In Re Cashmere State Bank

These cases, consolidated, present two questions for our determination: (1) May the state supervisor of banking, as liquidator of an insolvent bank, make a loan from the Reconstruction Finance Corporation, pledging as security for such loan the assets of the insolvent bank, and use the proceeds of the loan to pay the claims of preferred creditors and declare a first dividend to depositors and general creditors of the insolvent bank? (2) Has the court the power to approve the making of such loan? The two questions are closely related, and will be considered together in our discussion.

The facts…