SECTIONS 12550-12569 - California Statutes

INSURANCE CODE

SECTION 12550-12569

12550. In all cases where a mortgage insurer has issued mortgage
participation certificates evidencing a share or interest or right to
participate in a security or group of securities deposited with a
depositary or trustee, the commissioner may, by verified petition,
apply to the superior court of the county in which the principal
office of the mortgage insurer affected by such petition is located,
for an order requiring the depositary or trustee to show cause why a
conservator should not be appointed to take possession of all the
property and assets held in such trust and to conserve, operate,
manage, control or liquidate the same and distribute the avails
thereof to the holders of the mortgage participation certificates
which evidence an interest in such assets.

12551. A similar petition may be made by any mortgage insurer if
the holders of a majority in interest of the mortgage participation
certificates issued under any trust affected by such petition have
consented in writing to the filing of such petition and such consent
is filed with such mortgage insurer.

12552. In the petition for the appointment of such conservator the
petitioner may nominate or recommend any person believed by such
petitioner to be competent to act as such conservator, but such
nomination or recommendation shall not be controlling on the court.

12553. A copy of the petition and of the order to show cause shall
be served on the depositary or the trustee in the same manner as a
summons is served in civil actions. Such other notice of the pendency
of the proceedings shall be given as the court prescribes.

12554. Said superior court shall have jurisdiction of said petition
and of the proceedings thereon and may make all such orders as
justice and equity require, including orders:
(a) Requiring the depositary or trustee to account.
(b) For the discharge of the depositary or trustee.
(c) For the appointment of a conservator.
(d) For the winding up of the trust and the distribution of the
trust property.
(e) For the presentation of claims and demands against the trust
estate and the barring from participation of creditors and claimants
failing to make claims and present proofs as required.

12555. Any notice required, other than notice to the depositary or
trustee, may be given in such manner as the court directs.

12556. On the return day of such order to show cause, or on any day
to which the hearing is continued, the court shall either deny the
petition or appoint a competent person to act as conservator.

12557. If the court appoints a conservator, it shall direct the
conservator forthwith to take possession of all the assets in the
trust. Thereupon the conservator shall be vested by operation of law
with the title to all such assets, including all the securities,
contracts and rights of action of the depositary or trustee and of
said mortgage insurer pertaining to the trust property, as of the
date of the order so appointing the conservator.

12558. The court shall further order that the depositary or trustee
file its account and shall fix the date for the hearing of said
account.

12559. On the filing of such petition, or at any time thereafter,
the court may in its discretion issue an injunction restraining the
depositary or trustee, the mortgage insurer, the holders of
participation certificates, and all other persons having or asserting
claims or demands against the depositary or trustee or the trust
property from taking any action or proceeding with respect to the
assets in the trust without leave of court first had and obtained.

12560. In all cases arising under the provisions of this article
the conservator shall have and possess full power and right to deal
with the property and assets held in such trust in his own name, as
conservator, or in the name of the insurer or of the depositary or
trustee, as the court directs.

12561. In addition to all powers and duties herein mentioned the
conservator shall have and possess all the powers and duties of a
receiver appointed upon the dissolution of a corporation.

12562. In the conservation, operation, management, control or
liquidation of the affairs of any trust hereunder the conservator,
subject to the approval of the court and notwithstanding anything to
the contrary contained in the trust indenture under which the trust
is established, may sell, mortgage, or otherwise encumber or exchange
any of the property or assets held in such trust upon such terms as
he deems advisable and in the best interests of the certificate
holders thereunder, and may accept a deed in lieu of foreclosure. The
conservator may also do any act or execute any instrument not
expressly authorized by this article upon an order of the court made
after a hearing on such notice as the court shall prescribe.

12563. Sales of real property may be made by the conservator for
cash, or for cash and/or notes secured by mortgage on the property
sold. Such sales may be made to the mortgage insurer or to any other
purchaser.

12564. Such conservator may, subject to the approval of the court,
determine and prescribe the amount of interest and principal which
may be paid out of the assets of such trust and the times of payment
thereof, and may make, rescind or amend all such further rules,
regulations and conditions relative to the conservation, management,
control or liquidation of such trust as he deems advisable and in the
best interests of the certificate holders.

12565. If the conservator becomes satisfied that it may safely be
done and that it would be in the interest of the certificate holders
and the insurer, he may apply to the court for an order terminating
the conservatorship. Upon the making of his account and its approval
by the court, such conservatorship shall be terminated and the
property and assets of the trust shall be returned to the depositary
or trustee.

12566. If the conservator at any time determines that such trust
should be wound up and the avails thereof distributed, he shall
petition the court for an order for final winding up of the trust and
distribution of the trust assets.

12567. After notice is served upon the depositary or trustee and
the insurer, and upon such other parties as the court directs, the
court may order such final winding up of the trust and distribution
of the trust assets.

12568. In winding up the affairs of any trust the conservator,
subject to the approval of the court, may sell, exchange or dispose
of all or any part of the assets in the trust to a corporation
organized under the laws of this state for a consideration which may
include shares of stock or other securities in such corporation, or
participation certificates issued by a domestic mortgage insurer, if
such sale, exchange or other disposition has been approved by the
consent in writing of the holders of participation certificates
representing more than fifty per cent in interest of all mortgage
participation certificates issued and outstanding under such trust.

12569. The conservator may distribute such shares of stock,
participation certificates or other consideration, or the proceeds
thereof among the holders of participation certificates in the trust
under liquidation in proportion to their several interests therein,
as directed or confirmed by the court.