Title 08, Title 08: Banking and Insurance

§ 7035. Continuation of delinquency proceedings Every proceeding heretofore commenced under the laws in effect before May 29, 1991, except a liquidation proceeding in which a liquidation order has been entered by the Superior Court, shall be deemed to have commenced under this ch…

§ 7036. Condition on release from delinquency proceedings An insurer subject to delinquency proceedings, whether formal or informal, shall not: (1) be released from such proceeding, unless the proceeding is converted into a judicial rehabilitation or liquidation proceeding; (2) b…

§ 7041. Commissioner’s summary orders and supervision proceedings (a) Whenever the Commissioner has reasonable cause to believe, and determines after a hearing held under subsection (e) of this section, that any domestic insurer has committed or engaged in, or is about to commit …

§ 7042. Court’s seizure order (a) The Commissioner may file in the Superior Court of Washington County a petition alleging, with respect to a domestic insurer: (1) that there exist grounds that would justify a court order for a formal delinquency proceeding against an insurer und…

§ 7043. Confidentiality of hearings Administrative and judicial proceedings under sections 7041 and 7042 of this title, all records of the insurer, other documents, and all Department files and court records and papers, so far as they pertain to or are a part of the record of the…

§ 7051. Grounds for rehabilitation The Commissioner may petition the Superior Court of Washington County for an order authorizing him or her to rehabilitate a domestic insurer or an alien insurer domiciled in this State on one or more of the following grounds: (1) The insurer is …

§ 7052. Rehabilitation orders (a) An order to rehabilitate the business of a domestic insurer, or an alien insurer domiciled in this State, shall appoint the Commissioner and the Commissioner’s successors in office the rehabilitator and shall direct the rehabilitator immediately …

§ 7053. Powers and duties of the rehabilitator (a) The Commissioner as rehabilitator may appoint one or more special deputies, who shall have all the powers and responsibilities of the rehabilitator granted under this section, and the Commissioner may employ such counsel, clerks,…

§ 7054. Actions by and against rehabilitator (a) A court in this State before which an action or proceeding in which the insurer is a party, or is obligated to defend a party, is pending when a rehabilitation order against the insurer is entered shall stay the action or proceedin…

§ 7055. Termination of rehabilitation (a) Whenever the Commissioner believes further attempts to rehabilitate an insurer would substantially increase the risk of loss to creditors, policyholders, or the public, or would be futile, the Commissioner may petition the Superior Court …

§ 7056. Grounds for liquidation The Commissioner may petition the Superior Court of Washington County for an order directing the Commissioner to liquidate a domestic insurer or an alien insurer domiciled in this State on the basis of one or more of the following grounds: (1) one …

§ 7057. Liquidation orders (a) An order to liquidate the business of a domestic insurer shall appoint the Commissioner and the Commissioner’s successors in office liquidator and shall direct the liquidator immediately to take possession of the assets of the insurer and to adminis…

§ 7058. Continuance of coverage (a) All policies, including bonds and other noncancellable business, 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: (1) a period of 30 d…

§ 7059. Dissolution of insurer The Commissioner may petition for an order dissolving the corporate existence of a domestic insurer or the U.S. branch of an alien insurer domiciled in this State at the time the Commissioner applies for a liquidation order. The court shall order di…

§ 7060. Powers of liquidator (a) The liquidator shall have the power to: (1) Appoint a special deputy to act for him or her and to determine reasonable compensation for the special deputy. The special deputy shall have all powers of the liquidator granted by this section. The spe…

§ 7061. Notice to creditors and others (a) Unless the court otherwise directs, the liquidator shall give or cause to be given notice of the liquidation order as soon as possible: (1) by first-class mail and either by telegram or telephone to the insurance commissioner of each jur…

§ 7062. Duties of agents (a) Every person who receives notice in the form prescribed in section 7061 of this title that an insurer which he or she represents as an agent is the subject of a liquidation order shall, within 30 days of such notice, provide to the liquidator (in addi…

§ 7063. Actions by and against liquidator (a) Upon issuance of an order appointing a liquidator of a domestic insurer or of an alien insurer domiciled in this State, no action shall be brought against the insurer or liquidator, whether in this State or elsewhere, nor shall any su…

§ 7064. Collection and list of assets (a) As soon as practicable after the liquidation order but not later than 120 days thereafter, the liquidator shall prepare in duplicate a list of the insurer’s assets. The list shall be amended or supplemented from time to time as the liquid…

§ 7065. Fraudulent transfers prior to petition (a) Every transfer made or suffered and every obligation incurred by an insurer within one year prior to the filing of a successful petition for rehabilitation or liquidation under this chapter is fraudulent as to then existing and f…

§ 7066. Fraudulent transfer after petition (a) After a petition for rehabilitation or liquidation has been filed, 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 fair equivalent …

§ 7067. Voidable preferences and liens (a)(1) 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 year before the filing of a successful petition f…

§ 7068. Claims of holders of void or voidable rights (a) No claims of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment, or encumbrance voidable under this chapter shall be allowed unless he or she surrenders the preference, lien, convey…

§ 7069. Setoffs (a) Mutual debts or mutual credits whether arising out of one or more contracts between the insurer and another person in connection with any action or proceeding under this chapter shall be set off and the balance only shall be allowed or paid, except as provided…

§ 7070. Assessments (a) As soon as practicable but not more than two years from the date of an order of liquidation under section 7057 of this title of an insurer issuing assessable policies, the liquidator shall make a report to the court setting forth: (1) the reasonable value …

§ 7071. Reinsurer’s liability The amount recoverable by the liquidator from reinsurers shall not be reduced as a result of the delinquency proceedings, regardless of any provision in the reinsurance contract or other agreement. Payment made directly to an insured or other credito…

§ 7072. Recovery of premiums owed (a)(1) An agent, broker, premium finance company, or any other person, other than the insured, responsible for the payment of a premium shall be obligated to pay any unpaid premium for the full policy term due the insurer at the time of the decla…

§ 7073. Domiciliary liquidator’s proposal to distribute assets (a) Within 120 days of a final determination of insolvency of an insurer by a court of competent jurisdiction of this State, the liquidator shall make application to the court for approval of a proposal to disburse as…

§ 7074. Filing of claims (a) Proof of all claims shall be filed with the liquidator in the form required by section 7075 of this title on or before the last day for filing specified in the notice required under section 7061 of this title, except that proof of claims for cash surr…

§ 7075. Proof of claim (a) Proof of claim shall consist of a statement signed by the claimant that includes all 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; …

§ 7076. Special claims (a) The claim of a third party that is contingent only on his or her first obtaining a judgment against the insured shall be considered and allowed as if there were no such contingency. (b) A claim may be allowed even if contingent, if it is filed in accord…

§ 7077. Special provisions for third-party claims (a) 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. (b) Whether or not the third party files a claim, the insured may file a…

§ 7078. Disputed claims (a) When a claim is denied in whole or in part by the liquidator, written notice of the determination shall be given to the claimant or the claimant’s attorney by first-class mail at the address shown in the proof of claim. Within 60 days from the mailing …

§ 7079. Claims of surety 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 c…

§ 7080. Secured creditor’s claims (a) The value of any security held by a secured creditor shall be determined in one of the following ways, as the court may direct: (1) by converting the same into money according to the terms of the agreement pursuant to which the security was d…

§ 7081. Priority of distribution The priority of distribution of claims from the insurer’s estate shall be in accordance with the order in which each class of claims is set forth in this section. Every claim in each class shall be paid in full or adequate funds retained for such …

§ 7082. Liquidator’s recommendations to the court (a) The liquidator shall review all claims duly filed in the liquidation and shall make such further investigation as he or she shall deem necessary. He or she may compound, compromise, or in any other manner negotiate the amount …

§ 7083. Distribution of assets Under the direction of the court, the liquidator shall pay distributions in a manner that will ensure the proper recognition of priorities and a reasonable balance between the expeditious completion of the liquidation and the protection of unliquida…

§ 7084. Unclaimed and withheld funds (a) 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 …

§ 7085. Termination of proceedings (a) When all assets justifying the expense of collection and distribution have been collected and distributed under this chapter, the liquidator shall apply to the court for discharge. The court may grant the discharge and make any other orders,…

§ 7086. Reopening liquidation After the liquidation proceeding has been terminated and the liquidator discharged, the Commissioner or other interested party may at any time petition the Superior Court of Washington County to reopen the proceedings for good cause, including the di…

§ 7087. Disposition of records during and after termination of liquidation Whenever it shall appear to the Commissioner that the records of any insurer in process of liquidation or completely liquidated are no longer useful and are no longer required by law to be retained, the Co…

§ 7088. External audit of the receiver’s books The Superior Court of Washington County may, as it deems desirable, cause audits to be made of the books of the Commissioner relating to any receivership established under this chapter, and a report of each audit shall be filed with …

§ 7091. Conservation of property of foreign or alien insurers found in this State (a) If a domiciliary liquidator has not been appointed, the Commissioner may apply to the Superior Court of Washington County by verified petition for an order directing the Commissioner to act as c…

§ 7092. Liquidation of property of foreign or alien insurers found in this State (a) If no domiciliary receiver has been appointed, the Commissioner may apply to the Superior Court of Washington County by verified petition for an order directing the Commissioner to liquidate the …

§ 7093. Domiciliary liquidators in other states (a) The domiciliary liquidator of an insurer domiciled in a reciprocal state shall, except as to special deposits and security on secured claims under subsection 7094(c) of this title, be vested by operation of law with the title to…