Bulletin outlines process for voluntary liquidations of mutual FSAs

Regulatory requirements and processes that the federal regulators use to review a voluntary liquidation of a mutual federal savings association (mutual FSA) have been updated, the Office of the Comptroller of the Currency (OCC) said Friday in a new bulletin.

According to the OCC (in its bulletin 2021-45), a voluntary liquidation is the process by which a mutual FSA that has decided to close, without being sold to another owner or merged with another entity, winds down its operations and ceases to exist by terminating its charter. Such transactions are described as “infrequent” by the OCC, which serves as the federal regulator of the institutions. However, the agency said, the transactions must comply with agency requirements (under 12 CFR 5.48).

Other key points in the bulletin, the agency said, include:

  • A determination to pursue a voluntary liquidation is a business decision by a mutual FSA’s board of directors, subject to nonobjection by the OCC and the member approval requirement.
  • A mutual FSA considering a voluntary liquidation must submit a preliminary notice of voluntary liquidation to the OCC.
  • Following the determination by the mutual FSA’s board to voluntarily liquidate, the institution must submit a plan of liquidation to the OCC that addresses, among other things, the rights of the members, i.e., depositors, certain borrowers, and any other stakeholders.
  • The OCC reviews the plan of liquidation and the relevant factors, including the purpose of the liquidation and its impact on the safety and soundness of the mutual FSA and on its depositors, creditors, and customers.
  • The OCC must provide its nonobjection before the mutual FSA may hold the meeting of its members to vote on the plan of liquidation.
  • The members of the mutual FSA vote on the plan of liquidation at a legal meeting in accordance with its charter and bylaws.
  • Following the member approval of the plan of liquidation, the mutual FSA must file a notice with the OCC and provide notice to depositors and known creditors or claimants upon commencing voluntary liquidation.

OCC Bulletin 2021-45: Mutual Savings Associations: Requirements and Process for Voluntary Liquidation