§ 42-116-12. Payment of depositor's claims. (a) Subject to the provisions of § 42-116-7(1) - (6), distributions from the corporation with respect to deposit liabilities assumed from eligible institutions shall be made in accordance with this section.

(b) For the purposes of this section, each assumed deposit liability is the sum of the principal amount thereof as of January 1, 1991, plus accrued interest thereon to the date that the eligible institution was petitioned into receivership. In the case of an eligible institution that is a credit union, all types of the eligible institution's member share accounts, including regular shares, share certificates and share draft accounts, except as to one share per account which are deemed to constitute an equity ownership interest in the eligible institution, are deemed to be deposit liabilities to the extent assumed by the corporation.

(c) Deposit liabilities and distributions on account thereof made pursuant to this section shall not include any interest accrued from the time that the eligible institution from which the deposit liabilities arose was petitioned into receivership.

(d) For the purpose of determining distributions by the corporation in respect of assumed deposit liabilities, as set forth in subsection (b), assumed deposit liabilities in the same eligible institution are aggregated and adjusted in accordance with regulations adopted by the corporation, which regulations follow the principles contained in § 3(m) of the Federal Deposit Insurance Act, 12 U.S.C. § 1811 et seq., as in effect as of December 31, 1990 and rules and regulations of the Federal Deposit Insurance Corporation as in effect as of December 31, 1990. Assumed deposit liabilities determined after this aggregation shall be segregated into separate obligations that are entitled to separate distributions from the corporation as provided in this section (as so aggregated and determined referred to individually as "distributable account" and collectively as "distributable accounts").

(e) Payments on account of distributable accounts as set forth in subsection (d) shall be made as follows:

(1) Distributable accounts of four thousand dollars ($4,000) or less shall be paid in full by June 30, 1992.

(2) As to distributable accounts of more than four thousand dollars ($4,000), ninety percent (90%) of the entire balance of the distributable account shall be paid by June 30, 1992.

(3) As to distributable accounts described in subdivision (2) of this subsection, there is established a guaranteed balance equal to ten percent (10%) of the distributable account as initially determined. The guaranteed balance shall bear simple interest, not compounded, at five percent (5%) per annum beginning July 1, 1992. Interest accrued through June 30, 1997 shall be posted to each depositor's guaranteed balance as of June 30, 1997 as an addition to the principal thereof. A depositor has no right to receive that interest prior to July 1, 1997. The principal of the guaranteed balance, to include the interest posted on June 30, 1997, shall be paid in fifteen (15) consecutive equal annual payments commencing on July 1, 1997 and on each July 1, thereafter until paid in full. Notwithstanding any other provisions or references to pro-rata distribution in chapter 116 of title 42, all net proceeds from litigation, whether settled in or out of court, shall be paid equally to each depositor with guaranteed balances upon receipt by the corporation each time that escrow reaches fifteen million dollars ($15,000,000). Interest accrued after June 30, 1997 shall be paid in arrears on the outstanding principal of the guaranteed balance concurrently with each annual principal payments.

(f) The principal amount of any guaranteed balance and/or the amount of each distribution by the corporation under this section, including without limitation those in respect of distributable accounts and/or guaranteed balances, shall be reduced permanently from time to time by an amount equal to the aggregate of all prior payments not previously applied against each distribution, and the corporation may continue to reduce these distributions by any unapplied prior payments until the aggregate amount of the prior payments have been applied against these distributions under this section. For the purposes of this section, the term "prior payment" means the aggregate amount from time to time after January 1, 1991 of:

(1) Payments made or issued by an eligible institution, the receiver of the eligible institution or the corporation (other than distributions under this section) in respect of any deposit liabilities of the intended recipient of the distribution and/or any deposit liabilities giving rise to the distribution; and

(2) Set-offs made by the eligible institution, the receiver of the eligible institution or the corporation in respect of any deposit liabilities of the intended recipient of the distribution and/or any deposit liabilities giving rise to the distribution.

(g)(1) Within thirty (30) days after the date of the payment set forth in subdivision (e)(2) and concurrently with each annual payment of the guaranteed balance, the owner thereof shall receive a statement of account.

(2) From June 30, 1992 until June 30, 1997, except for transfer by will, the laws of descent and distribution, or otherwise required by operation of law, the guaranteed balance is non-transferable, whether by sale, pledge, gift, or otherwise. Commencing on July 1, 1997, any guaranteed balance may be transferred by the holder thereof; provided that the transfer does not subject the corporation, the transferor, or the transferee to any registration or reporting requirements under applicable federal and/or state securities laws; and provided further, that any guaranteed balance transferred pursuant to this section may not be used by any transferee or subsequent transferee as a set off or other reduction against any debt or liability to the corporation, or any assignee or transferee of the corporation.

(3) The guaranteed balances will not be evidenced by a certificate or other instrument. The corporation shall maintain a record of the name and address of the owner of the guaranteed balance and the amount of the guaranteed balance.

(h) The corporation may:

(1) Pre-pay any guaranteed balance with a principal amount of less than one thousand dollars ($1,000) at any time;

(2) Pre-pay the outstanding amount of all guaranteed balances at any time; and

(3) Pre-pay all guaranteed balances on a pro-rata basis at any time. Pro-rata means a distribution in the percentage that the aggregate amount of prepayment bears to the aggregate amount of the outstanding principal balance of all guaranteed balances.

(i)(1) All net proceeds of litigation, (after payment of all legal fees, costs, and expenses arising in connection therewith) whether by settlement or suit, prosecuted by an eligible institution, the receiver of an eligible institution and/or the corporation, shall be paid to the corporation and shall be utilized by it as follows:

(i) To pay the guaranteed balances in accordance with subdivision (e)(3); and

(ii) After the guaranteed balances have been paid in full, to pay the loan obligations or bond indebtedness of the corporation.

(2) The term "litigation," for the purposes of this subsection, means all rights, claims and causes of action against:

(i) Any eligible institution;

(ii) The Rhode Island share and deposit indemnity corporation;

(iii) And/or any officers, directors, employees, accountants, attorneys, appraisers, consultants, agents, or providers of professional services to the institution and/or the Rhode Island share and deposit indemnity corporation.

(j)(1) The corporation requires that any depositor entitled to receive any payment under the terms of this chapter shall, in consideration of the corporation's making the payment and as a condition precedent to the depositor's receiving the payment, and only to the extent of that payment and any tolled or lost interest or consequential damages attributable to that payment, execute a total and complete waiver and release of any and all rights, claims and causes of action, of any nature whatsoever, which that depositor might have against the state or any of its officials or employees in relation to the pro rata portion of any funds or accounts that the depositor may have or may have had on deposit with any eligible institution.

(2) Distributions as to distributable accounts arising from the assumed deposit liabilities of the heritage loan and investment company are limited to those deposit liability claims which have been allowed and validated by an un-stayed order or judgment of the superior court sitting at Providence county. Distributable accounts arising from deposit liability claims which have not been allowed and validated by an un-stayed order or judgment of the superior court as of June 30, 1992 shall be paid by the corporation within sixty (60) days of the receipt by the corporation of an un-stayed order or judgment of the superior court which allows and validates the claim. Payment of distributable accounts pursuant to this subsection shall be in accordance with and in the same manner and form as set forth in subdivisions (e)(1), (e)(2) and (e)(3).

(k)(1) The provisions of subdivisions (e)(1) and (e)(2) do not apply to this subsection. In the event that substantially all of the deposit liabilities of the Davisville Credit Union are insured by the Federal Deposit Insurance Corporation, the payment of any distributable account arising from the assumption by the corporation of any uninsured portion of a deposit liability of the Davisville Credit Union, which uninsured portion does not exceed ten percent (10%) of the deposit liability existing as of the date of the insurance, shall be made by the establishment by the corporation of a guaranteed balance equal to the amount of the distributable account. The amount of the distributable account shall be determined by the corporation within thirty (30) days of the corporation's assumption of the portion of the deposit liability. The guaranteed balance as established in this subsection is payable in the same manner and on the same terms and conditions as the guaranteed balance provided for in subdivision (e)(3).

(2) The guaranteed balance as established in this subsection is subject to the remaining provisions of this section.

History of Section. (P.L. 1992, ch. 9, § 3; P.L. 1993, ch. 251, § 1; P.L. 2006, ch. 216, § 53.)