Kansas Statutes

Chapter 9: Banks And Banking; Trust Companies

Article 19: Banking Code; Dissolution; Insolvency

Statutes:

• 9-1901: Dissolution by district court; procedure.
• 9-1902: Definition of insolvency.
• 9-1902a: Undercapitalized, when.
• 9-1903: Undercapitalized and insolvent banks and trust companies; commissioner to take charge, when.
• 9-1904: Reorganization of insolvent and undercapitalized bank or trust company.
• 9-1905: Receiver for insolvent and undercapitalized bank or trust company.
• 9-1906: Receiver to take charge of assets; order of payment.
• 9-1907: Powers of federal deposit insurance corporation or its successor.
• 9-1908: Title to all assets to vest in insurance corporation.
• 9-1909: Claims to be filed within one year.
• 9-1910: Surrender control to commissioner.
• 9-1911: Receiver may borrow money.
• 9-1912: Examination of bank or trust company in hands of receiver; exception.
• 9-1913:
• 9-1914: Report of examination form; fee for copies, approval.
• 9-1914a: Destruction of records and papers of state banks which went into receivership; procedure.
• 9-1915: Deposits or debts while insolvent; liability.
• 9-1916: Same; action to enforce liability; evidence.
• 9-1917: Undelivered funds due creditors, depositors and shareholders of defunct bank or trust company; duties of commissioner and state treasurer; undistributed assets of defunct institutions fund.
• 9-1918: Escheat and disposition of certain property in custody of commissioner; escheat.

• 9-1901: Dissolution by district court; procedure. Any corporation transacting business under this act may be dissolved by the district court of the county in which its place of business is located, in the following manner: A verified petition shall be filed in the office of the clerk of said court, signed by the president or a majority of the board of directors, setting forth that stockholders representing two-thirds in amount of the stock of such association have adopted a resolution favoring such dissolution, and directing proceedings to be instituted for that purpose, a copy of which resolution shall set forth that all claims and demands against such association have been paid and discharged; and thereupon a notice shall be published for the time and in the manner prescribed by the law for service by publication. Such notice shall state the name of the court in which the petition has been filed, the substance and purpose thereof, and that unless objections are filed thereto on or before a time to be stated, which shall not be less than forty-one days from the first publication, the relief prayed for will be granted.

        A copy of such notice shall be sent to the bank commissioner within ten days after the first publication thereof, and the commissioner shall, within thirty days thereafter, make a thorough examination of the affairs of such bank, and file a certified copy of the report with said petition. Any creditor or stockholder may, on or before the time fixed by the notice, and afterwards, if permitted by the court, file written objections to the dissolution of such corporation. The petition and objections thereto, if any, shall stand for hearing the same as a civil action; and if upon the hearing thereof the court shall be satisfied that the petition is true, and that there is no valid objection to the dissolution of such corporation, it shall render judgment dissolving the same.

        History:   L. 1947, ch. 102, § 109; June 30.

• 9-1902: Definition of insolvency. A bank or trust company shall be deemed to be insolvent when (1) the actual cash market value of its assets is insufficient to pay its creditor liabilities except that for this purpose unconditional evidence of indebtedness of the United States of America may be valued, at the discretion of the commissioner, at par or cost whichever is the lesser; (2) when it is unable to meet the demands of its creditors in the usual and customary manner; (3) when it shall fail to make good its reserve as required by this act.

        History:   L. 1947, ch. 102, § 110; L. 1980, ch. 49, § 2; July 1.

• 9-1902a: Undercapitalized, when. A bank or trust company is critically undercapitalized when the ratio of its capital to total assets is equal to or less than 2.0%. For the purposes of this section, capital shall be the sum total of the institution's common stock, surplus, undivided profits, capital reserves, noncumulative perpetual preferred stock and outstanding cumulative perpetual preferred stock (including related surplus).

        History:   L. 1993, ch. 7, § 1; March 18.

• 9-1903: Undercapitalized and insolvent banks and trust companies; commissioner to take charge, when. If it shall appear upon the examination of any bank or trust company or from any report made to the commissioner that any bank or trust company is critically undercapitalized, the commissioner may take charge of such bank or trust company and all of its property and assets. If from such examination or reports it shall appear any bank or trust company is insolvent the commissioner shall take charge of such bank or trust company and all of its property and assets. In so doing the commissioner may appoint a special deputy commissioner to take charge temporarily of the affairs of such insolvent or critically undercapitalized bank or trust company until a receiver is appointed. Such deputy shall qualify, give bond and receive compensation as determined by the commissioner, but such compensation shall be paid by the insolvent or critically undercapitalized bank or trust company or in case of the appointment of a receiver allowed by the court as costs in the case. After appointment, the special deputy shall continue to serve under the direction of the commissioner for such period of time as deemed reasonable and necessary by the commissioner before returning charge of the bank or trust company back to the board of directors of the institution or appointing a receiver. In no case shall any bank or trust company continue in the charge of a special deputy for a period exceeding nine months.

        History:   L. 1947, ch. 102, § 111; L. 1993, ch. 7, § 3; March 18.

• 9-1904: Reorganization of insolvent and undercapitalized bank or trust company. The stockholders of any insolvent or critically undercapitalized bank or trust company and its depositors and creditors may formulate a plan for the reorganization of such bank or trust company while the same is in charge of the commissioner or a special deputy commissioner or a receiver, at any time before a dividend has been paid. The depositors and creditors of such insolvent or critically undercapitalized bank or trust company may formulate a plan for the reorganization thereof, and if such plan is subscribed to in writing by creditors and depositors having not less than 80% in amount of the known claims against such bank or trust company, and such plan shall be approved by the board, and a copy thereof filed with the commissioner, the same shall be held to be legal, valid and binding upon all depositors and creditors of such insolvent or critically undercapitalized bank or trust company to the same extent and with the same effect as if all of the depositors and creditors had joined in the execution thereof.

        As used in this section "depositors" and "creditors" shall mean and include the pooled money investment board acting for and on behalf of the state of Kansas and the governing body of any county, township, city, drainage district, school district, sewer district or other governmental subdivision and as such they are hereby authorized to join in the execution of any plan for the reorganization of any insolvent or critically undercapitalized bank or trust company with the same legal effect and validity as any individual depositor or creditor.

        History:   L. 1947, ch. 102, § 112; L. 1976, ch. 58, § 2; L. 1993, ch. 7, § 4; March 18.

• 9-1905: Receiver for insolvent and undercapitalized bank or trust company. When the commissioner shall take charge of any insolvent or critically undercapitalized bank or trust company pursuant to article 19 of chapter 9 of the Kansas Statutes Annotated and amendments thereto, the commissioner shall ascertain its actual condition as soon as possible by making a thorough investigation into its affairs and condition, and if the commissioner shall be satisfied that such bank or trust company cannot sufficiently recapitalize, resume business or liquidate its indebtedness to the satisfaction of its depositors and creditors, then the commissioner forthwith shall appoint a receiver therefor and require the receiver to give such bond as the commissioner deems proper. The commissioner also shall fix reasonable compensation for the receiver but the same shall be subject to the approval of the district court of the county wherein such bank or trust company is located upon the application of any party in interest.

        Any receiver shall be a resident of the state of Kansas and shall have had at least five years credit experience. Upon written application made within 30 days after the finding of insolvency the commissioner shall appoint as receiver any person whom the holders of more than 60% in amount of the claims against such bank or trust company shall agree upon in writing. The creditors so agreeing may also agree upon the compensation and charges to be paid such receiver. Each receiver so appointed shall make a complete report to the commissioner covering the receiver's acts and proceedings as such. The commissioner may remove for cause any receiver and appoint the receiver's successor.

        History:   L. 1947, ch. 102, § 113; L. 1993, ch. 7, § 5; March 18.

• 9-1906: Receiver to take charge of assets; order of payment. (a) A receiver appointed pursuant to K.S.A. 9-1905 and amendments thereto, under the direction of the commissioner, shall take charge of any insolvent or critically undercapitalized bank or trust company and all of its assets and property, and liquidate the affairs and business thereof for the benefit of its depositors, creditors and stockholders. The receiver may sell or compound all bad and doubtful debts and sell all the property of the bank or trust company upon such terms as the district court of the county where the bank or trust company is located shall approve. The receiver shall pay over all moneys received to the creditors and depositors of such bank or trust company as ordered by the commissioner.

        (b)   In distributing assets of the insolvent or critically undercapitalized bank or trust company in payment of its liabilities, the order of payment, in the event its assets are insufficient to pay in full all of its liabilities, shall be by category as follows:

        (1)   The costs and expenses of the receivership and real and personal property taxes assessed against the bank pursuant to applicable law;

        (2)   claims which are secured or given priority by applicable law;

        (3)   claims of unsecured depositors;

        (4)   all other claims exclusive of claims on capital notes and debentures;

        (5)   claims on capital notes and debentures.

        Should the assets be insufficient for the payment in full of all claims within a category, such claims shall be paid in the order provided by other applicable law or, in the absence of such applicable law, pro rata.

        History:   L. 1947, ch. 102, § 114; L. 1985, ch. 59, § 1; L. 1988, ch. 63, § 1; L. 1993, ch. 7, § 6; March 18.

• 9-1907: Powers of federal deposit insurance corporation or its successor. The federal deposit insurance corporation or its successor, hereby is authorized and empowered to be and act without bond as receiver or liquidator of any insolvent or critically undercapitalized bank, the deposits in which are to any extent insured by such corporation, and which bank shall have been closed. In the event of any such closing of any bank the commissioner may tender to the insurance corporation the appointment as receiver or liquidator of such bank, and if the insurance corporation accepts the appointment then such insurance corporation shall have and possess all the powers and privileges and shall assume all the duties and requirements provided by the laws of this state with respect to a state receiver or liquidator, respectively, of a bank, its depositors and other creditors, and shall be subject to the jurisdiction of the district courts and supreme court of Kansas.

        History:   L. 1947, ch. 102, § 115; L. 1989, ch. 48, § 50; L. 1993, ch. 7, § 7; March 18.

• 9-1908: Title to all assets to vest in insurance corporation. Whenever the federal deposit insurance corporation, or its successor, shall accept the appointment as receiver or liquidator for any bank the possession of and title to all of the assets, business, and property of every kind, including real estate, of such bank shall pass to and vest in such insurance corporation as receiver or liquidator without the execution of any instruments of assignment, endorsement, transfer or conveyance.

        History:   L. 1947, ch. 102, § 116; L. 1989, ch. 48, § 51; July 1.

• 9-1909: Claims to be filed within one year. All claims of depositors and other creditors must be filed with the receiver within one year after the date of the receiver's appointment, and if any claim is not so filed then it shall be barred from participation in the estate and assets of any such bank or trust company.

        History:   L. 1947, ch. 102, § 117; June 30.

• 9-1910: Surrender control to commissioner. The board of directors of any bank or trust company may place its affairs and assets under the control of the commissioner by posting a notice in the following forms on its front door: "This bank is in the hands of the state bank commissioner." The posting of such notice or the taking possession and custody of any bank or trust company by the commissioner shall be sufficient to place all its assets and property of whatever nature in the possession of the commissioner, and shall operate as a bar to any attachment proceedings.

        History:   L. 1947, ch. 102, § 118; June 30.

• 9-1911: Receiver may borrow money. The receiver of any insolvent bank or trust company may borrow money and pledge the assets of such insolvent bank or trust company but only upon prior written approval of the commissioner.

        History:   L. 1947, ch. 102, § 119; June 30.

• 9-1912: Examination of bank or trust company in hands of receiver; exception. (a) At least once each six months the commissioner shall examine every bank or trust company in the hands of a receiver and shall file a copy of such examination report with the clerk of the district court of the county wherein such bank or trust company is located. Every receiver shall submit the records and affairs of such bank or trust company to an examination by the commissioner or the commissioner's assistant and examiners whenever the receiver is requested to do so.

        (b)   The provisions of subsection (a) shall not apply if the federal deposit insurance corporation or its successor is appointed as receiver of a bank or trust company.

        History:   L. 1947, ch. 102, § 120; L. 1986, ch. 59, § 1; April 24.

• 9-1913:

        History:   L. 1947, ch. 102, § 121; Repealed, L. 1986, ch. 59, § 3; April 24.

• 9-1914: Report of examination form; fee for copies, approval. The commissioner shall provide a form for a report of the examination of any bank or trust company in the hands of a receiver. All such examination reports received by the commissioner shall be preserved in the commissioner's office and upon the demand of any person the commissioner shall furnish a certified copy of any published official statement made by any bank or trust company in the hands of a receiver upon the payment to the commissioner of a fee per folio and a fee for the commissioner's certificate in amounts fixed by the commissioner and approved by the director of accounts and reports under K.S.A. 45-204.

        History:   L. 1947, ch. 102, § 122; L. 1978, ch. 347, § 2; July 1.

• 9-1914a: Destruction of records and papers of state banks which went into receivership; procedure. Whenever books, papers, or records of any bank which went into receivership more than twenty (20) years before a petition was filed in a district court as provided hereinafter, or the records of a receiver of such bank are impounded or stored on or in the property of any county, either in the office of the clerk of the district court or elsewhere, the board of county commissioners of such county or the clerk of the district court may petition the district court having jurisdiction in such county, and such court shall have authority, in its discretion, to order the destruction of all or any part of such records. The order of such court shall be directed to the board of county commissioners of such county and any officer in whose care or possession such records are located or entrusted, and shall contain any special instructions which the court deems proper for the performance of such order.

        History:   L. 1961, ch. 65, § 1; L. 1980, ch. 50, § 1; July 1.

• 9-1915: Deposits or debts while insolvent; liability. It shall be unlawful for the president, director, managing officer, cashier or any other officer of any bank to assent to the reception of deposits or the creation of any debt by any bank after such person has knowledge of the fact that such bank is insolvent. It hereby is made the duty of every such officer or managing officer to examine into the affairs of every such bank and know its condition if possible. Upon failure to discharge such duty such person shall be held to have had knowledge of the insolvency of such bank or that it was in failing circumstances, for the purposes of this act. Every person who shall violate the provisions of this section shall be responsible individually for such deposits so received and all debts so contracted, except that any director or officer who may have paid more than such person's share of the liabilities mentioned in this section shall have the proper remedy at law against such other persons as shall not have paid their full share of such liabilities.

        History:   L. 1947, ch. 102, § 123; L. 1989, ch. 48, § 52; July 1.

• 9-1916: Same; action to enforce liability; evidence. In all actions brought for the recovery of any deposits received or debt created while any bank was insolvent or in failing circumstances all officers, agents, and directors of such bank may be joined as defendants or proceeded against severally. The fact that any bank was insolvent or in failing circumstances at the time of the reception of the deposit charged to have been so received, or the creation of the debt charged to have been so created, shall be prima facie evidence of such knowledge and assent to such deposit or creation of such debt on the part of such officer, agent, or director so charged therewith. This liability may be enforced by and against executors and administrators of any deceased officer, director or agent.

        History:   L. 1947, ch. 102, § 124; L. 1989, ch. 48, § 53; July 1.

• 9-1917: Undelivered funds due creditors, depositors and shareholders of defunct bank or trust company; duties of commissioner and state treasurer; undistributed assets of defunct institutions fund. On and after July 1, 1972, and in every case occurring heretofore and hereafter, in which funds due to creditors, depositors and shareholders on liquidation of institutions under the jurisdiction of the state bank commissioner under K.S.A. 9-1901 et seq., and amendments thereto, are undelivered, they shall, together with accrued interest, if any, be paid to the state bank commissioner, who shall remit all such payments to the state treasurer, in accordance with the provisions of K.S.A. 75-4215, and amendments thereto, and credit such individual creditors, depositors or shareholders account in the undistributed assets of defunct institution fund ledger. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the undistributed assets of defunct institutions fund which is hereby created. Such fund shall be used only for refunds and payments of amounts due creditors, depositors and shareholders on claims filed with and approved by the state bank commissioner. Any balance remaining in the fund from any single defunct institution five years, during which time no person entitled thereto shall have appeared to claim such funds, shall be transferred by the state bank commissioner to the state general fund and appropriate entries made in the individual creditors, depositors or shareholders record, showing the date and disposition of the funds and shall further recite that they were transferred by reason of this statute of limitation.

        History:   L. 1972, ch. 36, § 1; L. 2001, ch. 5, § 46; July 1.

• 9-1918: Escheat and disposition of certain property in custody of commissioner; escheat. Whenever the state bank commissioner shall determine that property or assets held in the commissioner's custody and received as a result of the liquidation of any institution under the jurisdiction of the commissioner has remained in the commissioner's custody for a period of more than 10 years, and no claim has been filed during such period by any creditor, depositor or shareholder of such institution, such property shall escheat to the state. The commissioner shall notify the director of purchases of the property or assets so held and the director of purchases shall authorize and provide for the sales of such property or assets in the manner provided by law for the sale of obsolete or unused property of the state. All proceeds from the sale of any such property or assets shall be remitted to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the state general fund and appropriate entries made in the records of the state bank commissioner showing the disposition of the property or assets, the amount received therefor and the disposition thereof.

        History:   L. 1976, ch. 361, § 1; L. 2001, ch. 5, § 47; July 1.