(A) If it appears that any credit union organized under the laws of this state is bankrupt or insolvent, or that it has willfully violated the laws of this state relating to credit unions, or is operating in an unsafe or unsound manner, the Bank Commissioner, upon approval of the State Credit Union Board, may issue an order temporarily suspending all or part of a credit union's operations for not more than sixty (60) days. The board of directors shall be given notice by registered mail of such suspension, which notice shall include a list of the reasons for such suspension, and shall include a list of the specific violations of law, if any, and the operations suspended. The Bank Commissioner shall also notify the insuring organization of any suspension.

(B) Upon receipt of such suspension notice, the credit union shall cease those operations identified by the Bank Commissioner in the notice. The board of directors shall then file with the Bank Commissioner a reply to the suspension notice, and may request a hearing to present a plan of corrective actions proposed if the board desires to continue operations. The board may request that the credit union be declared insolvent and a liquidating agent be appointed.

(C) Upon receipt from the suspended credit union of evidence that the conditions causing the order of suspension have been corrected, the Bank Commissioner may revoke the suspension notice, permit the credit union to resume normal operations, and notify the insuring organization and the State Credit Union Board of such actions.

(D) If the Bank Commissioner, after issuing notice of suspension and providing an opportunity for a hearing, rejects the credit union's plan to continue operations, the Bank Commissioner may issue a notice of involuntary liquidation and appoint a liquidating agent. The credit union may request the appropriate court to stay execution of such action. Involuntary liquidation may not be ordered prior to the conclusion of suspension procedures outlined in this section.

(E) If, within the suspension period, the credit union fails to answer the suspension notice or request a hearing, the Bank Commissioner may then revoke the credit union's certificate, appoint a liquidating agent and liquidate the credit union.

(F) In the event of liquidation, the assets of the credit union or the proceeds from any disposition of the assets shall be applied and distributed in the following sequence:

(1) Secured creditors up to the value of their collateral;

(2) Costs and expenses of liquidation;

(3) Wages due the employees of the credit union;

(4) Costs and expenses incurred by creditors in successfully opposing the release of the credit union from certain debts as allowed by the Bank Commissioner;

(5) Taxes owed to the United States or any other governmental unit;

(6) Debts owed to the United States;

(7) General creditors, secured creditors to the extent their claims exceed the value of their collateral and owners of deposit accounts to the extent such accounts are uninsured;

(8) Members, to the extent of uninsured share accounts and the organization that insured the accounts of the credit union; and

(9) Members, to the extent of membership shares.

Added by Laws 1992, c. 90, § 13, eff. July 1, 1992.