court for any bank or trust company, pursuant to the provisions of this article:

1. To apply and contract for a loan from any corporation or agency that is (i) organized or provided for by, or pursuant to, federal law and (ii) authorized, among other purposes, to make loans upon the application of the receiver or liquidating agent of any bank that is closed, or in process of liquidation, secured by the assets of any such bank, and if such loan is for the purpose of aiding in the reorganization or liquidation of any such bank, secured by the payment of liquidating dividends from the proceeds thereof; and

2. To secure any loan described in subdivision 1 by the pledge, hypothecation or mortgage of any or all of the assets of the bank or trust company, or in such other manner as such court, in its discretion, may authorize.

B. Any such court, in its discretion, also may authorize any receiver so appointed by it to invest any funds in the hands of such receiver in bonds of the United States or of the Commonwealth.

Code 1950, § 6-81; 1966, c. 584, § 6.1-110; 2010, c. 794.