Powers and duties of liquidator

(1) Where a liquidator is appointed under section 106, the liquidator shall become the sole legal representative of the licensee, and subject to sub-section (7), shall succeed to all rights and powers of the shareholders and directors and officers responsible for the management of the licensee. (2) Without prejudice to the generality of sub-section (1) and subject to sub-section (4), such rights and powers of the liquidator shall include– (a) holding title to the books, records, and assets of the licensee; (b) managing, operating and representing the (c) marshalling assets and claims; (d) transferring or disposing of assets and liabilities; and (e) taking such other action as is necessary for the efficient liquidation of the licensee and to 173 obtain the maximum amount from the sale of assets, including without limitation– (i) continuing or interrupting any operation of the licensee; (ii) borrowing money guaranteed with its assets or without guarantee; (iii) suspending or limiting the payment of debts subject to the approval of the Central Bank as provided below; (iv) hiring specialists, experts or professional consultants; (v) administering the licensee’s accounts; (vi) collecting the debts due to the licensee and recovering goods owed by the third parties; (vii) employing or dismissing any officer, employee or advisor; (viii) initiating or defending the licensee in any legal proceeding and executing any relevant instrument in the name of the licensee; and (ix) restructuring the licensee’s liabilities through arrangements with the licensee’s creditors, including through a reduction, modification, rescheduling and novation of their claims, up to the amount determined by the Central Bank. 174 (3) The liquidator shall act in accordance with the regulations and practice directions made pursuant to this Act at any time in the course of the liquidation, and shall be accountable only to the Central Bank for the performance of duties and the exercise of powers as liquidator. (4) A liquidator may not take any new deposits. A liquidator may extend credit only to an existing customer in accordance with the terms of an agreement in force at the time of the appointment of the liquidator and with the prior approval of the (5) The liquidator shall have unrestricted access to and control over the offices, books of account and other records, and other assets of the licensee and its subsidiaries. (6) The liquidator may request the assistance of law enforcement officials, who shall, if necessary, use force to assist the liquidator to gain access to any premises of the licensee, to gain control over and to secure such properties, offices, assets, books and records of the licensee. (7) Any person who willfully interferes with a liquidator’s access to or control over the offices, books of account and other records, and other assets of a licensee commits an offence and shall be liable on summary conviction thereof to fine not exceeding one hundred thousand dollars or to imprisonment for a term of not less than one year nor more than five years or to both, and in the case of a continuing offence, to an additional fine not exceeding ten thousand dollars for each day during which the offence continues. (8) The Central Bank shall approve or deny a merger of the licensee with another licensee, or sale of substantially all the licensee’s assets or liabilities, or both, to any one licensee. 175 (9) The powers of the shareholders and directors and officers responsible for the management of the licensee shall be terminated during a liquidation; provided, however, that directors or officers may be instructed by the liquidator to exercise specified functions for the licensee; and further provided, that such persons shall be subject to dismissal by the liquidator from their positions at the licensee and shall thereupon cease to receive compensation from the licensee. (10) The liquidator shall secure the property, offices, books, records, and assets of the licensee to seek to prevent their dissipation by theft or other improper action, by taking actions including, but not limited to, the following– (a) changing the locks and limiting access to the new keys on external entrances to the licensee’s offices and on doors to internal offices which contain financial assets or information or equipment which could enable a person to gain unlawful access to financial (b) changing or establishing access codes to the licensee’s computers and granting access only to a limited number of trustworthy employees; (c) issuing new photo identification passes for entrance of authorized employees to the licensee’s premises and controlling the access of others to the licensee’s premises; (d) cancelling authorizations of persons to engage the financial responsibility of the licensee and issuing new authorizations, as appropriate, and notifying third parties; 176 (e) informing correspondent licensees, registrars and transfer agents of securities, and external asset managers of the licensee’s assets that persons who previously had authorization to give instructions on behalf of the licensee with respect to dealing in the licensee’s assets or assets held in trust by the licensee are no longer so authorized and that only the liquidator, and persons authorized by the liquidator have such authority; and (f) suspending the of distributions in general and payment of any kind to directors, officers and principal shareholders; provided, however, that base compensation may be paid to directors and officers for services rendered in their capacity as directors and officers of the licensee. (11) The liquidator shall establish a new balance sheet for the licensee, based on his determination of liquidation values of the licensee’s assets with a corresponding reduction in the value of the licensee’s liabilities in the reverse order of priority in payment of distributions in a liquidation of a licensee’s assets. Liabilities shall be deemed due and payable and interest shall cease to accrue as of the date of the appointment of the liquidator. Un matured liabilities shall be discounted to present value at the rate of interest determined by the Central Bank. (12) Within one month of taking possession of a licensee, the liquidator shall make an inventory of the assets and property of the licensee and transmit a copy thereof to the Central Bank which shall make a copy available for examination by the (13) As of the date of appointment of a liquidator177 (a) any term, statutory, contractual or otherwise, on the expiration of which a claim or right of the licensee would expire or be extinguished, shall be suspended; (b) the calculation of interests and penalties licensee’s obligations shall be suspended and no other charge or liability shall accrue on the obligations of the licensee; (c) all legal proceedings against the licensee are stayed and the exercise of any right on the licensee’s assets shall be suspended; (d) no right can be exerted over assets during the licensee’s liquidation, except rights given to (e) no creditor may attach, sell or take possession of any assets of the licensee as a means of enforcing his claim or initiate or continue any legal proceeding to recover the debt or perfect security interests in the licensee’s assets; (f) any attachment or security interest (except one existing six months prior to the effective date of the liquidation) shall be vacated, and no attachment or security interest, except one created by the liquidator in the application of this section shall attach to any of the assets or property of the licensee so long as such liquidation continues; (g) shareholders’ rights shall be extinguished except for the right to receive proceeds, if any, under section 116; and 178 (h) the liquidator may sell the assets of the licensee or arrange for the assumption of liabilities of the licensee on terms he considers fair. (14) If the liquidator has reasonable cause to believe that shareholders, directors, officers, attorneys, accountants or other professionals have engaged or are engaging in criminal activities punishable by imprisonment of one year or more or in any matter involving fraud, he shall immediately notify the Central Bank and shall pursue any civil actions seeking damages, restitution and such other relief as the liquidator shall deem fit. (15) The procedures for determination of the validity of claims and for liquidation of licensee assets and return of licensee customers’ property shall be prescribed by the Central Bank; provided however that the sale of licensee’s assets shall be accomplished in a transparent and commercially reasonable manner. (16) The liquidator shall report, on a monthly basis, to the Central Bank on the progress of the liquidation in such form as may be prescribed by the Central Bank and provide any other information upon the request of the Central Bank. (17) The liquidator may, upon the prior written approval of the Central Bank and according to its practice directions, pursue the following activities– (a) dispose of a licensee’s assets and liabilities through a purchase and assumption transaction; or (b) organize a restructuring of the licensee’s assets and liabilities or continue viable or necessary operations through a bridge bank. 179