7-2-6 - Possession by commissioner -- Notice -- Presentation, allowance, and disallowance of claims -- Objections to claims.
7-2-6. Possession by commissioner -- Notice -- Presentation, allowance, anddisallowance of claims -- Objections to claims.
(1) (a) Possession of an institution by the commissioner commences when notice oftaking possession is:
(i) posted in each office of the institution located in this state; or
(ii) delivered to a controlling person or officer of the institution.
(b) All notices, records, and other information regarding possession of an institution bythe commissioner may be kept confidential, and all court records and proceedings relating to thecommissioner's possession may be sealed from public access if:
(i) the commissioner finds it is in the best interests of the institution and its depositorsnot to notify the public of the possession by the commissioner;
(ii) the deposit and withdrawal of funds and payment to creditors of the institution is notsuspended, restricted, or interrupted; and
(iii) the court approves.
(2) (a) (i) Within 15 days after taking possession of an institution or other person underthe jurisdiction of the department, the commissioner shall publish a notice to all persons whomay have claims against the institution or other person to file proof of their claims with thecommissioner before a date specified in the notice.
(ii) The filing date shall be at least 90 days after the date of the first publication of thenotice.
(iii) The notice shall be published:
(A) (I) in a newspaper of general circulation in each city or county in which theinstitution or other person, or any subsidiary or service corporation of the institution, maintainsan office; and
(II) published again approximately 30 days and 60 days after the date of the firstpublication; and
(B) as required in Section 45-1-101 for 60 days.
(b) (i) Within 60 days of taking possession of a depository institution, the commissionershall send a similar notice to all persons whose identity is reflected in the books or records of theinstitution as depositors or other creditors, secured or unsecured, parties to litigation involvingthe institution pending at the date the commissioner takes possession of the institution, and allother potential claimants against the institution whose identity is reasonably ascertainable by thecommissioner from examination of the books and records of the institution. No notice isrequired in connection with accounts or other liabilities of the institution that will be paid in fullor be fully assumed by another depository institution or trust company. The notice shall specify afiling date for claims against the institution not less than 60 days after the date of mailing. Claimants whose claims against the institution have been assumed by another depositoryinstitution or trust company pursuant to a merger or purchase and assumption agreement with thecommissioner, or a federal deposit insurance agency appointed as receiver or liquidator of theinstitution, shall be notified of the assumption of their claims and the name and address of theassuming party within 60 days after the claim is assumed. Unless a purchase and assumption ormerger agreement requires otherwise, the assuming party shall give all required notices. Noticeshall be mailed to the address appearing in the books and records of the institution.
(ii) Inadvertent or unintentional failure to mail a notice to any person entitled to writtennotice under this paragraph does not impose any liability on the commissioner or any receiver or
liquidator appointed by him beyond the amount the claimant would be entitled to receive if theclaim had been timely filed and allowed. The commissioner or any receiver or liquidatorappointed by him are not liable for failure to mail notice unless the claimant establishes that ithad no knowledge of the commissioner taking possession of the institution until after allopportunity had passed for obtaining payment through filing a claim with the commissioner,receiver, or liquidator.
(c) Upon good cause shown, the court having supervisory jurisdiction may extend thetime in which the commissioner may serve any notice required by this chapter.
(d) The commissioner has the sole power to adjudicate any claim against the institution,its property or other assets, tangible or intangible, and to settle or compromise claims within thepriorities set forth in Section 7-2-15. Any action of the commissioner is subject to judicialreview as provided in Subsection (9).
(e) A receiver or liquidator of the institution appointed by the commissioner has all theduties, powers, authority, and responsibilities of the commissioner under this section. All claimsagainst the institution shall be filed with the receiver or liquidator within the applicable timespecified in this section and the receiver or liquidator shall adjudicate the claims as provided inSubsection (2)(d).
(f) The procedure established in this section is the sole remedy of claimants against aninstitution or its assets in the possession of the commissioner.
(3) With respect to a claim which appears in the books and records of an institution orother person in the possession of the commissioner as a secured claim, which, for purposes ofthis section is a claim that constitutes an enforceable, perfected lien, evidenced in writing, on theassets or other property of the institution:
(a) The commissioner shall allow or disallow each secured claim filed on or before thefiling date within 30 days after receipt of the claim and shall notify each secured claimant bycertified mail or in person of the basis for, and any conditions imposed on, the allowance ordisallowance.
(b) For all allowed secured claims, the commissioner shall be bound by the terms,covenants, and conditions relating to the assets or other property subject to the claim, as set forthin the note, bond, or other security agreement which evidences the secured claim, unless thecommissioner has given notice to the claimant of his intent to abandon the assets or otherproperty subject to the secured claim at the time the commissioner gave the notice described inSubsection (3)(a).
(c) No petition for lifting the stay provided by Section 7-2-7 may be filed with respect toa secured claim before the claim has been filed and allowed or disallowed by the commissionerin accordance with Subsection (3)(a).
(4) With respect to all other claims other than secured claims:
(a) Each claim filed on or before the filing date shall be allowed or disallowed within180 days after the final publication of notice.
(b) If notice of disallowance is not served upon the claimant by the commissioner within210 days after the date of final publication of notice, the claim is considered disallowed.
(c) The rights of claimants and the amount of a claim shall be determined as of the datethe commissioner took possession of the institution under this chapter. Claims based oncontractual obligations of the institution in existence on the date of possession may be allowedunless the obligation of the institution is dependent on events occurring after the date of
possession, or the amount or worth of the claim cannot be determined before any distribution ofassets of the institution is made to claimants having the same priority under Section 7-2-15.
(d) (i) An unliquidated claim against the institution, including claims based on allegedtorts for which the institution would have been liable on the date the commissioner tookpossession of the institution and any claims for a right to an equitable remedy for breach ofperformance by the institution, may be filed in an estimated amount. The commissioner maydisallow or allow the claim in an amount determined by the commissioner, settle the claim in anamount approved by the court, or, in his discretion, refer the claim to the court designated bySection 7-2-2 for determination in accordance with procedures designated by the court. If theinstitution held on the date of possession by the commissioner a policy of insurance that wouldapply to the liability asserted by the claimant, the commissioner, or any receiver appointed byhim may assign to the claimant all rights of the institution under the insurance policy in fullsatisfaction of the claim.
(ii) If the commissioner finds there are or may be issues of fact or law as to the validityof a claim, liquidated or unliquidated, or its proper allowance or disallowance under theprovisions of this chapter, he may appoint a hearing examiner to conduct a hearing and to prepareand submit recommended findings of fact and conclusions of law for final consideration by thecommissioner. The hearing shall be conducted as provided in rules or regulations issued by thecommissioner. The decision of the commissioner shall be based on the record before the hearingexaminer and information the commissioner considers relevant and shall be subject to judicialreview as provided in Subsection (9).
(e) A claim may be disallowed if it is based on actions or documents intended to deceivethe commissioner or any receiver or liquidator appointed by him.
(f) The commissioner may defer payment of any claim filed on behalf of a person whowas at any time in control of the institution within the meaning of Section 7-1-103, pending thefinal determination of all claims of the institution against that person.
(g) The commissioner or any receiver appointed by him may disallow a claim that seeksa dollar amount if it is determined by the court having jurisdiction under Section 7-2-2 that thecommissioner or receiver or conservator will not have any assets with which to pay the claimunder the priorities established by Section 7-2-15.
(h) The commissioner may adopt rules to establish such alternative dispute resolutionprocesses as may be appropriate for the resolution of claims filed against an institution under thischapter.
(i) In establishing alternative dispute resolution processes, the commissioner shall strivefor procedures that are expeditious, fair, independent, and low cost. The commissioner shall seekto develop incentives for claimants to participate in the alternative dispute resolution process.
(j) The commissioner may establish both binding and nonbinding processes, which maybe conducted by any government or private party, but all parties, including the claimant and thecommissioner or any receiver appointed by him, must agree to the use of the process in aparticular case.
(5) Claims filed after the filing date are disallowed, unless:
(a) the claimant who did not file his claim timely demonstrates that he did not havenotice or actual knowledge of the proceedings in time to file a timely proof of claim; and
(b) proof of the claim was filed prior to the last distribution of assets. For the purpose ofthis subsection only, late filed claims may be allowed if proof was filed before the final
distribution of assets of the institution to claimants of the same priority and are payable only outof the remaining assets of the institution.
(c) A late filed claim may be disallowed under any other provision of this section.
(6) Debts owing to the United States or to any state or its subdivisions as a penalty orforfeiture are not allowed, except for the amount of the pecuniary loss sustained by the act,transaction, or proceeding out of which the penalty or forfeiture arose.
(7) Except as otherwise provided in Subsection 7-2-15(1)(a), interest accruing on anyclaim after the commissioner has taken possession of an institution or other person under thischapter may be disallowed.
(8) A claim against an institution or its assets based on a contract or agreement may bedisallowed unless the agreement: (a) is in writing; (b) is otherwise a valid and enforceablecontract; and (c) has continuously, from the time of its execution, been an official record of theinstitution. The requirements of this Subsection (8) do not apply to claims for goods sold orservices rendered to an institution in the ordinary course of business by trade creditors who donot customarily use written agreements or other documents.
(9) (a) Objection to any claim allowed or disallowed may be made by any depositor orother claimant by filing a written objection with the commissioner within 30 days after service ofthe notice of allowance or disallowance. The commissioner shall present the objection to thecourt for hearing and determination upon written notice to the claimant and to the filing party. The notice shall set forth the time and place of hearing. After the 30-day period, no objectionmay be filed. This Subsection (9) does not apply to secured claims allowed under Subsection (3).
(b) The hearing shall be based on the record before the commissioner and any additionalevidence the court allowed to provide the parties due process of law.
(c) The court may not reverse or otherwise modify the determination of thecommissioner with respect to the claim unless it finds the determination of the commissioner tobe arbitrary, capricious, or otherwise contrary to law. The burden of proof is on the partyobjecting to the determination of the commissioner.
(d) An appeal from any final judgment of the court with respect to a claim may be takenas provided by law by the claimant, the commissioner, or any person having standing to object tothe allowance or disallowance of the claim.
(10) If a claim against the institution has been asserted in any judicial, administrative, orother proceeding pending at the time the commissioner took possession of the institution underthis chapter or under Chapter 19, Acquisition of Failing Depository Institutions or HoldingCompanies, the claimant shall file copies of all documents of record in the pending proceedingwith the commissioner within the time for filing claims as provided in Subsection (2). Such aclaim shall be allowed or disallowed within 90 days of the receipt of the complete record of theproceedings. No application to lift the stay of a pending proceeding shall be filed until the claimhas been allowed or disallowed. The commissioner may petition the court designated by Section7-2-2 to lift the stay to determine whether the claim should be allowed or disallowed.
(11) All claims allowed by the commissioner and not disallowed or otherwise modifiedby the court under Subsection (9), if not paid within 30 days after allowance, shall be evidencedby a certificate payable only out of the assets of the institution in the possession of thecommissioner, subject to the priorities set forth in Section 7-2-15. This provision does not applyto a secured claim allowed by the commissioner under Subsection (3)(a).
Amended by Chapter 388, 2009 General Session