Section 1406.

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(a) In this section:

(1) “Creditor” includes, but is not limited to, a depositor.

(2) “Insolvency,” when used with respect to a bank, means that the bank is unable to pay its debts as they come due.

(b) This section does not apply to any of the following:

(1) Any transaction authorized under Section 1463 or 1465.

(2) Any transaction made by a bank in the ordinary course of its business.

(c) No bank may pay or secure a creditor if the bank does so (1) after committing an act of insolvency or in contemplation of insolvency and (2) with a view to preventing the application of its assets in the manner prescribed in Chapter 7 (commencing with Section 600) of Division 1 or with a view to the preference of one creditor to another.

(d) Any transaction made by a bank in violation of this section is void.

(Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)


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