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The three major classes are: As cash is generated from the liquidation sale, creditors are paid in that order.If a company needs to liquidate its assets quickly, there are businesses that specialize in liquidation.
But there are different classes of creditors that determine in what order they are paid.
Typically, customer accounts are closed and checks are mailed to account holders for the amount of their insured deposits.
In a typical bank failure and sale, you may see a different name on the bank’s door and some changes to your account’s terms and conditions, but you don’t have to do much to keep money flowing in and out of your checking account.
But when a buyer can’t be found, things can get more complicated for account holders.
The process of permanently closing a bank and its branches, selling off any assets and using the proceeds to settle as many of the bank’s remaining liabilities as possible.
Still, that doesn’t mean having your checking account suddenly stop working is entirely painless.
For one thing, bank failures are sudden and unexpected — by necessity.If a bank is big and important enough to the local economy, the FDIC may keep it going for much longer.After the California-based Indy Mac Bank failed, it stayed open from July 14, 2008, until March 2009, when the deposits were picked up by One West Bank.The FDIC is most likely to pursue this option if the bank is very small or if most of the deposits are from institutional investors or large businesses, Cole says. Let help you find the best local savings account today. 13, 2013, when The Community’s Bank of Bridgeport, Connecticut, was closed down by the FDIC.“The FDIC was unable to find another financial institution to take over the banking operations of The Community’s Bank.Direct deposits into your account at the failed bank may also need to be quickly rerouted to a new account to avoid bouncing back.