Virginia Code 6.2-1317: Supervisory merger or transfer of assets of insolvent or financially unstable credit union.
A. If the Commission finds that (i) a state credit union is insolvent or financially unstable and (ii) its merger into another credit union is desirable for the protection of its members, and if the board of directors of both credit unions approves a plan of merging such state credit union into another state credit union or a federal credit union, compliance with § 13.1-895 shall be dispensed with as to both credit unions and the approval of the Commission of such plan of merger shall be the equivalent of approval by more than two-thirds of the members of both credit unions for all purposes of Article 11 (§ 13.1-893.1 et seq.) and Article 12 (§ 13.1-899 et seq.) of Chapter 10 of Title 13.1.
Terms Used In Virginia Code 6.2-1317
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Commission: means the State Corporation Commission. See Virginia Code 6.2-100
- Credit union: means a cooperative, nonprofit corporation organized under the laws of the Commonwealth and authorized to do business under this chapter for the purposes of encouraging thrift among its members, creating a source of credit at fair and reasonable rates of interest, providing an opportunity for its members to use and control their own money on a democratic basis in order to improve their economic and social condition, and conducting any other business, engaging in any other activity, and providing any other service that may be of benefit to its members, consistent with the provisions of this chapter and any regulations adopted by the Commission under this chapter. See Virginia Code 6.2-1300
- Financial institution: means any bank, trust company, savings institution, industrial loan association, consumer finance company, or credit union. See Virginia Code 6.2-100
- insolvency: means that (i) a credit union is incapable of meeting the current demands of creditors or (ii) the current value of a credit union's assets is less than the current value of the sum of its share accounts and liabilities. See Virginia Code 6.2-1313
- Insuring organization: means an organization that provides aid and financial assistance to credit unions that are in the process of liquidation or are incurring financial difficulty in order that the share accounts in the credit unions shall be protected or guaranteed against loss up to a specified limit for each account, such as the National Credit Union Administration Share Insurance Fund, a corporation organized under Article 5 (§ Virginia Code 6.2-1300
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- State: when applied to a part of the United States, includes any of the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, and the United States Virgin Islands. See Virginia Code 1-245
B. If the Commission finds that (i) a state credit union is insolvent or financially unstable and (ii) the acquisition of its assets by another state credit union or a federal credit union is in the best interests of its members, it may, with the consent of the board of directors of both credit unions as to the terms and conditions of such transfer, including the assumption of all or certain liabilities, enter an order transferring some or all of the assets of such state credit union to such other state or federal credit union and compliance with the provisions of §§ 13.1-899 and 13.1-900 shall not be required.
C. In the case either of such a merger or of such a sale of assets, the Commission shall require that prompt notice of its findings of insolvency or financial instability and of the merger or sale of assets be sent to the members of record of the insolvent or financially unstable state credit union for the purpose of providing such members an opportunity to challenge the finding that the state credit union is insolvent or financially unstable. The relevant books and records of such credit union shall be preserved and be made available to such members for a period of 30 days after such notice is sent. The Commission’s finding of insolvency or financial instability shall become final if a hearing before the Commission is not requested by any such member within such 30-day period.
D. If, after such hearing provided in subsection C, the Commission finds that the state credit union is solvent and financially stable, it shall rescind its order entered pursuant to subsection A or subsection B and the merger or transfer of assets shall be rescinded. After such hearing, however, if the Commission finds that the state credit union is insolvent or financially unstable, its order shall be final.
E. Notwithstanding the provisions of subsection B of § 6.2-1327, or any other provisions of this chapter, the Commission may order a merger pursuant to subsection A or a sale of assets pursuant to subsection B. The continuing credit union, upon approval of the Commission, shall amend its bylaws to incorporate the specified common bond of interest of the insolvent or financially unstable credit union.
F. The Commission may authorize a financial institution whose deposits are insured by a federal agency to purchase any of the assets of or assume any of the liabilities of a credit union that is insolvent or financially unstable, provided that prior to exercising this authority the Commission shall use every reasonable effort to effect a merger or consolidation with or purchase and assumption by another credit union and shall have been advised by the insuring organization that it cannot effect a merger, consolidation, or other disposition of the insolvent or financially unstable credit union acceptable to the Commission.
1982, c. 571, § 6.1-200.4; 1985, c. 364; 1990, c. 373, § 6.1-225.10; 2010, c. 794; 2021, Sp. Sess. I, c. 143.