PART 1237—CONSERVATORSHIP AND RECEIVERSHIP Authority: 12 U.S.C. 4513b, 4526, 4617. Source: 76 FR 35733, June 20, 2011, unless otherwise noted. § 1237.1 Purpose and applicability. The provisions of this part shall apply to the appointment and operations of the Federal Housing Finance Agency (“Agency”) as conservator or receiver of a regulated entity. These provisions implement and supplement the procedures and process set forth in the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended, by the Housing and Economic Recovery Act of 2008 (HERA), Public Law 110-289 for conduct of a conservatorship or receivership of such entity. § 1237.2 Definitions. For the purposes of this part the following definitions shall apply: Agency Authorizing statutes (1) The Federal National Mortgage Association Charter Act, (2) The Federal Home Loan Mortgage Corporation Act, and (3) The Federal Home Loan Bank Act. Capital distribution Compensation Conservator Default; in danger of default: (1) Default (2) In danger of default Entity-affiliated party Equity security Executive officer Golden parachute payment Limited-life regulated entity Receiver Securities litigation claim Transfer [76 FR 35733, June 20, 2011, as amended at 78 FR 2324, Jan. 11, 2013; 80 FR 72336, Oct. 22, 2015] Subpart A—Powers § 1237.3 Powers of the Agency as conservator or receiver. (a) Operation of the regulated entity. (1) Take over the assets of and operate the regulated entity with all the powers of the shareholders (including the authority to vote shares of any and all classes of voting stock), the directors, and the officers of the regulated entity and conduct all business of the regulated entity; (2) Continue the missions of the regulated entity; (3) Ensure that the operations and activities of each regulated entity foster liquid, efficient, competitive, and resilient national housing finance markets; (4) Ensure that each regulated entity operates in a safe and sound manner; (5) Collect all obligations and money due the regulated entity; (6) Perform all functions of the regulated entity in the name of the regulated entity that are consistent with the appointment as conservator or receiver; (7) Preserve and conserve the assets and property of the regulated entity (including the exclusive authority to investigate and prosecute claims of any type on behalf of the regulated entity, or to delegate to management of the regulated entity the authority to investigate and prosecute claims); and (8) Provide by contract for assistance in fulfilling any function, activity, action, or duty of the Agency as conservator or receiver. (b) Agency as receiver. (c) Powers as conservator or receiver. (d) Transfer or sale of assets and liabilities. § 1237.4 Receivership following conservatorship; administrative expenses. If a receivership immediately succeeds a conservatorship, the administrative expenses of the conservatorship shall also be deemed to be administrative expenses of the subsequent receivership. § 1237.5 Contracts entered into before appointment of a conservator or receiver. (a) The conservator or receiver for any regulated entity may disaffirm or repudiate any contract or lease to which such regulated entity is a party pursuant to section 1367(d) of the Safety and Soundness Act. (b) For purposes of section 1367(d)(2) of the Safety and Soundness Act, a reasonable period shall be defined as a period of 18 months following the appointment of a conservator or receiver. § 1237.6 Authority to enforce contracts. The conservator or receiver may enforce any contract entered into by the regulated entity pursuant to the provisions and subject to the restrictions of section 1367(d)(13) of the Safety and Soundness Act. Subpart B—Claims § 1237.7 Period for determination of claims. Before the end of the 180-day period beginning on the date on which any claim against a regulated entity is filed with the Agency as receiver, the Agency shall determine whether to allow or disallow the claim and shall notify the claimant of any determination with respect to such claim. This period may be extended by a written agreement between the claimant and the Agency as receiver, which may include an agreement to toll any applicable statute of limitations. § 1237.8 Alternate procedures for determination of claims. Claimants seeking a review of the determination of claims may seek alternative dispute resolution from the Agency as receiver in lieu of a judicial determination. The Director may by order, policy statement, or directive establish alternative dispute resolution procedures for this purpose. § 1237.9 Priority of expenses and unsecured claims. (a) General. (1) Administrative expenses of the receiver (or an immediately preceding conservator). (2) Any other general or senior liability of the regulated entity (that is not a liability described under paragraph (a)(3) or (a)(4) of this section). (3) Any obligation subordinated to general creditors (that is not an obligation described under paragraph (a)(4) of this section). (4) Any claim by current or former shareholders or members arising as a result of their current or former status as shareholders or members, including, without limitation, any securities litigation claim. Within this priority level, the receiver shall recognize the priorities of shareholder claims inter se, (b) Similarly situated creditors. (1) The Director determines that such action is necessary to maximize the value of the assets of the regulated entity, to maximize the present value return from the sale or other disposition of the assets of the regulated entity, or to minimize the amount of any loss realized upon the sale or other disposition of the assets of the regulated entity; and (2) All claimants that are similarly situated under paragraph (a) of this section receive not less than the amount such claimants would have received if the receiver liquidated the assets and liabilities of the regulated entity in receivership and such action had not been taken. (c) Priority determined at default. Subpart C—Limited-Life Regulated Entities § 1237.10 Limited-life regulated entities. (a) Status. (b) Investment authority. (c) Policies and procedures. § 1237.11 Authority of limited-life regulated entities to obtain credit. (a) Ability to obtain credit. (b) Inability to obtain credit. (c) Limitations. (d) Adequate protection. (1) Requiring the limited-life regulated entity to make a cash payment or periodic cash payments to the holder of the earlier lien, to the extent that there is likely to be a decrease in the value of such holder's interest in the property subject to the lien; (2) Providing to the holder of the earlier lien an additional or replacement lien to the extent that there is likely to be a decrease in the value of such holder's interest in the property subject to the lien; or (3) Granting the holder of the earlier lien such other relief, other than entitling such holder to compensation allowable as an administrative expense under section 1367(c) of the Safety and Soundness Act, as will result in the realization by such holder of the equivalent of such holder's interest in such property. Subpart D—Other § 1237.12 Capital distributions while in conservatorship. (a) Except as provided in paragraph (b) of this section, a regulated entity shall make no capital distribution while in conservatorship. (b) The Director may authorize, or may delegate the authority to authorize, a capital distribution that would otherwise be prohibited by paragraph (a) of this section if he or she determines that such capital distribution: (1) Will enhance the ability of the regulated entity to meet the risk-based capital level and the minimum capital level for the regulated entity; (2) Will contribute to the long-term financial safety and soundness of the regulated entity; (3) Is otherwise in the interest of the regulated entity; or (4) Is otherwise in the public interest. (c) This section is intended to supplement and shall not replace or affect any other restriction on capital distributions imposed by statute or regulation. § 1237.13 Payment of Securities Litigation Claims while in conservatorship. (a) Payment of Securities Litigation Claims while in conservatorship. (b) Claims against limited-life regulated entities. § 1237.14 Golden parachute payments [Reserved]