§ 19-12-7. Priority of claims. (a) When the superior court assumes jurisdiction of a receivership proceeding with respect to a financial institution or credit union subject to the provisions of this title, the expenses and claims against the financial institution or credit union shall have priority in receiving distributions, including (without limitation) any assumption of liabilities out of the assets of the financial institution or credit union in the following order; except to the extent otherwise provided by subsection (b) of this section, pro rata among any class of claimants having priority until the members of the class have been paid or provided for in full before distribution to any junior class of claimants:

(1) Reasonable administrative expenses as allowed by the court in connection with the administration of the receivership estate, including (without limitation) payment of any loans, together with interest thereon, obtained by the receiver with the approval of the court to fund the operations of the receivership estate and the administration of the receivership proceeding, repayable only from the assets in the estate.

(2) Unsecured claims for wages earned by individuals who provided services as employees to the financial institution or credit union as provided in § 28-14-6.1, in amounts recommended by the receiver subject to the approval of the court.

(3) Subject to subsections (b) and (d) of this section, unsecured claims of depositors in the financial institution or credit union that does not have, or that has failed to obtain, federal deposit insurance; provided, however, that any such claim shall only have priority under this subsection to the extent that, if the financial institution or credit union had maintained insurance with the Federal Deposit Insurance Corporation and whether or not the financial institution or credit union would have been eligible to maintain insurance with the Federal Deposit Insurance Corporation, the deposit with respect to which the claim relates would have been an "insured deposit" as the term is defined in the Federal Deposit Insurance Corporation Act (12 U.S.C. § 1813(m)) as in effect as of December 31, 1990, and would have been covered by deposit insurance under the rules and regulations of the Federal Deposit Insurance Corporation in effect as of December 31, 1990. For the purpose of applying the preceding sentence, in the case of a credit union, all types of the credit union's member share accounts, including regular shares, share certificates, and share draft accounts, except to the extent the accounts constitute equity ownership interests in the credit union under the terms of the charter or bylaws of the credit union, shall be deemed an insured deposit.

(4) Subject to subsections (b) and (d), unsecured claims of depositors in the financial institution or credit union that does not have, or that has failed to obtain, federal deposit insurance for its deposits, to the extent their deposit claims exceed amounts recovered under subsection (a)(3).

(5) Unsecured claims of any local, state, or federal taxing agency entitled by law to priority in distributions from any receivership estate, to the extent of that priority, in any amounts as shall be approved by the court.

(6) Unsecured claims of all general creditors and depositors of the financial institution or credit union to the extent not accorded priority pursuant to subsections (a)(1) through (a)(4), in any amounts as shall be approved by the court.

(b) Distributions entitled to priority under subsection (a)(3) and/or (a)(4) shall be reduced or limited to the extent that either of the following paragraphs apply:

(1) Any distribution to a depositor pursuant to subsection (a)(3) and/or (a)(4) shall be subject to any legally available setoff and reduction to the extent of any default on any debt of the depositor to the financial institution or credit union at the time of such distribution.

(2) Any distribution to a depositor entitled to priority pursuant to subsection (a)(3) and/or (a)(4) may be affected, reduced, or extended in time to the extent that the receiver may recommend, and the court may approve, a plan of distribution with respect to depositor claims entitled to priority that pays promptly (i) a subclass of the claims in full up to a stated amount for administrative convenience and (ii) if the receiver so recommends and the court approves, the stated amount to all other depositors entitled to priority under subsection (a)(3) and/or (a)(4) whose claims exceed the stated amount to provide partial and more timely relief for those depositors.

(c) The claim of a creditor that is secured by a mortgage, security interest, or lien on property in which the financial institution or credit union has an interest is a secured claim to the extent of the value of the estate's interest in the property or to the extent of amounts subject to setoff, as the case may be, and is an unsecured claim to the extent that the value of the creditor's interest or the amount so subject to setoff is less than the amount of the claim as approved by the court. Only the unsecured portion of the claim of the secured creditor shall participate in a distribution provided for in subsection (a) hereof.

(d) Notwithstanding the provisions of subsection (a)(3) and/or (a)(4) or the provisions of § 42-116-7(3)(i) and/or (3)(ii) or § 42-116-12, no priority shall be afforded under subsection (a)(3) and/or (a)(4) to the unsecured claims of any officer, director or employee of any financial institution or credit union or of the Rhode Island Share and Deposit Indemnity Corporation or any other person who, with knowledge of the actual or impending insolvency and/or the impending closing of a financial institution or credit union or of the actual or impending insolvency of and/or the actual or impending cessation of business by the Rhode Island Share and Deposit Indemnity Corporation, and for the purpose of avoiding the loss of funds and/or access to funds in any depository account in any insolvent financial institution or credit union, withdrew from any insolvent financial institution or credit union any amount of money within thirty (30) days prior to the closing of that financial institution or credit union by proclamation of the governor dated January 1, 1991.

History of Section. (P.L. 1995, ch. 82, § 50.)