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 8250.
  (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.