Wis. Admin. Code Department of Financial Institutions § DFI-SB 21.13 - Liquidation account

Current through March 28, 2022

(1) REQUIREMENT. At the time of conversion, each savings bank shall establish a liquidation account in an amount equal to the amount of net worth of the savings bank prior to conversion. The savings bank shall use the net worth figure established 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 s. DFI-SB 21.14(2), the existence of the liquidation account shall not restrict the use or application of any of the accounts of the savings bank.
(2) PURPOSE. The liquidation account shall be maintained for the benefit of eligible account holders and supplemental eligible account holders who maintain their deposit accounts. 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").
(3) 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 for deposit accounts held, in the amount of the date of complete liquidation subaccount balances adjusted under subs. (4) and (5) before any liquidation distribution may be made with respect to capital at the time of the conversion in exchange for the surrender of any mutual capital certificates issued in accordance with 12 CFR 563.74 by the institution prior to conversion. A merger, consolidation, sale of bulk assets, or similar combination or transaction with another SAIF-insured institution is not considered a complete liquidation, and in this kind of transaction, the liquidation account shall be assumed by the surviving institution. Preferred stock issued in exchange for mutual capital certificates may receive distributions in a 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 deposit account holders had the savings bank not been converted as of the date of liquidation.
(4) CALCULATING INDIVIDUAL DISTRIBUTIONS. The initial subaccount balance for a deposit account held by an eligible account holder 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 the savings account on the eligibility record date or the supplemental 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 institution on those dates. For deposit accounts in existence on both dates, separate subaccounts shall be determined on the basis of the qualifying deposits in the accounts on the appropriate record date. The initial subaccount balances shall not be increased, and they shall be subject to downward adjustment under sub. (5).
(5) ACCOUNT AND SUBACCOUNT BALANCES.
(a) Subparagraph (b) applies if the balance in any deposit account of an eligible account holder or supplemental eligible account holder at the close of business on any fiscal year's last day subsequent to the respective record dates is less than the lesser of:
1. The balance in the deposit account at the close of business on any other fiscal year's last day subsequent to the eligibility record date or supplemental eligibility record date; or
2. The amount of qualifying deposit as of the eligibility record date or the supplemental eligibility record date.
(b) 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. 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 savings bank is not required to recompute the liquidation account and subaccount balances provided the 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 eligible account holder or supplemental eligible account holder shall be maintained for as long as the eligible account holder or supplemental eligible account holder maintains an account with the same social security number.

Notes

Wis. Admin. Code Department of Financial Institutions § DFI-SB 21.13
CR Register, February, 1994, No. 458, eff. 3-1-94.

This section interprets or implements s. 214.685, Stats.

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