Title XXV, Business and Financial Institutions

An insurer that is subject to any delinquency proceedings, whether formal or informal or administrative or judicial, shall not: (1) Be released from such proceeding, unless such proceeding is converted into a judicial rehabilitation or liquidation proceeding; (2) Be permitted to …

In any proceeding under this subtitle the commissioner and his or her deputies shall be responsible on their official bonds for the faithful performance of their duties. If the court deems it desirable for the protection of the assets, it may at any time require an additional bon…

Every proceeding commenced before June 18, 1970, is deemed to have commenced under this subtitle for the purpose of conducting the proceeding thereafter, except that in the discretion of the commissioner the proceeding may be continued, in whole or in part, as it would have been …

Every proceeding heretofore commenced under the laws in effect before July 13, 1990, shall be deemed to have commenced under this subtitle for the purpose of conducting the proceeding henceforth, except that in the discretion of the commissioner the proceeding may be continued, i…

(1) Whenever the commissioner has reasonable cause to believe, and determines that any insurer has committed or engaged in, or is committing or engaging in or is about to commit or engage in any act, practice, or transaction that would subject it to formal delinquency proceedings…

The commissioner, the commissioner's special deputies, and all others appointed to act on the commissioner's behalf in connection with any delinquency proceedings under this subtitle shall not be liable for any acts or omissions done in good faith and within the scope of their au…

(1) Issuance. Upon the filing by the commissioner in any Circuit Court in this state of a verified petition alleging any ground that would justify a court order for a formal delinquency proceeding against an insurer under this subtitle and that the interests of policyholders or c…

(1) Confidentiality of commissioner's hearings. The commissioner shall hold all hearings in summary proceedings privately unless the insurer requests a public hearing, in which case the hearing shall be public. (2) Confidentiality of court hearings. The court may hold all hearing…

(1) The commissioner may apply by verified petition to the court for an order directing the commissioner to rehabilitate a domestic insurer or an alien insurer domiciled in this state on any one (1) or more of the following grounds: (a) Any ground on which the commissioner may ap…

(1) Appointment of rehabilitator. An order to rehabilitate the business of a domestic insurer, or an alien insurer domiciled in this state, shall appoint the commissioner and his or her successors in office rehabilitator and shall direct the rehabilitator forthwith to take posses…

(1) Special deputy. The commissioner as rehabilitator shall appoint one (1) or more special deputies, who are active or retired senior executives from a successful insurer, and who shall have all the powers and responsibilities of the rehabilitator granted under this section, and…

(1) The rehabilitator shall appear before the committee no more than two (2) weeks after he has disclosed his final recommendation, unless the chairman has designated a date beyond the two (2) week period, to disclose his recommendation to the committee and to hear the comments o…

(1) Stays in pending litigation. Except as provided in KRS 304.33-052 and 304.33-055, any court in this state before which any action or proceeding by or against an insurer is pending when a rehabilitation order against the insurer is entered shall, upon request of the rehabilita…

(1) Transformation to liquidation. Whenever he believes that further attempts to rehabilitate an insurer would substantially increase the risk of loss to creditors or policyholders, or would be futile, the rehabilitator may petition the court for an order of liquidation. A petiti…

(1) The commissioner may apply by petition to the Circuit Court for Franklin County or for the county in which the principal office of the insurer is located for an order directing him or her to liquidate a domestic insurer or an alien insurer domiciled in this state on any one (…

(1) Order to liquidate. An order to liquidate the business of a domestic insurer shall appoint the commissioner and his or her successors in office liquidator and shall direct the liquidator forthwith to take possession of the assets of the insurer and to administer them under th…

(1) All policies, other than life or health insurance or annuities, in effect at the time of issuance of an order of liquidation shall continue in force only for the lesser of: (a) A period of thirty (30) days from the date of entry of the liquidation order; (b) The expiration of…

(1) An agent, broker, premium finance company, or any other person, other than the insured, responsible for collection and payment of premium shall be obligated to pay any collected unpaid premium, whether earned or unearned, less any commissions on the earned portion of the prem…

The commissioner may petition for an order dissolving the corporate existence of a domestic insurer or the United States branch of an alien insurer domiciled in this state at the time the commissioner applies for a liquidation order. If the court issues a liquidation order, it al…

(1) Petition for federal receiver. Whenever in the commissioner's opinion, liquidation of a domestic insurer or an alien insurer domiciled in this state would be facilitated by a federal receivership, and when any ground exists upon which the commissioner might petition the court…

The liquidator shall report to the court monthly, or at other intervals specified by the court, on the progress of the liquidation in whatever detail the court orders. Subject to KRS 304.33-055, the liquidator may: (1) Appoint a special deputy to act for him or her under this sub…

(1) (a) Notice required; General requirements. The liquidator shall give notice of the liquidation order as soon as possible by first-class mail and either by telegram or telephone to the insurance commissioner of each jurisdiction in which the insurer is licensed to do business,…

(1) Written notice. Every person who receives notice in the form prescribed in KRS 304.33-250 that an insurer for which he or she has acted as agent is the subject of a liquidation order shall as soon as practicable give notice of the liquidation order. The notice shall be sent b…

(1) Termination of actions against insurer by order appointing liquidator. Upon issuance of any order appointing the commissioner liquidator of a domestic insurer or of an alien insurer domiciled in this state, no actions may be instituted against the insurer or the liquidator wi…

(1) List of assets required. As soon as practicable after the liquidation order, the liquidator shall prepare in duplicate a list of the insurer's assets. The list shall be amended or supplemented as the court requires. One (1) copy shall be filed in the office of the clerk of th…

(1) Definition and effect. Except as provided in subsection (5) of this section and KRS 304.33-055: (a) Every transfer made or suffered and every obligation incurred by an insurer within one (1) year prior to the filing of a successful petition for rehabilitation or liquidation u…

Except as provided in KRS 304.33-055: (1) Effect of petition: real property. After a petition for rehabilitation or liquidation, a transfer of any of the real property of the insurer made to a person acting in good faith shall be valid against the receiver if made for a present f…

Except as provided in KRS 304.33-055: (1) Preferences. (a) Preference defined. A preference is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt made or suffered by the insurer within one (1) year before t…

(1) Disallowance for failure to surrender property. No claims of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment or encumbrance, voidable under this subtitle, shall be allowed unless he surrenders the preference, lien, conveyance, tran…

(1) Set-offs allowed in general. Mutual debt or mutual credits between the insurer and another person in connection with any action or proceeding under this subtitle shall be set off and the balance only shall be allowed or paid, except as provided in subsection (2) of this secti…

(1) Report to court. As soon as practicable but not more than two (2) years from the date of an order of liquidation under KRS 304.33-200 of an insurer issuing assessable policies, the liquidator shall make a report to the court setting forth: (a) The reasonable value of the asse…

The amount recoverable by the liquidator from a reinsurer shall not be reduced as a result of delinquency proceedings unless the reinsurance contract provides, in substance, that in the event of the insolvency of the ceding insurer the reinsurance shall be payable under a contrac…

(1) Deadline for filing. Proof of all claims must be filed with the court in the form required by KRS 304.33-370 on or before the last day for filing specified in the notice required under KRS 304.33-250, except that proof of preferred ownership claims and proprietary claims unde…

(1) Contents of proof of claim. (a) Proof of claim shall consist of a verified statement that includes all of the following that are applicable: 1. The particulars of the claim, including the consideration given for it. 2. The identity and amount of the security on the claim. 3. …

(1) Claims contingent on judgments. The claim of a third party which is contingent only on his first obtaining a judgment against the insured shall be considered and allowed as if there were no such contingency. (2) Claims under terminated policies. Any claim that would have beco…

(1) Third-party's claim. Whenever any third party asserts a cause of action against an insured of an insurer in liquidation, the third party may file a claim with the liquidator. The filing of the claim shall release the insured's liability to the third party on that cause of act…

(1) Notice of rejection and request for hearing. When a claim is denied in whole or in part by the liquidator, written notice of the determination shall be given to the claimant and his attorney by first-class mail at the address shown in the proof of claim. Within sixty (60) day…

Whenever a creditor whose claim against an insurer is secured in whole or in part by the undertaking of another person fails to prove and file that claim, the other person may do so in the creditor's name, and shall be subrogated to the rights of the creditor, whether the claim h…

(1) The value of any security held by a secured creditor shall be determined in one (1) of the following ways, as the court directs: (a) By converting the same into money according to the terms of the agreement pursuant to which the security was delivered to such creditor; (b) By…

The order of distribution of claims from the insurer's estate shall be as stated in this section. The first fifty dollars ($50) of the amount allowed on each claim in the classes under subsections (3) to (7), inclusive, of this section, shall be deducted from the claim and includ…

KRS 304.33-430 shall apply to and govern the priority of the distribution of assets in any proceeding to liquidate an insurer pending on or commenced on or after July 15, 1996.

(1) Immediate Access. Within one hundred twenty (120) days of a final determination of insolvency of a company by a court of competent jurisdiction of this state, the liquidator shall make application to the court for approval of a proposal to disburse assets out of such company'…

Payments to creditors. Under the direction of the court the liquidator shall pay dividends in a manner that will assure the proper recognition of priorities and a reasonable balance between the expeditious completion of the liquidation and the protection of unliquidated and undet…

(1) Unclaimed funds. All unclaimed funds subject to distribution remaining in the liquidator's hands when the liquidator is ready to apply to the court for discharge, including the amount distributable to any creditor, shareholder, member or other person who is unknown or cannot …

(1) Liquidator's application. When all assets justifying the expense of collection and distribution have been collected and distributed under this subtitle, the liquidator shall apply to the court for discharge. The court may grant the discharge and make any other orders deemed a…

After the liquidation proceeding has been terminated and the liquidator discharged, the commissioner or other interested party may at any time petition the court to reopen the proceedings for good cause, including the discovery of additional assets. If the court is satisfied that…