Code Section Group

Financial Code - FIN

DIVISION 7. INDUSTRIAL LOAN COMPANIES [18000 - 18707]

  ( Division 7 repealed and added by Stats. 1976, Ch. 964. )

CHAPTER 5. Administration and Powers of the Commissioner [18339 - 18427.11]

  ( Chapter 5 added by Stats. 1976, Ch. 964. )

ARTICLE 4. Possession, Conservatorship, and Liquidation by the Commissioner [18415 - 18425.17]
  ( Article 4 added by Stats. 1985, Ch. 140, Sec. 1. )

18415.
  

The commissioner may take possession of the property and business of any industrial loan company and retain possession until the company resumes business or its affairs are liquidated if any of the following grounds exist:

(a) The capital of an industrial loan company is impaired.

(b) An industrial loan company has violated its articles of incorporation or any law of this state.

(c) An industrial loan company is conducting its business in an unsafe or unauthorized manner.

(d) An industrial loan company refuses to submit its books, papers and affairs to the inspection of any examiner.

(e) An officer of any industrial loan company refuses to be examined upon oath touching the concerns of such industrial loan company.

(f) An industrial loan company has suspended payment of its obligations.

(g) An industrial loan company is in such condition that it is unsound or unsafe for it to transact business.

(h) An industrial loan company neglects or refuses to observe any order of the commissioner made pursuant to this division, unless the enforcement of that order is restrained in a proceeding brought by the industrial loan company.

(i) An industrial loan company (1) fails to become and continue as either a member of the Federal Deposit Insurance Corporation or a member of the Thrift Guaranty Corporation of California in accordance with Chapter 7 (commencing with Section 18475), (2) has its right to participate in the Thrift Guaranty Corporation of California suspended or revoked pursuant to subdivision (a) of Section 18496 and it is not a member of the Federal Deposit Insurance Corporation, or (3) fails to pay any assessment levied pursuant thereto within the time specified.

(j) A member industrial loan company of Guaranty Corporation refuses to permit Guaranty Corporation, its appointed certified public accountant or public accountant, or specialized committees or employees to fulfill their duties under Section 18496.

(k) An industrial loan company has sold or issued investment certificates in violation of the provisions of this division.

(l) An industrial loan company has failed to maintain in effect a bond required under the provisions of this division.

(m) Any fact or condition exists which, if it had existed at the time of the original application for authority to organize and establish a corporation to engage in the industrial loan business reasonably would have warranted the commissioner in disapproving the application.

(n) An application for membership in the Federal Deposit Insurance Corporation has not been filed with and accepted by the Federal Deposit Insurance Corporation on or before January 15, 1990.

If the commissioner takes possession of the business and property of an industrial loan company, the company, with the consent of the commissioner, may resume business upon prescribed conditions.

(Amended by Stats. 1989, Ch. 583, Sec. 2.5.)

18415.1.
  

Whenever the commissioner has taken possession of the property and business of an industrial loan company, that industrial loan company, within 10 days after the taking, if it deems itself aggrieved thereby, may apply to the superior court in the county in which the head office of the industrial loan company is located to enjoin further proceedings. The commissioner may exercise all powers granted by this article during the 10-day period after taking possession of the property and business of the industrial loan company. The court, after citing the commissioner to show cause why further proceedings should not be enjoined and after a hearing and a determination of the facts upon the merits may dismiss the application or enjoin the commissioner from further proceedings and direct the commissioner to surrender the property and business to the industrial loan company, or make such further order as may be just.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.2.
  

An appeal may be taken from the judgment of the court by the commissioner or by the industrial loan company in the manner provided by law for appeals from the judgment of a superior court to the court of appeal.

(Amended by Stats. 1998, Ch. 931, Sec. 149. Effective September 28, 1998.)

18415.3.
  

(a) Whenever the net worth of an industrial loan company, exclusive of its good will, is less than 90 percent of the aggregate sum of its outstanding investment certificates, exclusive of those hypothecated with the company issuing them, divided by the fraction that is its investment certificates ratio permitted by the commissioner, the commissioner shall by written order direct the company to make good the alleged deficiency of net worth. Pursuant to the commissioner’s orders, the company’s net worth shall be at least 100 percent of the aggregate sum of its outstanding investment certificates, exclusive of those hypothecated with the company issuing them, divided by the fraction that is its investment certificates ratio permitted by the commissioner.

(b) If the company fails to cure the alleged deficiency of net worth within the commissioner’s specified time, not to exceed 120 days, the commissioner may take possession of the company’s property and business. If the alleged deficiency is not cured within 120 days of the order, the commissioner shall take possession of the company’s property and business.

(Amended by Stats. 2006, Ch. 538, Sec. 174. Effective January 1, 2007.)

18415.4.
  

The commissioner may also, upon the request of the board of directors of a company, take possession of the property and business of a company and as conservator, take such action as the commissioner deems proper.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.5.
  

Upon taking possession of the property and business of any industrial loan company, the commissioner shall give notice of that fact to all persons holding or having in their possession any assets of the company. The notice required by this section shall not be deemed to be a prerequisite to the taking of possession of the property and business of the industrial loan company. No person knowing of the taking, or who has been notified thereof, shall have a lien or charge upon any assets of the company for any payment, advance or clearance thereafter made, or for any liability thereafter incurred.

Notice is deemed given when the commissioner has either made personal service of the notice, or mailed the notice to the person by certified mail.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.6.
  

Any officer, agent, employee, director, or stockholder of a company who refuses to comply with the demand for possession issued under Section 18415 shall be guilty of a misdemeanor punishable by a fine of not more than one thousand dollars ($1,000) or imprisonment not exceeding one year or by both such fine and imprisonment.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.7.
  

On demand of the commissioner, it shall be the duty of the sheriff of any county of the state, and of the police department of any municipal corporation therein, to furnish the commissioner with deputies, patrolmen, or officers as may be necessary to assist the commissioner in making and enforcing any seizure under Section 18415.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.8.
  

Upon taking possession of the property and business of any company, the superior court for the county in which the head office of the company is located shall have exclusive original jurisdiction of all proceedings relating thereto and of any action or other proceedings brought under the provisions of this chapter. All papers relating to the taking of possession, including copies of the certificate of appointment of any special deputy, shall be filed and be made a part of the record of the proceeding within 45 days of the date of taking possession. All papers filed with the superior court, including inventories required to be filed, shall be made a part of the record of the proceeding without the payment of any additional fees therefor.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.9.
  

At any time after the order taking possession issued under Section 18415 has been filed with the court, the commissioner may remove the principal office of the person proceeded against to the City and County of San Francisco or to the City of Los Angeles. In the event of removal, the court where the proceeding was commenced shall, upon the application of the commissioner, direct the superior court clerk to transmit all of the papers filed therein with that clerk to the Superior Court Clerk of the City and County of San Francisco or of the County of Los Angeles as the case may require. The proceeding shall thereafter be conducted in the same manner as though it had been commenced in the county to which it had been transferred.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.10.
  

The commissioner may, at any time, examine under oath any officer, director, agent, employee or stockholder of a company to determine whether or not all property and assets have been transferred or delivered to the commissioner’s possession.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.11.
  

Upon taking possession of the property and business of any company, the commissioner has authority and the duty to collect all moneys due to the company and to do such other acts as are necessary or expedient to collect, conserve, or protect its assets, property and business. The commissioner shall also proceed to conserve or liquidate the affairs thereof as provided in this chapter.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.12.
  

The commissioner may file a petition with the court and the court shall issue such injunctions or orders, as may be deemed necessary, to prevent any of the following occurrences:

(a) Interference with the commissioner or the proceeding.

(b) The institution of any actions or proceedings, or the prosecution of any actions or proceedings already commenced.

(c) Waste of assets of the entity.

(d) The obtaining of preferences, judgments, attachments or other liens against the company or its assets.

(e) The making of any levy against the company or its assets.

(f) The sale or deed for nonpayment of taxes or assessments levied by any taxing agency of any of the following:

(1) Property owned by the company.

(2) Property upon which the company holds an encumbrance.

(3) Property upon which the company has prior thereto commenced an action to foreclose any deed of trust or mortgage or has exercised the power of sale under any trust deed or mortgage which sale or foreclosure proceedings have not yet been completed or upon which no trustee’s deed or judgment of court or sheriff’s certificate of sale has been issued.

“Taxing agency,” as used in this section, has the same meaning as defined in Section 121 of the Revenue and Taxation Code. The injunctions or orders authorized by this subdivision may be modified, dissolved, or rescinded by the court on motion of the commissioner, the Controller, or the person charged with the collection of taxes or assessments on such property. The recording in the office of the county recorder of any county in the state of an order or injunction issued pursuant to this section, shall constitute service of the order or injunction upon any taxing agency with respect to property or interest therein located in such county.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.13.
  

After the taking of possession of the property and business of any company, the commissioner may terminate or adopt any executory contract to which the company may be a party, including leases of real or personal property. The termination or adoption shall be made within six months after obtaining knowledge of the existence of the contract or lease. Any provision in the contract or lease which provides for damages or cancellation fees upon termination shall not be binding on the commissioner or the company seized. The commissioner and the company shall only be liable for actual damages and in no event in excess of one thousand dollars ($1,000). Any claim must be filed within 30 days of the date of the termination.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.14.
  

The commissioner may proceed against any debtor or alleged debtor by way of summary procedure or by order to show cause issued by the court upon application by the commissioner.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.15.
  

The commissioner may make examinations of the seized company and review the activities of any conservator or liquidator.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.16.
  

The actual cost of any examination, investigation or services, including the actual amount of salary or other compensation paid to the persons making the examination, investigation or rendering services and the overhead costs in connection therewith, as fixed by the commissioner, shall be paid out of the assets of the company.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.17.
  

The determination by the commissioner to liquidate a company, evidenced by filing written notice of the determination with the court, operates to stay or dissolve all actions or attachments instituted or levied within 90 days next preceding the taking of possession of the company by the commissioner, and pending the process of liquidation, no attachment or execution shall be levied or lien created upon any of the property of the company.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.18.
  

Upon taking possession of the property, and business of a company in any proceeding under this article, the commissioner shall have the power to do all of the following:

(a) Appoint one or more special deputy commissioners as his or her agent or agents with the powers specified in the certificate of appointment to assist in the duty of conservation or of liquidation and distribution.

(b) Employ the Attorney General as counsel or employ private counsel as may be deemed necessary to assist the commissioner in the performance of his or her duties under this chapter. Appointment of private counsel shall be made only with the consent of the Attorney General. The compensation of that counsel shall be fixed by the commissioner, subject to the approval of the court.

(c) Set the compensation of a special deputy commissioner.

(d) Require from each special deputy commissioner and from each assistant such security for the faithful performance of their duties as the commissioner may deem proper.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.19.
  

All expenses of taking possession of, conserving, conducting, liquidating, disposing of or otherwise dealing with the business and property of any company under this article shall be paid out of the assets of that company. Those expenses shall include, among other things, the compensation of special deputy commissioners, clerks and assistants and the actual cost of any services attributable to the conservatorship or liquidation performed by the commissioner and staff, including the actual amount of salary or compensation paid to the person performing the services and overhead costs in connection therewith as fixed by the commissioner.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.21.
  

Any transaction occurring within six months of the date of taking possession shall be voidable by the conservator or liquidator if the transaction has the effect of giving to, or enabling any creditor of, the company, any affiliate of the company, any officer, director, stockholder, employee or any relative thereof, to obtain a preference over any other creditor of the company.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.22.
  

No obligation may be purchased or discounted under any agreement between the company and any person involving the purchase or discount of obligation from the person, with or without recourse, from the moment of taking possession pursuant to Section 18415. Any guarantees, recourse or repurchase agreements given at the time of purchase, or discount of any obligation prior to the date of taking possession, shall continue to be binding on the person. Any reserves, withholds or other security held by the company under the terms of the agreement shall be considered liabilities of the company in the general creditor classification and may not be used as offset against any obligation purchased or discounted under the agreement. No distribution of assets shall be made on these liabilities until the obligations purchased or discounted under the agreement have been satisfied.

In case of sale of the obligations by the liquidator, the reserves, withholds or other security shall remain as a liability to be paid off in the normal course of liquidation.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18415.23.
  

No attachment or execution shall be issued against the property of any company before final judgment in any action or proceeding in any court.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18420.
  

The commissioner, as conservator or liquidator, after taking possession of the company, shall, in his or her name, in the name of the company, in the name of both, or otherwise, have authority to do all of the following:

(a) Collect all obligations and money due the company.

(b) Exercise and possess all the rights, powers and privileges of the company, its officers and directors.

(c) Institute, prosecute, maintain, defend, intervene, and otherwise participate in any and all actions, suits, or other legal proceedings by and against the conservator or liquidator or company, or in which the conservator, the company or its creditors or debtors, or any of them, have an interest, and in every way to represent the company, its creditors, and debtors.

(d) Execute, acknowledge, and deliver any and all deeds, contracts, leases, assignments, bills of sale, releases, extensions, satisfactions, and other instruments necessary or proper for any purposes.

(e) Be the custodian of all moneys collected by the commissioner or coming into his or her possession in the course of any proceeding under this chapter, but he or she may deposit those moneys, or any part thereof, in a bank insured by the Federal Deposit Insurance Corporation.

(f) Invest or reinvest such portions of funds and assets of the company, in a manner as he or she may deem suitable for the best interests of the creditors of the company.

(g) To revise, refinance, extend, or settle any loan or obligation upon those terms and conditions as he or she may deem to be most advantageous to the company.

(h) To sell, compound, compromise or assign for the purpose of collection upon those terms and conditions he or she deems best, any bad or doubtful debts due the company.

(i) To compound, compromise, or in any manner negotiate settlements of claims against the company upon those terms and conditions as he or she shall deem to be most advantageous to the company.

(j) To sell, acquire, hypothecate, encumber, lease, improve, abandon, or otherwise dispose of or deal with any real or personal property which has come into ownership of the company by way of repossession, foreclosure, execution, suit or by other such means on a basis of reasonable market value, without notice, for cash, on terms, or upon such other terms and conditions as he or she may deem proper.

(k) To settle, compromise, or obtain the release of, for cash or other consideration, claims and demands against the company or the conservator.

(l) To sell for cash or on terms, exchange, or otherwise dispose of, in whole or in part, any or all the assets and property of the company, real, personal, and mixed, tangible and intangible, of any nature.

(m) Execute, acknowledge, and deliver any and all deeds, contracts, leases, assignments, bills of sale, releases, extensions, satisfactions, and any other instruments necessary or proper for any purposes, including, but not limited to, the effectuation, termination, or modification of any sale, lease, or transfer of real, personal, or mixed property, or that shall be necessary or proper to liquidate or carry on the business of the company. Any deed or other instrument executed pursuant to the authority hereby given shall be as valid and effectual for all purposes as if it had been executed as the act and deed of the company.

(n) Pay out and expend such sums as the commissioner deems necessary or advisable including the following:

(1) To pay off or discharge any taxes, assessments, liens, claims, or charges of any nature against the company, the conservator or liquidator, any asset or property of any nature of the company, or upon any asset or property on which the company or conservator or liquidator has an interest of a value of any nature.

(2) For or in connection with the preservation, maintenance, conservation, protection, remodeling, repair, rehabilitation, or improvement of any asset or property of any nature of the company.

(3) To pay all costs and expenses of the conservatorship or liquidation and all costs of carrying out or exercising the commissioner’s rights, powers, privileges, and duties as conservator.

(4) To pay valid creditor obligations, interest owed on debts, debts incurred during conservatorship or liquidation and all other debts of the company or conservatorship or liquidation of any nature.

(5) To pay all costs and expenses in the operation of the conservatorship or liquidation of the company.

(o) Do such things, and have such rights, powers, privileges, immunities and duties, whether or not otherwise granted in this chapter, as shall be authorized, directed, conferred, or imposed from time to time in specific cases by order of the court.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18420.1.
  

No transaction involving real or personal property, investment or reinvestment of funds or assets, or settlement or compromise of pending lawsuits shall be made without first obtaining permission of the court, and then only in accordance with such terms as the court may prescribe, when either of the following exist:

(a) The principal sum of any obligation due the company or settlement or compromise of a pending lawsuit exceeds the sum of fifteen thousand dollars ($15,000).

(b) The market value of any real or personal property, except obligations due the company, exceeds the sum of ten thousand dollars ($10,000).

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18420.2.
  

The commissioner may, with ex parte approval of the court, sell all or any part of the company’s assets to another industrial loan company, to a bank, to a savings and loan association, to Guaranty Corporation, or to an instrumentality of the United States government. In like manner, the commissioner may borrow from Guaranty Corporation, an instrumentality of the United States government, or a private insurer which insures or guarantees the company’s investment certificates, any amount necessary to facilitate the assumption of investment certificate liabilities by a newly chartered or existing industrial loan company, assigning any part or all of the assets of the company as security for that loan.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18420.5.
  

The commissioner may appoint a person to act as conservator or liquidator of the company. The person appointed may be Thrift Guaranty Corporation of California. If the company’s outstanding thrift obligations are insured by an instrumentality of the United States government, the commissioner may appoint that instrumentality to act as conservator or liquidator of the company. Subject to the other provisions of this division, a conservator or liquidator, while in possession of the property and business of a company, has the same powers and rights and is subject to the same duties and obligations as the commissioner while in possession of the property and business of a company. During such time, the rights of the company and of all persons with respect thereto, subject to the other provisions of this chapter, are the same as if the commissioner had taken possession of such properties and business, except that the commissioner may limit those powers and rights as he or she may deem necessary.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18420.6.
  

The commissioner shall have the authority to terminate the appointment of a conservator or liquidator whenever the commissioner deems it in the best interest of the company, its creditors, and investors. The commissioner shall file a copy of the notice of termination with the court.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18420.7.
  

The commissioner may require a conservator or liquidator to provide such bond as the commissioner deems proper. The conservator or liquidator shall receive a salary, fixed by the commissioner, in an amount no greater than that which would be paid by the commissioner to a special deputy commissioner in charge of the liquidation of the company.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.
  

If at any time after taking possession of the property and business of a company it shall appear to the commissioner that it would be futile to proceed as conservator with the conduct of the business of the company, the commissioner may order the company to be liquidated. A copy of the liquidation order shall be filed with the clerk of the superior court.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.1.
  

The liquidator shall cause notice to be given by publication for four successive weeks in a newspaper of general circulation at or near the principal place of business in the state of the company, to all persons having claims against the company, other than investment certificate holders, whether or not an action is pending to enforce any claim for demand, requiring them to present and file their claims and make legal proof thereof at a place and within a time designated in the notice. The time shall not be less than 90 days after the first publication of the notice. The notice shall also state that all claims other than those of investment certificate holders appearing upon the books or records of the company and any claims, whether or not an action is pending to enforce any such claim or demand, shall be forever barred if not filed within the time designated. The liquidator shall also mail a similar notice to all persons whose names appear as creditors upon the books of the company and any person who has an action pending to enforce a claim or demand whose address appears upon the books or records of the company and shall enclose therewith a printed form or notice of claim.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.2.
  

All claims, demands, or causes of action of creditors, and persons other than investors against any property owned or held by it in trust, or otherwise, must be presented to the liquidator in writing, verified by the claimant, or someone on his or her behalf, within the period specified in the notice for the presentation of claims, whether or not an action is pending to enforce any such claim or demand. The liquidator shall not approve any claim not so presented, and any such claim, demand, or cause of action not so presented is forever barred.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.3.
  

If the liquidator doubts the validity of any claim, the liquidator may reject the claim and serve notice of rejection upon the claimant either by certified mail or personally. A notice of rejection given by mail, addressed to the claimant at the address set forth in the claim, shall constitute sufficient notice of the rejection. Any action upon a claim so rejected must be brought within 30 days after the mailing of the notice or personal service of the notice in the court in which the liquidation proceeding is pending for an order to show cause why the claim should not be allowed. Failure to bring such action within 30 days to enforce the payment of or establish any rejected claim shall forever bar any such action.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.4.
  

A claim shall set forth, under oath, on the form prescribed by the commissioner, all of the following:

(a) The particulars of the claim, and the consideration for the claim.

(b) Whether the claim is secured or unsecured, and, if secured, the nature and amount of the security.

(c) The payments, if any, made thereon.

(d) That the sum claimed is justly owing from such person to the claimant.

(e) That there is no offset to the claim.

(f) Such other data or supporting documents as the liquidator requires.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.5.
  

When an investment certificate holder is also a debtor, the liquidator may offset any balance due the investment certificate holder against the debt and the interest due on that debt up to the date of offset, in an amount not to exceed the amount of the debt or the amount of the thrift obligation guaranteed by the Thrift Guaranty Corporation of California, whichever is less.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.6.
  

The amount of a claim of an investment certificate holder shall be the amount which the investment certificate holder would have been entitled to withdraw as of the date of taking possession, pursuant to Section 18415, plus interest thereon accrued to that date, without regard to whether the account is subject to any pledge. In the case of an account with a fixed or minimum term or a qualifying or notice period that has not expired as of the date of taking possession, interest shall be computed as if the account had been withdrawn on that date without penalty or reduction in interest.

The liquidator shall give notice to each investment certificate holder of the amount of his or her claim and the investment certificate holder shall not be required to file a claim unless he or she disputes the amount of the liquidator’s determination.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.7.
  

When the time fixed for the presentation of claims has expired, the liquidator shall make in duplicate a full and complete list of all claims presented, including and specifying those claims that have been rejected by the liquidator, and a list of all claims of investment certificate holders as shown by the books or records of the company, and shall file one copy of the list in the commissioner’s office and one with the clerk of the superior court in which the liquidation proceedings are being held. Before each application to the court for leave to declare a dividend, the liquidator shall file a supplemental list of claims presented since the last preceding list was filed, including and specifying the claims as have been rejected by the liquidator. The list of claims and of claims of investment certificate holders as shown by the books or records of the company shall be open for inspection at all reasonable times.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.8.
  

Objections to any claim not rejected by the liquidator may be made by any person interested by filing his or her objections, in writing, with the liquidator, who shall present the objections to the court. The court shall dispose of the objections or may order reference for that purpose, and should the objections to any claim be sustained by the court or by the referee, that claim shall not be allowed by the liquidator until the claimant has established his or her claim by judgment. Any objections to a claim shall be filed within 60 days from the date of filing of the schedule of claims as required by this article with the court or be forever barred.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.9.
  

The liquidator, with the approval of the court, may pay one or more dividends to investment certificate holders prior to the expiration of the time for filing claims. After the time for filing of claims has elapsed, the liquidator, after obtaining approval of the court, may pay one or more dividends upon all approved claims out of the funds remaining in the liquidator’s possession after the payment of expenses and after setting aside an amount to pay creditors whose claims have been rejected and whose time for filing an application to show cause under this article has not yet elapsed or whose application is still pending. At any time after the expiration of one year from the date of the first publication of notice of creditors, and with court approval, the liquidator may pay a final distribution which shall consist of the remaining funds available for distribution, being distributed pro rata to all approved creditor claims.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.10.
  

(a) Claims allowed in a proceeding under this article shall be given preference in the following order:

(1) All costs and expenses of administration of conservatorship and liquidation.

(2) Taxes due to the State of California.

(3) Claims having preference by the laws of the United States and by laws of this state.

(4) All claims of creditors, including contractual claims for interest to the date of payment, whose claims are fully secured.

(5) Claims of investment certificate holders.

(6) Claims of general creditors.

(7) Claims on obligations subordinated to the claims of investment certificate holders and general creditors.

Paragraphs (5) and (6) apply only in liquidation proceedings, where the commissioner has taken possession of the property and business of the company on or after the effective date of this section, and paragraph (6) shall apply only with respect to persons who become general creditors on or after that date. It is the intent of the Legislature that no change in the law contained in this section shall be construed to affect the rights and obligations of parties with regard to transactions occurring prior to the effective date of this section. It is the intent of the Legislature that the rights and obligations of parties existing prior to the effective date of this section shall be determined by the law in effect prior to the effective date of this section and without application of changes in the law effected by this section.

(b) All approved claims shall bear interest at the rate provided by law or judgments from the date that the commissioner takes possession of the property and business of the company, to the extent funds are available to pay such interest, otherwise interest shall be prorated.

Interest shall be given the same preference as the claim on which it is based, but no interest on any claim shall be paid until all claims within the same class have received the full principal amount of the claim.

(c) Any funds remaining shall be returned to the stockholders of the company pursuant to the provisions of this article.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.11.
  

Whenever the commissioner determines to liquidate a company, the commissioner shall cause an inventory of all the assets of the company to be made in duplicate, file the original with the court, and file the duplicate in the commissioner’s office.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.12.
  

If it appears improbable that anything can be realized from any property of the company and that the cost of maintaining, preserving, or protecting the property would probably be lost, the court may direct the liquidator to abandon the property.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.13.
  

If a purchaser of any property or any bad or doubtful debt or claim of a company cannot be obtained and it appears improbable that recovery thereon can be had, and that the cost of action to enforce collection of the same would probably be lost, the superior court may direct that suit on the debt or claim need not be brought.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.14.
  

When the liquidator has fully liquidated all claims other than claims of stockholders, made due provision for any and all known but unclaimed liabilities, excepting claims of stockholders, and paid all expenses of liquidation, the liquidator may file an application for an order for the liquidation of a domestic corporation, or at any time thereafter, the commissioner may apply for, and the court shall make, an order dissolving the corporation.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.15.
  

Upon the payment of a final dividend in liquidation, the commissioner shall prepare and file with the court a full and final statement of the liquidation, including a summary of the receipts and disbursements, and a duplicate of the statement shall be filed in the office of the commissioner. After hearing and approval by the court, the liquidation shall be closed.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.16.
  

In making its order approving the commissioner’s final statement of the liquidation of the company, the court shall determine the amounts of the liquidating dividends to which claimants are entitled but which then remain unpaid or unclaimed in the hands of the commissioner. The order of the court shall direct the commissioner to deposit those amounts with the Treasurer. All amounts so deposited shall be deemed to be deposited in the State Treasury under the provisions of Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure, and shall be subject to claim or disposition as provided in that chapter.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

18425.17.
  

The order of the court approving the final statement on liquidation shall provide for the destruction or other disposition of the books and records of the company or pertaining to the liquidation of the company, and the court may declare the company dissolved as a corporation. The liquidator shall file a copy of the order of dissolution with the Secretary of State.

(Added by Stats. 1985, Ch. 140, Sec. 1. Effective July 1, 1985.)

FINFinancial Code - FIN4.