Article 6. Conservatorship of California Financial Code >> Division 2. >> Chapter 7. >> Article 6.
(a) Whenever the commissioner deems it necessary in order to
conserve the assets of any association for the benefit of the
depositors and other creditors, or if the commissioner finds any of
the following with respect to any association: (1) the association is
in an impaired condition; (2) the association is engaging in
practices that threaten to result in an impaired condition; (3) the
association has substantially dissipated its assets due to violation
of law or regulation or to unsafe or unsound practice; (4) the
association is in an unsafe or unsound condition to transact
business; (5) the association is in violation of an order or
injunction, as authorized by this division; or (6) the association
refuses to submit its books, papers, and affairs to the inspection of
the commissioner, the commissioner may, ex parte and without notice,
appoint a conservator for the association.
(b) The conservator may be the commissioner, deputy commissioner
or any other person.
(c) The conservator shall, upon appointment, immediately take
possession of the books, records, and assets of every description of
the association and shall take any further action as he or she may
deem necessary to conserve the assets of the association pending
further disposition of its business.
(d) Within six months of the date of appointment of the
conservator, or within 12 months if the commissioner extends the six
months' period, the association shall be returned to its board of
directors to be managed and operated as if no conservator had been
appointed, or a receiver shall be appointed as provided in Section
(e) If the commissioner or a department employee is appointed
conservator no additional compensation shall be paid, but if another
person is appointed then the compensation of the conservator, as
determined by the commissioner, shall be paid by the association.
(f) Any expenses of such conservatorship shall be paid out of the
assets of the association and shall be a lien against association
assets prior to any other lien.
Any conservator shall have all the rights, powers, and
privileges possessed by the officers, directors, members and
stockholders of the association.
Except as authorized by the commissioner, the conservator
shall not retain special counsel or other experts, incur any expense
other than normal operating expenses, or liquidate assets except in
the ordinary course of operations.
The directors and officers shall remain in office and the
employees shall remain in their respective positions, but the
conservator may remove any director, officer, or employee, provided
the order of removal of a director or officer shall be approved in
writing by the commissioner.
(a) While the association is in the charge of a conservator,
savings account holders, borrowers, and other obligors of the
association shall continue to make payments to the association in
accordance with the terms and conditions of their contracts, and the
conservator may permit savings account holders to withdraw their
accounts from the association pursuant to the provisions of this
division but shall not declare, credit, or distribute interest for
savings accounts without prior approval of the commissioner.
(b) The conservator shall have power to accept savings accounts
and additions to savings accounts, but any amounts received by the
conservator may be segregated if the commissioner shall so order in
writing. If so ordered, these amounts shall not be subject to offset
and shall not be used to liquidate any indebtedness of the
association existing at the time the conservator was appointed for it
or any subsequent indebtedness incurred for the purposes of
liquidating the indebtedness of the association existing at the time
the conservator was appointed.
(c) All expenses of the association during conservatorship shall
be paid by the association.
Whenever a conservator has taken possession of the property
and business of any association pursuant to this article, that
association, within 10 days after the taking, if it deems itself
aggrieved thereby, may apply to the superior court in the county in
which the home office of the association is located to enjoin further
proceedings. The court, after citing the commissioner to show cause
why further proceedings should not be enjoined and after hearing and
determination of the facts, may dismiss the application or enjoin the
commissioner from further proceedings and direct the commissioner to
surrender the property and business to that association.