N.Y. ISC Law § 7435 — New York Code / Act ISC / Article 74 / Section 7435
Distribution for life insurers
Status: in_force

§ 7435. Distribution for life insurers. (a) The priority of\ndistribution of claims from the estate of a life insurance company in\nany proceeding subject to this article shall be in accordance with the\norder in which each class of claims is herein set forth. Every claim in\neach class shall, subject to such limitations as may be prescribed by\nlaw and do not directly conflict with the express provisions of this\nsection, be paid in full or adequate funds retained for such payment\nbefore the members of the next class receive any payment. No subclasses\nshall be established within any class. The order of distribution of\nclaims shall be:\n  (1) Class one. Claims with respect to the actual and necessary costs\nand expenses of administration, incurred by the liquidator,\nrehabilitator, conservator or ancillary rehabilitator under this\narticle, or by The Life Insurance Guaranty Corporation or The Life and\nHealth Insurance Company Guaranty Corporation of New York, and claims\ndescribed in subsection (d) of section seven thousand seven hundred\nthirteen of this chapter.\n  (2) Class two. Debts due to employees for services performed to the\nextent that they do not exceed one thousand two hundred dollars and\nrepresent payment for services performed within one year before the\ncommencement of a proceeding under this article. Such priority shall be\nin lieu of any other similar priority which may be authorized by law as\nto wages or compensation of employees.\n  (3) Class three. All claims for payment for goods furnished or\nservices rendered to the impaired or insolvent insurer in the ordinary\ncourse of business within ninety days prior to the date on which the\ninsurer was determined to be impaired or insolvent, whichever is\napplicable.\n  (4) Class four. All claims under insurance policies, annuity contracts\nand funding agreements, and all claims of The Life and Health Insurance\nCompany Guaranty Corporation of New York or any other guaranty\ncorporation or association of this state or another jurisdiction, other\nthan claims provided for in paragraph one of this subsection and claims\nfor interest.\n  (5) Class five. Claims of the federal or any state or local\ngovernment.  Claims, including those of any governmental body for a\npenalty or forfeiture, shall be allowed to this class only to the extent\nof the pecuniary loss sustained from the act, transaction or proceeding\nout of which the penalty or forfeiture arose, with reasonable and actual\ncosts occasioned thereby. The remainder of such claims shall be\npostponed to the class of claims under paragraph eight of this\nsubsection.\n  (6) Class six. Claims of general creditors and any other claims other\nthan claims under paragraphs seven and eight of this subsection.\n  (7) Class seven. Surplus, capital or contribution notes, or similar\nobligations.\n  (8) Class eight. The claims of (i) policyholders, other than claims\nunder paragraph four of this subsection, and (ii) shareholders or other\nowners.\n  (b) Every claim under a separate account agreement providing, in\neffect, that the assets in the separate account shall not be chargeable\nwith liabilities arising out of any other business of the insurer shall\nbe satisfied out of the assets in the separate account equal to the\nreserves maintained in such account for such agreement and, to the\nextent, if any, not fully discharged thereby, shall be treated as a\nclass four claim against the estate of the life insurance company.\n  (c) For purposes of this section:\n  (1) "The estate of the life insurance company" shall mean the general\nassets of such company less any assets held in separate accounts that,\npursuant to section four thousand two hundred forty of this chapter, are\nnot chargeable with liabilities arising out of any other business of the\ninsurer.\n  (2) "Insurance policies, annuity contracts and funding agreements"\nshall mean all policies and contracts of any of the kinds of insurance\nspecified in paragraph one, two or three of subsection (a) of section\none thousand one hundred thirteen of this chapter and all funding\nagreements described in section three thousand two hundred twenty-two of\nthis chapter, including all separate account agreements, except that\nseparate account agreements referred to in subsection (b) of this\nsection shall be included only to the extent referred to therein.\n  (3) "Separate account agreement or agreements" shall mean any\nagreement or agreements for separate accounts referred to in section\nfour thousand two hundred forty of this chapter.\n