Connecticut Seal

Substitute Senate Bill No. 983

Public Act No. 03-153

AN ACT CONCERNING FOREIGN BANKS AND RECEIVERSHIPS AND CONSERVATORSHIPS FOR CONNECTICUT BANKS AND CONNECTICUT CREDIT UNIONS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 36a-223 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) In all cases in which the appointment of a receiver or conservator for any Connecticut bank or Connecticut credit union is sought, if it is found that a receiver or conservator should be appointed, the Superior Court shall appoint [the commissioner] as a receiver or conservator [, except that the commissioner may request that] the commissioner or, if requested by the commissioner, the Federal Deposit Insurance Corporation or the National Credit Union Administration, or their successor agencies [, be appointed receiver or conservator. If the commissioner requests appointment of either the Federal Deposit Insurance Corporation or the National Credit Union Administration, or their successor agencies, the Superior Court shall make such appointment] or, if extraordinary circumstances exist, another competent person. The Superior Court may appoint the receiver or conservator on an ex parte basis upon a sufficient affidavit of the commissioner or the commissioner's authorized representative indicating reasonable likelihood that an unsafe or unsound condition exists which is likely to have an adverse effect upon depositors, share account holders or creditors. The commissioner may organize a separate division within the Department of Banking for liquidating and administering the affairs of the banks or credit unions for which the commissioner is acting as receiver or conservator, and the commissioner may appoint such employees as the commissioner deems necessary for the liquidation or administration of the affairs of such banks or credit unions. Any salaries and expenses shall be paid out of the funds of the bank or credit union in the possession of the commissioner, subject to the approval of the court having jurisdiction. The commissioner may appoint an agent, who may be an employee of the Department of Banking or such other person as the commissioner may deem appropriate and who, in the absence or incapacity of the commissioner and of the commissioner's deputy, shall have authority to act for or represent the commissioner in all matters pertaining to the duties of the commissioner as the receiver or conservator of any Connecticut bank or Connecticut credit union. Such agent may execute and sign for the commissioner as the receiver or conservator any documents, instruments or reports necessary in the administration of the receivership or conservatorship. The state shall be reimbursed for any costs or expenses incurred by the Department of Banking in the administration of the receivership or conservatorship, and the commissioner may collect from each such estate in receivership or conservatorship such charges as, in the commissioner's opinion, are fair and equitable. Any such costs or expenses so collected shall be deposited with the State Treasurer and shall be credited to the State Banking Fund. All legal services required by the commissioner or the commissioner's deputy, agent or employees in connection with such receivership proceedings or the administration or reorganization of any such Connecticut bank or Connecticut credit union shall be performed by the Attorney General, and any salaries and expenses for such legal assistance shall be paid out of the funds of the estate in receivership or conservatorship with the approval of the superior court having jurisdiction. Such salaries and expenses shall be allocated by the commissioner as nearly as possible to the estate in receivership or conservatorship for which the services were rendered, and the funds in payment of the same shall be deposited with the State Treasurer and shall be credited to the appropriation for the Attorney General. The commissioner shall keep on file in the commissioner's office an executed copy of each report required to be filed by the commissioner, as the receiver or conservator, with the clerk of the Superior Court and shall include a report of each bank or credit union for which the commissioner is acting as receiver or conservator in the commissioner's annual report to the Governor. If the commissioner, the Federal Deposit Insurance Corporation or the National Credit Union Administration, or their successor agencies, accepts the appointment as receiver or conservator, no bond shall be required to be posted.

(b) Upon the appointment of a receiver pursuant to subsection (a) of this section, possession of and title to all assets, business and property of the Connecticut bank or Connecticut credit union shall pass to and vest in the receiver without the execution of any instruments of conveyance, assignment, transfer or endorsement.

(c) A receiver or conservator appointed pursuant to subsection (a) of this section shall have the following powers: (1) To take possession of the books, records and assets of every description of the Connecticut bank or Connecticut credit union and collect all debts due and claims belonging to it; (2) to sue and defend all rights and claims involving the bank or credit union; (3) to exercise any and all fiduciary functions of the bank or credit union as of the date of the commencement of the receivership or conservatorship; (4) to borrow such sums of money as may be necessary or desirable in the performance of the duties of the receiver or conservator, and in connection therewith, to secure such borrowings by the pledge, hypothecation or mortgage of the assets of the bank or credit union; (5) [to sell,] subject to the approval of the appointing court, unless such approval is not required under subsection (d) of this section, to sell or otherwise dispose of any and all real and personal property [and, on like order, to] of the bank or credit union; sell, assign, compromise, [and settle] or otherwise dispose of all bad or doubtful debts; and compromise all doubtful claims for or against the bank or credit union; (6) to exercise all of the power and authority of the corporators, shareholders, directors, trustees, officers, depositors and share account holders of such bank or credit union in carrying out the duty of the receiver or conservator; (7) to exercise such other powers and duties as may be reasonably necessary or desirable to effectively and efficiently perform the functions of receiver or conservator in accordance with federal and state banking and credit union laws and regulations.

(d) Notwithstanding the provisions of subsection (a) of this section, in all cases in which the commissioner is appointed receiver or conservator, the commissioner, without the approval of the appointing court, may, upon such terms as the commissioner deems in the best interest of the Connecticut bank or Connecticut credit union: (1) Sell, assign, compromise or otherwise dispose of any bad or doubtful debt held by the bank or credit union, the value of which does not exceed fifty thousand dollars; (2) compromise any claim, other than a deposit claim, against the bank or credit union when the amount proposed to be paid in compromise does not exceed fifty thousand dollars, provided no claim in favor of the bank or credit union against any director, trustee or other officer for breach or neglect of official duty shall be compromised without the approval of the court; and (3) sell or otherwise dispose of any personal property of the bank or credit union the value of which does not exceed fifty thousand dollars. For purposes of this subsection, the value of any bad or doubtful debt shall be its current value, as determined by the commissioner in good faith, and the value of any personal property shall be (A) in the case of any single class of a security or any commodity, or other property or claim that has a readily ascertainable market value, such market value, and (B) in any other case, its current value as determined by the commissioner in good faith.

Sec. 2. Section 36a-226 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The receiver shall, as soon after the receiver's appointment as is practicable, make and return to the court an inventory and appraisal of the assets of the Connecticut bank or Connecticut credit union or estate in receivership, verified by oath according to the receiver's best knowledge, information and belief, and shall, from time to time thereafter, make and return such additional or supplementary inventories and valuations, and render such reports of the receiver's actions and statements of accounts, as are necessary for the information of the court or as are required by the order of the court. The receiver shall hold all the assets which come into the receiver's possession as such receiver, subject to the order of the court, and shall convert such assets into money with all reasonable dispatch [, and for that purpose may sell and dispose of such assets, and make all proper conveyances thereof, and may compromise all doubtful claims for or against such bank or credit union; provided no claim in favor of such bank or credit union against any director, trustee or other officer thereof, for breach or neglect of official duty, shall be compromised without the special authority and approval of the court] in accordance with section 36a-223, as amended by this act. In cases of doubt or difficulty the receiver may, upon written application, ask the advice of the court as to the manner in which the receiver shall execute the receiver's trust. The court may, from time to time, on its own motion, or on complaint of any interested party, make all necessary and proper orders as to the proceedings and actions of the receiver.

Sec. 3. Section 36a-428n of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) As used in this section:

(1) "Branch or agency net payment entitlement" means, with respect to a qualified financial contract, the amount, if any, that would have been owed by a party to a foreign bank after netting only those transactions entered into by the branch or agency of the foreign bank in this state and such party under such qualified financial contract.

(2) "Branch or agency net payment obligation" means, with respect to a qualified financial contract, the amount, if any, that would have been owed by the foreign bank to a party after netting only those transactions entered into by the branch or agency of the foreign bank in this state and such party under such qualified financial contract.

(3) "Business and property in this state" includes, but is not limited to, all property of the foreign bank, real, personal or mixed, whether tangible or intangible, (A) wherever situated, constituting part of the business of the state agency or state branch of the foreign bank in this state and appearing on its books as such, and (B) situated within this state whether or not constituting part of the business of such state agency or state branch in this state or so appearing on its books.

(4) "Global net payment entitlement" means the amount, if any, owed by a party or that would be owed if the relevant agreements provided for payments to either party, upon termination thereof under any and all circumstances, to the foreign bank as a whole after giving effect to the netting provisions of a qualified financial contract with respect to all transactions subject to netting under such qualified financial contract.

(5) "Global net payment obligation" means the amount, if any, owed by the foreign bank as a whole to a party after giving effect to the netting provisions of a qualified financial contract with respect to all transactions subject to netting under such qualified financial contract.

(6) "Qualified financial contract" means any securities contract, commodity contract, forward contract [,] including any spot and forward foreign exchange, [contract,] repurchase agreement, swap agreement, and any similar agreement, any option to enter into any such agreement, including any combination of the foregoing, [any other agreement determined by the commissioner by regulation or order to be a qualified financial contract] and any master agreement for such agreements. Such master agreement, together with all supplements thereto, shall be treated as one qualified financial contract, provided, such contract, option or agreement, or combination of contracts, options or agreements is reflected in the books, accounts or records of the foreign bank or a party provides documentary evidence of such agreement. The commissioner may by regulation or order determine any other agreement to be a qualified financial contract.

(b) The commissioner may, by order, immediately take possession of the business and property in this state of any foreign bank with a state branch or state agency in this state upon the commissioner's determination that such action is necessary for the protection of the interests of the creditors of such foreign bank's business in this state or for the protection of the public interest, and that such foreign bank: (1) Has violated any applicable law, regulation or order; (2) is conducting its business in an unauthorized or unsafe manner; (3) is in an unsafe or unsound condition to transact its business; (4) cannot with safety and expediency continue business; (5) has ceased to operate its state branch or state agency in this state; (6) has an impairment of its capital; (7) has suspended payment of its obligations, made an assignment for the benefit of its creditors, or admitted in writing its inability to pay its debts as they become due; (8) has neglected, refused or failed to take or continue proceedings for voluntary liquidation in accordance with section 36a-428k; (9) is insolvent in that it has ceased to pay its debts in the ordinary course of business, cannot pay its debts as they become due, or has liabilities exceeding its assets; (10) has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief under any bankruptcy, reorganization, insolvency or moratorium law, or, that any person has applied for any such relief under any such law against the foreign bank, and the foreign bank has by any affirmative act approved of or consented to such action or such relief has been granted; (11) is no longer in existence or its authority to transact banking business under the laws of the place where it is domiciled has been suspended or terminated; (12) is in liquidation, receivership or conservatorship at its domicile or elsewhere, or that any proceeding for appointment of a liquidator, receiver or conservator or any similar proceeding has been initiated against it, or there is reason to doubt its ability or willingness to pay in full the claims of creditors; (13) has otherwise had its license revoked, suspended, cancelled, terminated or otherwise not renewed pursuant to the provisions of section 36a-428j; or (14) is in a condition, or facts or circumstances relating to such foreign bank exist, which, if existing at the time such foreign bank applied for its license to establish a state branch or state agency in this state, would have been grounds for denying such application.

(c) Title to such business and property in this state of a foreign bank shall vest by operation of law in the commissioner and his successors upon taking possession, without the execution of any instruments of conveyance, assignment, transfer or endorsement. The commissioner shall promptly apply to the superior court for the judicial district of Hartford for appointment as receiver of such foreign bank with effect from the time of taking possession, and the superior court shall make such appointment. Thereafter, except as otherwise provided in this section, the commissioner shall liquidate or otherwise deal with such business and property in this state of a foreign bank in accordance with the provisions of sections 36a-223 to 36a-239, inclusive, provided, (1) "debts", "liabilities", "deposits", "claims" and other similar terms used in sections 36a-223 to 36a-239, inclusive, refer to the claims that the commissioner shall accept pursuant to subsection (e) of this section; (2) "creditors" and "depositors", as used in such sections, refer to the owners of such accepted claims; (3) except as the context otherwise requires, "Connecticut bank", as used in such sections, refers to the state branches or state agencies in this state; and (4) "officer", as used in such sections, includes any person in charge of or who is an officer of such state branches and the agent or other person in charge of such state agencies. Notwithstanding any contrary provision of law, including chapters 55a and 67, the commissioner may employ or contract with such legal counsel and expert assistants under such titles as the commissioner may assign to them and may retain such of the officers or employees of such foreign bank as the commissioner deems necessary in the liquidation and distribution of the assets of such foreign bank, without the prior approval of any other state agency or elective officers. The commissioner shall be entitled to the appointment of a single judge to supervise the liquidation upon request to the administrative judge of the superior court for the judicial district of Hartford. Said judge shall have the power to order expedited or simplified procedures whenever necessary to resolve a matter in such liquidation.

(d) At any time within ten days after the commissioner has taken possession of the business and property in this state of a foreign bank, such foreign bank may apply to the superior court for the judicial district of Hartford for an order requiring the commissioner to show cause why the commissioner should not be enjoined from continuing such possession. The court may, upon good cause shown, direct the commissioner to refrain from further proceedings and to surrender such possession.

[(e) Only the claims of creditors of such foreign bank arising out of transactions entered into by such creditors with its state branches or state agencies in this state, shall be accepted by the commissioner for]

(e) (1) The only claims that the commissioner shall accept for payment out of such business and property in this state of a foreign bank as provided in this section are claims of creditors of such foreign bank arising out of transactions entered into by such creditors with its state branches or state agencies in this state that still exist as liabilities of such state branches and state agencies as shown in the books and records of such state branches and state agencies at the time the commissioner takes possession of the business and property of the foreign bank. Acceptance or rejection of such claims by the commissioner shall not prejudice such creditors' rights to otherwise share in the assets of such foreign bank. The following claims shall not be accepted by the commissioner for payment out of such business and property in this state of a foreign bank: [(1)] (A) Claims which would not represent an enforceable legal obligation against such state branch or state agency if such branch or agency were a separate and independent legal entity; and [(2)] (B) amounts due and other liabilities to other offices, agencies, branches and affiliates of such foreign bank. [Whenever the principal amount of any such claim owed by or owing to such foreign bank does not exceed fifty thousand dollars, the commissioner may sell, assign, compromise or otherwise dispose of the same upon such terms as the commissioner may deem for the best interest of such foreign bank without obtaining the approval of the court otherwise having jurisdiction of the matter. ] All wages actually owing to the employees of a foreign bank in the possession of the commissioner for services rendered within three months prior to the date when possession was taken, not exceeding two thousand dollars to each employee, shall be paid prior to the payment of every other debt or claim, and in the discretion of the commissioner may be paid as soon as practicable after taking possession, except that at all times the commissioner shall reserve such funds as will in the commissioner's opinion be sufficient for the expenses of administration.

(2) Nothing in this section shall be construed to adversely affect a valid lien or perfected security interest of a federal reserve bank or the United States Department of the Treasury in the business and property in this state of a foreign bank.

(f) Whenever the accepted claims, together with interest thereon, and the expenses of the liquidation have been paid in full or properly provided for, the commissioner, upon the order of the superior court for the judicial district of Hartford, shall [turn over] pay, from the remaining assets, [to] other offices of the foreign bank that are being liquidated in the United States, upon the request of the liquidators of such offices, in amounts which the liquidators of such offices demonstrate to the commissioner are needed to pay the claims accepted by such liquidators and any expenses incurred by such liquidators in liquidating such offices of the foreign bank. After such payments, if any, have been made, the commissioner shall turn over any remaining assets of the foreign bank to the principal office of such foreign bank, or to the duly appointed domiciliary liquidator or receiver of such foreign bank.

(g) After taking possession of the business and property in this state of any foreign bank: (1) The commissioner shall immediately give notice of such fact to all persons known to the commissioner to hold any assets of such foreign bank. No person having notice or knowledge that the commissioner has taken possession of the business and property in this state of such foreign bank, shall have a lien or charge for any payment, advance or clearance thereafter made against any of the assets of such foreign bank for liability thereafter incurred. (2) Upon the written demand of the commissioner, any person holding assets of such foreign bank shall deliver such assets to the commissioner and shall thereupon be discharged from liability with respect to any claim upon such assets, provided, such demand shall not affect the right of a secured creditor with a perfected security interest, or other valid lien or security interest enforceable against third parties, to retain collateral, including any right of such secured creditor under any security arrangement related to a qualified financial contract to retain collateral and apply such collateral in accordance with this section. Nothing in this section shall affect any right of set-off permitted under applicable law, provided, no person may set off the business and property in this state of a foreign bank against liabilities of such foreign bank other than those that arise out of transactions entered into by such person with the state branch or state agency of the foreign bank in this state, which liabilities shall be deemed to include in the case of qualified financial contracts the lesser of the two amounts calculated with respect to any such qualified financial contract pursuant to subdivision (2) of subsection (i) of this section.

(h) (1) The commissioner shall, after taking possession of the business and property in this state of a foreign bank, cause to be mailed or sent to each person claiming to be, or appearing upon the books of such foreign bank to be (A) the owner of any personal property in the custody or possession of such foreign bank as bailee or depositary for hire or otherwise, including securities, whether held in custody directly or in book-entry form by such foreign bank, its nominee, subcustodian, clearing corporation or similar entity, and the contents of any safe, vault or box opened for nonpayment of rental in accordance with the provisions of this subsection, or (B) the lessee of any safe, vault or box, a notice in writing sent by registered mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to such person at such person's last address as it appears on the books of such foreign bank or at such person's last known address if no address appears on such books, notifying such person to remove all such property or the contents of any such safe, vault or box, within a period stated in such notice, which period shall be not less than sixty days from the date of such notice, and further notifying such person of the terms and provisions of this subsection and any regulations that may be adopted under this section by the commissioner pursuant to chapter 54. The contract of bailment or of deposit for hire, or the lease of such safe, vault or box, if any, between the person to whom such notice is mailed and such foreign bank shall terminate upon the date for removal fixed in such notice. Such person shall have a claim against such foreign bank for the amount of unearned rent or charges, if any, paid by such person from the date fixed in such notice if the property or contents are removed on or before such date, or from the date of actual removal if the property or contents are removed after such date.

(2) If such property or contents are not removed, and all accrued rental or storage and other charges, if any, are not paid, within the time fixed by such notice, the commissioner shall inventory and deal with such property and contents in accordance with any regulations that may be adopted under this section by the commissioner pursuant to chapter 54. The commissioner shall deal with such property and contents at the expense and risk of the person in whose name it stands. The commissioner shall be held harmless and shall not be liable to any subsequent claimant for any delivery or transfer made by the commissioner in good faith to the claimant appearing to be entitled to such property from the records available to the commissioner. If the commissioner is in doubt concerning the person entitled to property in the possession of the commissioner, or there are conflicting claims thereto, the commissioner may require of the claimant an order of the superior court of the judicial district of Hartford authorizing and directing the delivery of such property.

(3) After the expiration of one year from the date of mailing the notice required by subdivision (1) of this subsection, the commissioner may apply to the superior court for the judicial district of Hartford for an order authorizing the commissioner to sell, destroy or otherwise dispose of any personal property which had been in the custody or possession of such foreign bank as bailee or depositary for hire or otherwise and which remains in the possession of the commissioner. The court may require that the commissioner provide notice to the person in whose name such property stands and to any other person claiming or appearing to have an interest therein, by publication, mailing or in such other manner as the court may prescribe. Whenever the commissioner is given the power to sell such property, such power to sell shall be deemed a power to sell in satisfaction of a lien for nonpayment of accrued rental or storage charges and all other charges and expenses paid or incurred to the date of sale with respect to such property. Such power to sell, destroy or otherwise dispose of, when authorized pursuant to this subsection or any regulations that may be adopted under this section by the commissioner pursuant to chapter 54, shall be deemed to include the power to sell, destroy or otherwise dispose of any bonds, stock certificates, promissory notes, choses in action or other securities, and any other tangible or intangible property contained in any package, regardless of whether or not it shall appear from such securities or properties that the person in whose name the package stands possesses title to or interest in such securities or other properties or the power to transfer such title or interest, and any sale of such securities or properties pursuant to this subsection shall vest good title thereto in the purchaser thereof.

(4) The provisions of this subsection shall not (A) affect or preclude any other remedy, by civil action or otherwise, for the enforcement of the claims or rights of the commissioner or of such foreign bank against the person in whose name any property, or any safe, vault, box, package, parcel or receptacle stands, or (B) affect or bar the right of the commissioner or the foreign bank to recover, before sale, any debt or claim due the commissioner or such foreign bank, or, after sale, the portion of the debt or claim that was not paid by the proceeds of the sale.

(i) (1) Except as otherwise provided in this subsection, after taking possession of the business and property in this state of a foreign bank, the commissioner may assume or repudiate any contract, including an unexpired lease, of such foreign bank, relating to the business and property in this state of such foreign bank and to which such foreign bank is a party, the performance of which the commissioner determines to be burdensome and the repudiation of which the commissioner determines will promote the orderly administration of the foreign bank's affairs in this state. After the expiration of ninety days from the date that the commissioner takes possession, any party to a contract with the foreign bank relating to the business and property in this state of such foreign bank may demand in writing that the commissioner assume or repudiate such contract. If the commissioner has not assumed or repudiated the contract within fifteen days from the date of receipt of the demand, the affected party may bring an action in the superior court for the judicial district of Hartford to obtain an order requiring the commissioner to decide whether to assume or repudiate such contract. If the commissioner has not assumed or repudiated a contract not later than one month before the last date for filing claims against such foreign bank established pursuant to section 36a-225, such contract shall be deemed repudiated. Notwithstanding the provisions of this subdivision, with respect to an unexpired lease of the foreign bank for the rental of real property under which the foreign bank was a lessee, if the commissioner remains in possession of the leasehold, the commissioner shall not be required to assume or repudiate such lease and may continue in possession of such leasehold for the remainder of the term of the lease in accordance with the terms of the lease, provided, if the commissioner later repudiates the lease before the end of the lease term, any amounts that may be due the lessor as a result of such repudiation shall be calculated according to the provisions of subparagraph (A) of subdivision (3) of this subsection. Notwithstanding any contrary provision of this subsection, in liquidating a state branch or state agency of a foreign bank in this state, the commissioner shall not assume or repudiate any qualified financial contract that such state branch or state agency entered into which is subject to a multibranch netting agreement or arrangement that provides for netting present or future payment obligations or payment entitlements, including termination or closeout values relating to the obligations or entitlements, among the parties to the contract, agreement or arrangement, and the commissioner shall not be required to assume or repudiate any other qualified financial contract that such state branch or state agency entered into, provided, upon any repudiation of any qualified financial contract or the termination or liquidation of any qualified financial contract in accordance with its terms, the liability under such qualified financial contract shall be determined in accordance with subparagraph (B) of subdivision (2) of this subsection.

(2) (A) Except as otherwise provided in this subsection, upon the repudiation or termination of any contract pursuant to subdivision (1) of this subsection, liability shall be limited to the actual direct compensatory damages of the parties to the contract, determined as of the date the commissioner took possession. The commissioner shall not be liable for any future wages, other than reasonable severance payments, or for payments for future services, costs of cover, any consequential, punitive or exemplary damages, damages for lost profits or lost opportunity, or any other damages except as allowed by this subparagraph.

(B) Except as otherwise provided in this subsection, the liability of the commissioner upon the repudiation of any qualified financial contract, or in connection with the termination or liquidation of any qualified financial contract in accordance with the terms thereof, shall be limited as provided in subparagraph (A) of this subdivision, except that compensatory damages shall be deemed to include normal and reasonable costs of cover or other reasonable measures of damages utilized among participants in the market for qualified financial contract claims, calculated as of the date of repudiation or the date of the termination of such qualified financial contract in accordance with its terms. Upon the repudiation of any qualified financial contract or in connection with the termination or liquidation of any qualified financial contract in accordance with the terms thereof, if the commissioner is entitled to damages, such damages shall be paid by the party to the commissioner upon written demand pursuant to subdivision (2) of subsection (g) of this section, notwithstanding any provision in any such contract that purports to effect a forfeiture of such damages.

(C) In the case of the liquidation of a state branch or state agency of a foreign bank by the commissioner, with respect to qualified financial contracts subject to netting agreements or arrangements that provide for netting present or future payment obligations or payment entitlements, including termination or closeout values relating to the obligations or entitlements, among the parties to the contracts and agreements or arrangements, the liability of the commissioner to any party to any such qualified financial contract upon repudiation or in connection with the termination or liquidation of such qualified financial contract in accordance with the terms thereof, shall be calculated as of the date of repudiation or the date of the termination of such qualified financial contract in accordance with its terms and shall be limited to the lesser of (i) the global net payment obligation or (ii) the branch or agency net payment obligation. The liability of the commissioner under this subparagraph shall be reduced by any amount otherwise paid to or received by the party in respect of the global net payment obligation pursuant to such qualified financial contract which, if added to the liability of the commissioner under this subdivision, would exceed the global net payment obligation. The liability of the commissioner under this subparagraph to a party to a qualified financial contract also shall be reduced by the fair market value or the amount of any proceeds of collateral that secures and has been applied to satisfy the obligations of the foreign bank to the party pursuant to such qualified financial contract. In the event that netting under any applicable netting agreement or arrangement results in a branch or agency net payment entitlement, notwithstanding any provision in any such contract that purports to effect a forfeiture of such entitlement, the commissioner may make written demand upon the party to such contract under subdivision (2) of subsection (g) of this section for an amount not to exceed the lesser of the global net payment entitlement or the branch or agency net payment entitlement. The liability of the party under this subparagraph shall be reduced by any amount otherwise paid to or received by the commissioner or any other liquidator or receiver of the foreign bank with respect to the global net payment entitlement pursuant to such qualified financial contract which, if added to the liability of the party under this subparagraph, would exceed the global net payment entitlement. The liability of the party under this subparagraph to the commissioner pursuant to such qualified financial contract shall also be reduced by the fair market value or the amount of any proceeds of collateral that secures and has been applied to satisfy the obligations of the party to the foreign bank pursuant to such qualified financial contract.

(D) A party to a qualified financial contract with [the] a foreign bank whose state branch or state agency [in this state of the foreign bank] the commissioner is liquidating, which party has a perfected security interest in collateral [,] or other valid lien or security interest in collateral enforceable against third parties pursuant to a security arrangement related to such qualified financial contract, may retain all such collateral and [,] upon repudiation [or termination] of that qualified financial contract, or in connection with the termination or liquidation of that qualified financial contract in accordance with its terms, apply such collateral in satisfaction of any claims secured by the collateral, provided the total amount so applied to such claims shall not exceed the global net payment obligation, if any.

(3) (A) If the commissioner repudiates a lease of the foreign bank for the rental of real or personal property under which the foreign bank was a lessee, the lessor under such lease shall be entitled to file a claim with the commissioner for whichever is the least of: (i) The amount designated as liquidated damages contained in the agreement between the foreign bank and the lessor, (ii) an amount equal to one year's rent under the terms of the repudiated lease, or (iii) an amount equal to the rent for the remaining term of the lease.

(B) If the commissioner repudiates a lease of the foreign bank for the rental of real property under which the foreign bank was a lessor, and the lessee was not in default at the time of repudiation, the lessee under such repudiated lease may either (i) treat the lease as terminated by such repudiation and vacate the premises, or (ii) remain in possession of the leasehold interest for the balance of the term of the lease, and for any renewal or extension of such term that is enforceable by such lessee under applicable law other than any law relating to insolvency, unless the lessee defaults under the terms of the lease after the date of such repudiation. If the lessee remains in possession of the leasehold interest, the lessee shall continue to pay to the commissioner the contractual rent pursuant to the terms of the lease after the date of the repudiation of such lease and may offset against such rent payment any damages which may accrue due to the nonperformance of any obligation of the foreign bank under the lease after the date of repudiation. The commissioner shall not be liable to the lessee for any damages arising after such date as a result of the repudiation other than the amount of any offset allowed under this subdivision. Nothing in this subsection shall prohibit the commissioner from entering into a new contract with the lessee for the rental of the leasehold which was the subject of the repudiated lease.

(4) Except as otherwise provided in this subsection, notwithstanding any provision in an unexpired lease or other contract and notwithstanding any applicable law to the contrary, a contract or unexpired lease of the foreign bank that is subject to assumption or repudiation by the commissioner under this subsection may not be terminated or modified by any party other than the commissioner without the concurrence of the commissioner. Any right or obligation under such contract or lease may not be terminated or modified, at any time after the commissioner takes possession, solely pursuant to a provision in such contract or lease that is conditioned on (A) the commissioner taking possession, or (B) the insolvency, financial condition or liquidation of the foreign bank.

(5) Nothing in this subsection shall affect the right of a party to a contract of a foreign bank to seek performance of such contract or damages thereon in any other jurisdiction, provided, the commissioner shall not be liable for the performance of such contract or damages thereon in any other jurisdiction.

(6) The rights granted in this subsection are in addition to any other rights available to the commissioner under any other law.

(j) Where, by any agreement, a period of limitation is fixed for instituting an action upon any claim or for presenting or filing any claim, proof of claim, proof of loss, demand, notice or the like, or where, in any action or by statute or ordinance, a period of limitation is fixed for serving or filing any claim or pleading, taking any appeal or doing any other act, and where in any such case such period had not expired as of the date the commissioner took possession of the business and property in this state of the foreign bank, the commissioner may for the benefit of such foreign bank institute any such action, serve or file any such claim or pleading, take any such appeal, or do any such other act, required or permitted to such foreign bank within a period of one year subsequent to the date of taking possession, or within such further period as may be permitted by the agreement, or in the action, or by statute or ordinance, as the case may be.

(k) (1) Except as provided in this subsection, the commissioner's taking possession of the business and property in this state of a foreign bank shall operate as a stay of and as an injunction against the following, as of the date the commissioner takes possession: (A) The commencement or continuation, including the issuance or employment of process, of a judicial, administrative or other action or proceeding against the foreign bank that was or could have been commenced before the taking of possession, or to recover a claim against the foreign bank that arose before the taking of possession; (B) the enforcement against the foreign bank or its business and property in this state of a judgment obtained before the taking of possession; (C) any act to obtain possession of property of the foreign bank or of property from the foreign bank or to exercise control over property of the foreign bank; (D) any act to create, perfect, or enforce any lien against property of the foreign bank, including any lien that secures a claim that arose before the taking of possession; and (E) any act to collect, assess, or recover a claim against the foreign bank that arose before the taking of possession.

(2) The commissioner's taking possession of the business and property in this state of a foreign bank shall not operate as a stay of or as injunction against: (A) The filing of a claim pursuant to subsection (e) of this section in the liquidation of the foreign bank; the making of a demand upon the commissioner pursuant to subsection (i) of this section to decide whether to assume or repudiate a contract of the foreign bank; the exercise of any set-off otherwise permissible under applicable law except as limited by subdivision (2) of subsection (g) of this section; the right of any secured creditor with a perfected security interest or other valid lien or security interest enforceable against third parties to retain collateral, including any right of such secured creditor under any security arrangement related to a qualified financial contract, to retain collateral and to apply such collateral in accordance with subparagraph (D) of subdivision (2) of subsection (i) of this section; any automatic termination in accordance with the terms of any qualified financial contract or any right to cause the termination or liquidation of any qualified financial contract, in accordance with the terms thereof; any right to offset or net out any termination value, payment amount, or other transfer obligation arising under or in connection with one or more such qualified financial contracts; or the commencement of an action under subsection (d) of this section or any other action relating to the liquidation before the Superior Court judge overseeing the liquidation of the foreign bank; (B) the commencement or continuation of a criminal action or proceeding against the foreign bank; (C) the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power; (D) the enforcement of a judgment, other than a money judgment, obtained in an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power; (E) the issuance to the foreign bank by a governmental unit of a notice of tax deficiency; and (F) the commencement or continuation of a judicial action or proceeding by a secured creditor with a perfected security interest, or other valid lien or security interest enforceable against third parties, including any right of such secured creditor under any security arrangement related to a qualified financial contract, to enforce such security interest or lien.

(3) Except as otherwise provided in this subsection: (A) The stay or enjoining of an act against property of the foreign bank under this subsection shall continue until such property is no longer the property of the commissioner in possession of the foreign bank; and (B) the stay or enjoining of any other act under this subsection shall continue until the commissioner has concluded the liquidation.

(4) For good cause shown, on request of a party in interest and after notice and a hearing, the Superior Court judge overseeing the liquidation may grant relief from the stay or injunction provided under this subsection by terminating, annulling, modifying or conditioning such stay or injunction.

(5) In the case of any wilful violation of a stay or injunction provided in this subsection by any person or entity who has knowledge of the commissioner taking possession of the business and property in this state of a foreign bank that is the subject of the stay or injunction, the commissioner shall recover actual damages, including costs and reasonable attorneys' fees and, in appropriate circumstances, may recover punitive damages.

(l) The commissioner shall not accept any claim based on an agreement with the foreign bank unless the agreement is either reflected on the accounts, books or records of the foreign bank or a creditor provides documentary evidence of such agreement.

Approved June 26, 2003