# Title 6 — Banks and Banking

## Chapter 6-07.1 — Dissolution and Liquidation of Trust Companies

### § 6-07.1-01. Action to close state trust company.

The commissioner or board may close and liquidate a state trust company on finding that
the interests of its clients and creditors are jeopardized by the state trust company's insolvency
or imminent insolvency or that the best interests of clients and creditors would be served by
requiring that the state trust company be closed and its assets liquidated. A majority of the state
trust company's directors, managers, or managing participants may voluntarily close the state
trust company and place it with the commissioner for liquidation.
### § 6-07.1-02. Involuntary closing.

After closing a state trust company, the commissioner shall place a sign at its main entrance
stating that the state trust company has been closed. A correspondent bank of the closed state
trust company may not pay an item drawn on the account of the closed state trust company
which is presented for payment after the correspondent has received actual notice of closing
unless it previously certified the item for payment. As soon as practicable after posting the sign
at the state trust company's main entrance, the commissioner shall file a copy of the notice of
the action to close a state trust company in district court in the county where the state trust
company's home office is located. The court in which the notice is filed shall docket it as a case
styled, "In re liquidation of ____", inserting the name of the state trust company. As soon as this
notice is filed, the court has constructive custody of all the state trust company's assets, and any
action initiated which seeks to directly or indirectly affect state trust company assets is
considered to be an intervention in the receivership proceeding. Venue for an action instituted to
effect, contest, or otherwise intervene in the liquidation of a state trust company is Burleigh
County, North Dakota, except on a motion filed and served concurrently with or before the filing
of the answer, the court, on a finding of good cause, may transfer the action to the county of the
state trust company's home office.
### § 6-07.1-03. Nature and duration of receivership.

The court may not require a bond from the commissioner as receiver. Any reference in this
chapter to the receiver is a reference to the commissioner as receiver and any successors in
office or an independent receiver appointed at the request of the commissioner. The acts of the
receiver are the acts of the state trust company in liquidation and this state and its political
subdivisions are not liable and may not be held accountable for any debt or obligation of a state
trust company in receivership. The receiver has all the powers of the directors, managers,
managing participants, officers, and shareholders or participants of the state trust company as
necessary to support an action taken on behalf of the state trust company. A state trust
company receivership must be administered continuously for the length of time necessary to
complete its purposes, and the period prescribed by other law limiting the time for the
administration of receiverships or of corporate affairs generally does not apply.
### § 6-07.1-04. Contest of liquidation.

A state trust company, acting through a majority of its directors, managers, or managing
participants, may intervene in the action filed by the commissioner to challenge the
commissioner's closing of the state trust company and to enjoin the commissioner or other
receiver from liquidating its assets. The intervenors must file the intervention not later than the
second business day after the closing of the state trust company, excluding legal holidays. The
court may issue an ex parte order restraining the receiver from liquidating state trust company
assets pending a hearing on the injunction. The receiver shall comply with the restraining order
but may petition the court for permission to liquidate an asset as necessary to prevent its loss or
diminution pending the outcome of the injunction. The court shall hear this action as quickly as
possible and shall give it priority over other business. The state trust company or receiver may
appeal the court's judgment as in other civil cases, except that the receiver shall retain all state
trust company assets pending a final appellate court order even if the commissioner does not

prevail in the district court. If the commissioner prevails in the district court, liquidation of the
state trust company may proceed unless the district court or appellate court orders otherwise. If
liquidation is enjoined or stayed pending appeal, the district court retains jurisdiction to permit
liquidation of an asset as necessary to prevent its loss or diminution pending the outcome of the
appeal.
### § 6-07.1-05. Notice of state trust company closing.

As soon as reasonably practicable after initiation of the receivership proceeding, the
receiver shall publish notice, in a newspaper of general circulation in each community where the
state trust company's home office and a branch are located. The notice must state that the state
trust company has been closed for liquidation, that creditors and clients must present their
claims for payment on or before a specific date, and that all safe deposit boxholders and bailors
of property left with the state trust company should remove their property not later than a
specified date. The receiver shall select the dates to allow the affairs of the state trust company
to be wound up as quickly as feasible while allowing creditors, clients, and owners of property
adequate time for presentation of claims, withdrawal of accounts, and redemption of property,
but may not select a date before one hundred twenty days after the date of the notice. The
receiver may adjust the dates with the approval of the court with or without republication if
additional time appears needed for these activities. As soon as reasonably practicable given the
state trust company records and the adequacy of staffing, the receiver shall mail to each of the
state trust company's known clients, creditors, safe deposit boxholders, and bailors of property
left for the state trust company, at the mailing address shown on the state trust company
records, an individual notice containing the information required in this section. The receiver
may determine the form and content notices under this section.
### § 6-07.1-06. Inventory.

As soon as reasonably practicable given the condition of the state trust company records
and the adequacy of staffing, the receiver shall prepare a comprehensive inventory of the state
trust company's assets for filing with the court. The inventory must be open to inspection.
### § 6-07.1-07. Title and receiver.

The receiver has title to all the state trust company's property, contracts, and rights of
action, wherever located, beginning on the date the state trust company is closed for liquidation.
The rights of the receiver have priority over all liens that arise after the date of the closing of the
state trust company for liquidation.
### § 6-07.1-08. Rights fixed.

The rights and liabilities of state trust company liquidation and of a client, creditor, officer,
director, manager, managing participant, employee, shareholder, participant, agent, or other
person interested in the state trust company's estate are fixed on the date of closing of the state
trust company for liquidation, except as otherwise directed by the court or as expressly provided
by this chapter.
### § 6-07.1-09. Depositories.

The receiver may deposit funds collected on behalf of the state trust company estate in the
Bank of North Dakota or one or more depository institutions in this state. If receivership funds
deposited in an account at a depository institution exceed the maximum insured amount, the
receiver shall require the excess deposit to be adequately secured through pledge of securities
or otherwise, without approval of the court.
### § 6-07.1-10. Pending lawsuits.

A judgment or order of a court of this state or of any other jurisdiction in an action pending
by or against the state trust company, rendered after the date the state trust company was
closed for liquidation, is not binding on the receiver unless the receiver was made a party to the
suit. Before the first anniversary of the date the state trust company was closed for liquidation,

the receiver may not be required to plead to any suit pending against the state trust company in
a court in this state on the date the state trust company was closed for liquidation and in which
the receiver is a proper plaintiff or defendant.
### § 6-07.1-11. New lawsuits.

Except as otherwise provided in this section, the court in which the receivership proceeding
is pending under this chapter has exclusive jurisdiction to hear and determine all actions or
proceedings instituted by or against the state trust company or receiver after the receivership
proceeding starts. The receiver may file in any jurisdiction an ancillary suit that may be helpful to
obtain jurisdiction or venue over a person or property. Exclusive venue of an action or
proceeding instituted against the receiver or the receiver's designated agent, including an
employee of the department, which asserts personal liability on the part of the receiver or
designated agent lies in Burleigh County, North Dakota.
### § 6-07.1-12. Records with third parties.

Each state trust company affiliate, officer, director, manager, managing participant,
employee, shareholder, participant, trustee, agent, employee, attorney, attorney in fact, or
correspondent shall immediately upon request deliver to the receiver any property, book, record,
account, document, or other writing of the state trust company which relates to the business of
the state trust company, without cost to the receiver.
### § 6-07.1-13. Injunction in aid of liquidation.

On application by the receiver, the court may with or without notice issue an injunction
restraining each state trust company, officer, director, manager, managing participant, employee,
shareholder, participant, trustee, agent, employee, attorney, attorney in fact, accountant or
accounting firm, correspondent, or another person from transacting the state trust company's
business or wasting or disposing of its property or requiring the delivery of its property or assets
to the receiver subject to the further order of the court. The court, at any time during a
proceeding under this chapter, may issue another injunction or order considered necessary or
desirable to prevent interference with the receiver of the proceeding, waste of the assets of the
state trust company, the beginning of prosecution of an action, the obtaining of a preference,
judgment, attachment, garnishment, or other lien, or the making of a levy against the state trust
company or its assets.
### § 6-07.1-14. Subpoena.

In addition to the authority granted by law to the receiver relating to the taking of a
deposition of a witness in a civil action, the receiver may request the court ex parte to issue a
subpoena to compel the attendance and testimony of a witness before the receiver and the
production of a book, account, record, paper, or correspondence, or other record relating to the
receivership estate. For this purpose, the receiver or the receiver's designated representative
may administer an oath or affirmation, examine a witness, or receive evidence. The court has
statewide subpoena power and may compel attendance and production of a record before the
receiver at the state trust company, the office of the receiver, or another location. In case of
disobedience of a subpoena, or of the contumacy of a witness appearing before the receiver or
the receiver's designated representative, the receiver may request and the court may issue an
order requiring the person subpoenaed to obey the subpoena, give evidence, or produce any
record relating to the matter in question.
### § 6-07.1-15. Preferences.

Any transfer of or lien on the property or assets of a state trust company is voidable by the
receiver if the transfer or lien is made or created after four months before the date the state trust
company is closed for liquidation or one year before the date the state trust company is closed
for liquidation if the receiving creditor was at the time an affiliate, officer, director, manager,
principal shareholder, or participant of the state trust company or an affiliate of the state trust
company, or was made or created with the intent of giving to a creditor, enabling the creditor to

obtain a greater percentage of the claimant's debt that is given or obtained by another claimant
of the same class.
### § 6-07.1-16. Administrative expenses.

The receiver may employ agents, legal counsel, accountants, appraisers, consultants, and
other personnel the receiver considers necessary to assist in the performance of the receiver's
duties. The receiver may use personnel of the department if the receiver considers the use to be
advantageous or desirable. The expense of employing these persons is an administrative
expense of liquidation.
### § 6-07.1-17. Disposal of property and settling claims.

In the course of liquidating a state trust company, the receiver on order of the court entered
with or without hearing may sell all or part of the real and personal property of the state trust
company; borrow money and pledge all or part of the assets of the state trust company to
secure the debt created, except that the receiver may not be held personally liable to repay
borrowed funds; compromise or compound a doubtful or uncollectible debt or claim owed by or
owing to the state trust company; and enter another agreement on behalf of the state trust
company that the receiver considers necessary or proper to the management, conservation, or
liquidation of its assets.
### § 6-07.1-18. Filing reports and expenses.

The receiver shall file quarterly reports with the court showing the operation, receipts,
expenditures, and general condition of the state trust company in liquidation. The receiver shall
also file a final report regarding the liquidated state trust company showing all receipts and
expenditures and giving a full explanation and a statement of the disposition of all assets of the
state trust company. The receiver shall pay all administrative expenses out of funds or assets of
the state trust company. Each quarter the receiver shall submit an itemized report of those
expenses.
### § 6-07.1-19. Fiduciary activities.

As soon after beginning the receivership proceeding as is practicable, the receiver shall
terminate all fiduciary positions it holds, surrender all property held by it as a fiduciary, and settle
the state trust company's fiduciary accounts. The receiver shall release all segregated and
identifiable fiduciary property held by the state trust company to successor fiduciaries. With the
approval of the court, the receiver may sell the administration of all or substantially all remaining
fiduciary accounts to one or more successor fiduciaries on terms that appear to be in the best
interests of the state trust company's estate and the persons interested in the fiduciary
accounts. If commingled fiduciary funds held by the state trust company as trustee are
insufficient to satisfy all fiduciary claims to the commingled funds, the receiver shall distribute
commingled funds pro rata to all fiduciary claimants of commingled funds based on their
proportionate interests after payment of administrative expenses related solely to the fiduciary
claims. The fictional tracing rule does not apply. The receiver may require certain fiduciary
claimants to file proofs of claim if the records of the state trust company are insufficient to
identify their respective interests.
### § 6-07.1-20. Disposition and maintenance of records.

On approval by the court, the receiver may dispose of records of the state trust company in
liquidation which are obsolete and unnecessary to continue administration of the receivership
proceeding. Records of a liquidated state trust company are not public records for any purpose
and are exempt from public disclosure. To maintain the records of a liquidated state trust
company after the closing of the receivership proceeding, the receiver may reserve assets of an
estate, deposit them in an account, and use them for maintenance, storage, and disposal of
records in closed receivership estates.

### § 6-07.1-21. Filing claims.

A person who has a claim against the estate of a state trust company in liquidation must file
proof of claim pursuant to rules adopted by the state banking board. The priority of disposition of
assets from the estate of a state trust company must be in accordance with the order of each
class as provided by this section. Every claim in each class must be paid in full, or adequate
funds must be retained for that payment, before the members of the next class receive any
payment. A subclass may not be established within a class, except for a preference or
subordination within a class expressly created by contract or other instrument in the articles of
association. Assets must be distributed in the following order of priority: administrative
expenses; approved claims of secured trust deposits; approved claims of secured creditors;
approved claims by beneficiaries insufficient to satisfy all fiduciary claims to commingled
fiduciary funds or missing fiduciary property and approved claims of clients of the state trust
company; other approved claims of general creditors not falling within a higher priority under this
section; approved claims of a type described above that were not filed within the period
prescribed; and claims of capital note or debenture holders or holders of similar obligations and
proprietary claims of shareholders, participants, or other owners accorded the terms established
by issue, class, or series. After completion of the liquidation, any unclaimed property remaining
in the hands of the receiver must be considered abandoned property.
