§ 42-116-12 - Payment of depositor's claims.
SECTION 42-116-12
§ 42-116-12 Payment of depositor's claims.– (a) Subject to the provisions of § 42-116-7(1) – (6), distributionsfrom the corporation with respect to deposit liabilities assumed from eligibleinstitutions shall be made in accordance with this section.
(b) For the purposes of this section, each assumed depositliability is the sum of the principal amount thereof as of January 1, 1991,plus accrued interest thereon to the date that the eligible institution waspetitioned into receivership. In the case of an eligible institution that is acredit union, all types of the eligible institution's member share accounts,including regular shares, share certificates and share draft accounts, exceptas to one share per account which are deemed to constitute an equity ownershipinterest in the eligible institution, are deemed to be deposit liabilities tothe extent assumed by the corporation.
(c) Deposit liabilities and distributions on account thereofmade pursuant to this section shall not include any interest accrued from thetime that the eligible institution from which the deposit liabilities arose waspetitioned into receivership.
(d) For the purpose of determining distributions by thecorporation in respect of assumed deposit liabilities, as set forth insubsection (b), assumed deposit liabilities in the same eligible institutionare aggregated and adjusted in accordance with regulations adopted by thecorporation, which regulations follow the principles contained in § 3(m)of the Federal Deposit Insurance Act, 12 U.S.C. § 1811 et seq., as ineffect as of December 31, 1990 and rules and regulations of the Federal DepositInsurance Corporation as in effect as of December 31, 1990. Assumed depositliabilities determined after this aggregation shall be segregated into separateobligations that are entitled to separate distributions from the corporation asprovided in this section (as so aggregated and determined referred toindividually as "distributable account" and collectively as "distributableaccounts").
(e) Payments on account of distributable accounts as setforth in subsection (d) shall be made as follows:
(1) Distributable accounts of four thousand dollars ($4,000)or less shall be paid in full by June 30, 1992.
(2) As to distributable accounts of more than four thousanddollars ($4,000), ninety percent (90%) of the entire balance of thedistributable account shall be paid by June 30, 1992.
(3) As to distributable accounts described in subdivision (2)of this subsection, there is established a guaranteed balance equal to tenpercent (10%) of the distributable account as initially determined. Theguaranteed balance shall bear simple interest, not compounded, at five percent(5%) per annum beginning July 1, 1992. Interest accrued through June 30, 1997shall be posted to each depositor's guaranteed balance as of June 30, 1997 asan addition to the principal thereof. A depositor has no right to receive thatinterest prior to July 1, 1997. The principal of the guaranteed balance, toinclude the interest posted on June 30, 1997, shall be paid in fifteen (15)consecutive equal annual payments commencing on July 1, 1997 and on each July1, thereafter until paid in full. Notwithstanding any other provisions orreferences to pro-rata distribution in chapter 116 of title 42, all netproceeds from litigation, whether settled in or out of court, shall be paidequally to each depositor with guaranteed balances upon receipt by thecorporation each time that escrow reaches fifteen million dollars($15,000,000). Interest accrued after June 30, 1997 shall be paid in arrears onthe outstanding principal of the guaranteed balance concurrently with eachannual principal payments.
(f) The principal amount of any guaranteed balance and/or theamount of each distribution by the corporation under this section, includingwithout limitation those in respect of distributable accounts and/or guaranteedbalances, shall be reduced permanently from time to time by an amount equal tothe aggregate of all prior payments not previously applied against eachdistribution, and the corporation may continue to reduce these distributions byany unapplied prior payments until the aggregate amount of the prior paymentshave been applied against these distributions under this section. For thepurposes of this section, the term "prior payment" means the aggregate amountfrom time to time after January 1, 1991 of:
(1) Payments made or issued by an eligible institution, thereceiver of the eligible institution or the corporation (other thandistributions under this section) in respect of any deposit liabilities of theintended recipient of the distribution and/or any deposit liabilities givingrise to the distribution; and
(2) Set-offs made by the eligible institution, the receiverof the eligible institution or the corporation in respect of any depositliabilities of the intended recipient of the distribution and/or any depositliabilities giving rise to the distribution.
(g) Within thirty (30) days after the date of the payment setforth in subdivision (e)(2) and concurrently with each annual payment of theguaranteed balance, the owner thereof shall receive a statement of account.
(2) From June 30, 1992 until June 30, 1997, except fortransfer by will, the laws of descent and distribution, or otherwise requiredby operation of law, the guaranteed balance is non-transferable, whether bysale, pledge, gift, or otherwise. Commencing on July 1, 1997, any guaranteedbalance may be transferred by the holder thereof; provided that the transferdoes not subject the corporation, the transferor, or the transferee to anyregistration or reporting requirements under applicable federal and/or statesecurities laws; and provided further, that any guaranteed balance transferredpursuant to this section may not be used by any transferee or subsequenttransferee as a set off or other reduction against any debt or liability to thecorporation, or any assignee or transferee of the corporation.
(3) The guaranteed balances will not be evidenced by acertificate or other instrument. The corporation shall maintain a record of thename and address of the owner of the guaranteed balance and the amount of theguaranteed balance.
(h) The corporation may:
(1) Pre-pay any guaranteed balance with a principal amount ofless than one thousand dollars ($1,000) at any time;
(2) Pre-pay the outstanding amount of all guaranteed balancesat any time; and
(3) Pre-pay all guaranteed balances on a pro-rata basis atany time. Pro-rata means a distribution in the percentage that the aggregateamount of prepayment bears to the aggregate amount of the outstanding principalbalance of all guaranteed balances.
(i) All net proceeds of litigation, (after payment of alllegal fees, costs, and expenses arising in connection therewith) whether bysettlement or suit, prosecuted by an eligible institution, the receiver of aneligible institution and/or the corporation, shall be paid to the corporationand shall be utilized by it as follows:
(i) To pay the guaranteed balances in accordance withsubdivision (e)(3); and
(ii) After the guaranteed balances have been paid in full, topay the loan obligations or bond indebtedness of the corporation.
(2) The term "litigation," for the purposes of thissubsection, means all rights, claims and causes of action against:
(i) Any eligible institution;
(ii) The Rhode Island share and deposit indemnity corporation;
(iii) And/or any officers, directors, employees, accountants,attorneys, appraisers, consultants, agents, or providers of professionalservices to the institution and/or the Rhode Island share and deposit indemnitycorporation.
(j) The corporation requires that any depositor entitled toreceive any payment under the terms of this chapter shall, in consideration ofthe corporation's making the payment and as a condition precedent to thedepositor's receiving the payment, and only to the extent of that payment andany tolled or lost interest or consequential damages attributable to thatpayment, execute a total and complete waiver and release of any and all rights,claims and causes of action, of any nature whatsoever, which that depositormight have against the state or any of its officials or employees in relationto the pro rata portion of any funds or accounts that the depositor may have ormay have had on deposit with any eligible institution.
(2) Distributions as to distributable accounts arising fromthe assumed deposit liabilities of the heritage loan and investment company arelimited to those deposit liability claims which have been allowed and validatedby an un-stayed order or judgment of the superior court sitting at Providencecounty. Distributable accounts arising from deposit liability claims which havenot been allowed and validated by an un-stayed order or judgment of thesuperior court as of June 30, 1992 shall be paid by the corporation withinsixty (60) days of the receipt by the corporation of an un-stayed order orjudgment of the superior court which allows and validates the claim. Payment ofdistributable accounts pursuant to this subsection shall be in accordance withand in the same manner and form as set forth in subdivisions (e)(1), (e)(2) and(e)(3).
(k) The provisions of subdivisions (e)(1) and (e)(2) do notapply to this subsection. In the event that substantially all of the depositliabilities of the Davisville Credit Union are insured by the Federal DepositInsurance Corporation, the payment of any distributable account arising fromthe assumption by the corporation of any uninsured portion of a depositliability of the Davisville Credit Union, which uninsured portion does notexceed ten percent (10%) of the deposit liability existing as of the date ofthe insurance, shall be made by the establishment by the corporation of aguaranteed balance equal to the amount of the distributable account. The amountof the distributable account shall be determined by the corporation withinthirty (30) days of the corporation's assumption of the portion of the depositliability. The guaranteed balance as established in this subsection is payablein the same manner and on the same terms and conditions as the guaranteedbalance provided for in subdivision (e)(3).
(2) The guaranteed balance as established in this subsectionis subject to the remaining provisions of this section.