NCUA involuntary liquidation rule change effective late June

A final rule allowing payment of certain severance claims, such as unpaid wages, sick time or vacation time, when a federally insured credit union is involuntarily liquidated was published in the Federal Register Wednesday with an effective date of June 29.

The final rule, approved by the National Credit Union Administration (NCUA) Board May 24, elaborates on the definition of permissible employment-related claims in involuntary liquidations to include vacation, sick, and severance pay if the payment is supported by an employee handbook or other credit union record and is calculable in accordance with a formula or criteria available to all employees. It makes a distinction between employees’ claims and claims by a credit union executive that constitute a golden parachute.

Involuntary Liquidation of Federal Credit Unions and Claims Procedures