La. Admin. Code tit. 10 § VII-315

Current through Register Vol. 50, No. 11, November 20, 2024

Section VII-315 - Liquidation Account

A. Requirement. At the time of conversion, each applicant shall establish a liquidation account in an amount equal to the amount of net worth of the converting savings bank prior to conversion. The applicant shall use the net worth figure no later than that set forth in its latest statement of financial condition contained in the final offering circular. The function of the liquidation account is to establish a priority on liquidation and, except as provided in §319 B, the existence of the liquidation account shall not restrict the use or application of any of the net worth accounts of the converted savings bank.

B. Purpose. The liquidation account shall be maintained by the savings bank for the benefit of eligible account holders and supplemental eligible account holders who maintain their deposit accounts in the converted savings bank. Each eligible account holder and supplemental eligible account holder shall, with respect to each deposit account held, have a related inchoate interest in a portion of the liquidation account balance ("subaccount").

C. Distribution. In the event of a complete liquidation of the converted savings bank, each eligible account holder and supplemental eligible account holder shall be entitled to receive a liquidation distribution from the liquidation account, in the amount of the then current adjusted subaccount balances for deposit accounts held, before any liquidation distribution may be made with respect to capital at the time of the conversion in exchange for the surrender of mutual capital certificates issued by the applicant prior to conversion. A merger, consolidation, sale of bulk assets or similar combination or transaction with another institution is not considered a complete liquidation for these purposes, and in this kind of transaction, the liquidation account shall be assumed by the surviving depository institution. Preferred stock issued in exchange for mutual capital certificates may receive distributions in liquidation prior to distribution from the liquidation account to the holders of the mutual capital certificates that would have been entitled to priority over the residual rights of depositors had the savings bank not been converted as of the date of liquidation.

D. Calculating Individual Distributions. The initial subaccount balance for a deposit account held by an eligible account holder and/or supplemental eligible account holder shall be determined by multiplying the opening balance in the liquidation account by a fraction of which the numerator is the amount of qualifying deposits in such savings account on the eligibility record date and the denominator is the total amount of qualifying deposits of all eligible account holders and supplemental eligible account holders in the converting savings bank on such dates. For deposit accounts in existence at both dates, separate subaccounts shall be determined on the basis of the qualifying deposits in such accounts on the record dates. The initial subaccount balances shall not be increased, and it shall be subject to downward adjustment under Subsection E of this Section.

E. Account and Subaccount Balances

1.

a. If the balance in any deposit account of an eligible account holder or supplemental eligible account holder at the close of business on any annual closing date subsequent to the respective record dates is less than the lesser of:

i. the balance in the deposit account at the close of business on any other annual closing date subsequent to the eligibility record date or supplemental eligibility record date; or

ii. the amount of qualifying deposit as of the eligibility record date or the supplemental eligibility record date;

b. then the subaccount balance for the deposit account shall be adjusted by reducing the subaccount balance in an amount proportionate to the reduction in the deposit balance.

2. If a downward adjustment is made, the subaccount balance shall not be subsequently increased, notwithstanding any increase in the deposit balance of the related deposit account. The converted savings bank shall not be required to recompute the liquidation account and subaccount balances provided the converted savings bank maintains records sufficient to make necessary computations in the event of a complete liquidation or any other events requiring a computation of the balance of the liquidation account. The liquidation subaccount of an account holder shall be maintained for as along as the account holder maintains an account with the same Social Security number.

La. Admin. Code tit. 10, § VII-315

Promulgated by the Department of Economic Development, Office of Financial Institutions, LR 21:1069 (October 1995).

AUTHORITY NOTE: Promulgated in accordance with R.S. 6:1141.