The Vermont Statutes Online

Title 8 : Banking and Insurance

Chapter 226 : Suspension, Liquidation, Insolvency, Conservation, Involuntary Merger, and Directors and Managing Officers of a Troubled Credit Union

• § 36101. Suspension, voluntary liquidation, and involuntary liquidation

  (a) Suspension. If it appears that any credit union is bankrupt or insolvent or that it has willfully violated this chapter or is operating in an unsafe or unsound manner, the Commissioner shall issue an order temporarily suspending the credit union’s operations for not more than 60 days. The governing body shall be given notice by registered mail of the suspension, which notice shall include a list of the reasons for the suspension or a list of the specific violations of this chapter. The Commissioner shall also notify the insuring organization of any suspension. Upon receipt of the suspension notice, the credit union shall immediately cease all operations. The directors of the credit union shall then file with the Commissioner a reply to the suspension notice, request a hearing to present a plan of corrective actions proposed if they desire to continue operations, or request that the credit union be declared insolvent and a liquidating agent appointed. If the credit union fails to answer the suspension notice or request a hearing with the Commissioner, the Commissioner may then revoke the credit union’s charter, appoint a liquidating agent, and liquidate the credit union in accordance with subsection (d) of this section.

  (b) Voluntary liquidation. At a meeting specially called to consider the matter, a majority of the entire membership may vote to dissolve the credit union if a copy of the notice was mailed to the members of the credit union at least 10 days prior to the meeting. Any member not present at the meeting may within the next 20 days vote in favor of dissolution by signing a statement in a form approved by the Commissioner, and the vote shall have the same force and effect as if cast at the meeting. The credit union shall thereupon immediately cease to do business except for the purposes of liquidation, and the chairperson of the governing body and secretary shall, within five days following the meeting, notify the Commissioner of the credit union’s intention to liquidate and shall include in the notification a list of the names and addresses of the directors and officers of the credit union.

  (c) Involuntary liquidation. If the Commissioner, after issuing notice of suspension and providing an opportunity for a hearing, rejects the credit union’s plan to continue operations, the Commissioner may issue a notice of involuntary liquidation and appoint a liquidating agent. The credit union may request a stay of execution of that action by appealing to the Superior Court of Washington County. Involuntary liquidation may not be ordered before the suspension procedures outlined in subsection (a) of this section are completed.

  (d) Liquidating procedure. The credit union shall continue in existence for the purpose of discharging its debts, collecting and distributing its assets, and doing all acts required in order to wind up its business and may sue and be sued for the purpose of enforcing those debts and obligations until its affairs are fully adjusted. The governing body or, in the case of involuntary dissolution, the liquidating agent shall use the assets of the credit union to pay: first, expenses incidental to liquidation including any surety bond that may be required; second, any liability due nonmembers; third, deposits and savings club accounts as provided in this chapter. Assets then remaining shall be distributed to the members proportionately to the shares held by each member as of the date liquidation was voted. As soon as the governing body or the liquidating agent determines that all assets from which there is a reasonable expectancy of realization have been liquidated and distributed as set forth in this section, it shall execute a certificate of liquidation on a form prescribed by the Commissioner and file it with the Secretary of State. The certificate shall, after filing or recording and indexing, be forwarded to the Commissioner whereupon the credit union shall be dissolved.

  (e) NCUA as liquidating agent. In the case in which the administrator of the National Credit Union Administration is appointed liquidating agent, the Administrator shall have the right to be subrogated to the rights of the members of the liquidating credit union. (Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2021, No. 105 (Adj. Sess.), § 344, eff. July 1, 2022.)