Source: http://www.wvwvermont.org/cgi-bin/vt_legis/fullchapter.cfm?Title=08&Chapter=145&form_access_date=20140109
Timestamp: 2018-05-20 19:46:26
Document Index: 683375741

Matched Legal Cases: ['§ 7034', '§ 2', '§ 38', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2']

T: 8 C: 145 - SUPERVISION, REHABILITATION, AND LIQUIDATION OF INSURERS The Vermont Statutes Online
(3) "Creditor" is a person having any claim, whether matured or unmatured, liquidated or unliquidated, secured or unsecured, absolute, fixed or contingent.
(4) "Delinquency proceeding" means any proceeding instituted against an insurer for the purpose of liquidating, rehabilitating, reorganizing or conserving such insurer, and any summary proceeding under sections 7041 and 7042 of this title. "Formal delinquency proceeding" means any liquidation or rehabilitation proceeding.
(10) "General assets" mean all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited or otherwise encumbered for the security or benefit of specified persons or classes of persons. As to specifically encumbered property, "general assets" include all such property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. Assets held in trust and on deposit for the security or benefit of all policyholders or all policyholders and creditors, in more than a single state, shall be treated as general assets.
(11) "Guaranty association" means the Vermont Property and Casualty Insurance Guaranty Association created in accordance with the provisions of subchapter 9 of chapter 101 of this title, the Vermont Life and Health Insurance Guaranty Association created in accordance with the provisions of chapter 112 of this title, and any other similar entity now or hereafter created by the Legislature of this State for the payment of claims of insolvent insurers. "Foreign guaranty association" means any similar entities now in existence in or hereafter created by the legislature of any other State.
(B) for any insurer, other than an insurer described in subdivision (A) of this subdivision, that it is unable to pay its obligations when they are due, or when its assets admitted pursuant to this title do not exceed its liabilities plus the greater of:
(C) for purposes of this subdivision, "liabilities" shall include reserves required by statute or by general regulations of the Department or specific requirements imposed by the Commissioner upon a subject company at the time of admission or subsequent thereto.
(16) "Reciprocal state" means any state other than this State in which in substance and effect subsection 7057(a), and sections 7093, 7094 and 7096 through 7098 of this title are in force, and in which provisions are in force requiring that the commissioner or equivalent official be the receiver of a delinquent insurer, and in which some provision exists for the avoidance of fraudulent conveyances and preferential transfers.
(a) A delinquency proceeding shall not be commenced under this chapter by anyone other than the commissioner and a court shall have no jurisdiction to entertain, hear or determine any proceeding commenced by any other person.
(b) A court of this state shall have no jurisdiction to entertain, hear or determine any complaint praying for the dissolution, liquidation, rehabilitation, sequestration, conservation or receivership of any insurer; or praying for an injunction or restraining order or other relief preliminary to, incidental to or relating to such proceedings other than in accordance with this chapter.
(11) any other threatened or contemplated action that might lessen the value of the insurer's assets or prejudice the rights of policyholders, creditors or shareholders, or the administration of any proceeding under this chapter.
§ 7034. Cooperation of officers, owners and employees
(a) An officer, manager, director, trustee, owner, employee or agent of any insurer, or any other persons with authority over or in charge of any segment of the insurer's affairs, shall cooperate with the commissioner in any proceeding under this chapter or any investigation preliminary to the proceeding. The term "person" as used in this section shall include any person who exercises control directly or indirectly over activities of the insurer through any holding company or other affiliate of the insurer. "To cooperate" shall include, but shall not be limited to, the following:
(2) to make available to the commissioner any books, accounts, documents, or other records or information or property of or pertaining to the insurer and in his or her possession, custody or control.
Sub-Chapter 2: Summary 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 or engage in, any act, practice, or transaction that would subject it to delinquency proceedings under this chapter, he or she may make and serve upon the insurer and any other persons involved, such orders as are reasonably necessary to correct, eliminate, or remedy such conduct, condition or ground.
(1) dispose of, convey or encumber any of the insurer's assets or its business in force;
(e) The notice of hearing held under subsection (a) of this section and any order issued pursuant to subsection (a) shall be served upon the insurer pursuant to the provisions of 3 V.S.A. chapter 25. The notice of hearing shall state the time and place of hearing, and the conduct, condition or ground upon which the Commissioner may base his or her order. Unless mutually agreed between the Commissioner and the insurer, the hearing shall occur not less than ten days nor more than 30 days after notice is served and shall be held at the offices of the Department of Financial Regulation or in some other place convenient to the parties as determined by the Commissioner. Hearings under subsection (a) of this section shall be private and shall not be subject to the provisions of 1 V.S.A. chapter 5, subchapters 2 and 3 (public information and access to public records), unless the insurer requests a public hearing.
(j) In the event that a person, subject to the provisions of this chapter, including those persons described in subsection 7034(a) of this title, shall knowingly violate a valid order of the Commissioner issued under the provisions of this section and, as a result of the violation, the net worth of the insurer is reduced or the insurer suffers loss it would not otherwise have suffered, such person shall become personally liable to the insurer for the amount of the reduction or loss. The Commissioner or supervisor is authorized to bring an action on behalf of the insurer in the Superior Court of Washington County to recover the amount of the reduction or loss together with costs. (Added 1991, No. 45, § 2, eff. May 29, 1991; amended 1995, No. 180 (Adj. Sess.), § 38(a); 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012.)
Sub-Chapter 3: Formal Proceedings
(1) The insurer is in such condition that the further transaction of business would be hazardous financially to its policyholders, creditors or the public.
(8) The insurer or its property has been or is the subject of an application for the appointment of a receiver, trustee, custodian, conservator or sequestrator or similar fiduciary of the insurer or its property otherwise than as authorized under the insurance laws of this state, and such appointment has been made or is imminent, and such appointment might oust the courts of this state of jurisdiction or might prejudice orderly delinquency proceedings under this chapter.
(9) Within the previous three years the insurer has willfully violated its charter or articles of incorporation, its bylaws, any provisions of this title or a valid order of the commissioner.
(c) Entry of an order of rehabilitation shall not constitute an anticipatory breach of any contracts of the insurer nor shall it be grounds for retroactive revocation or retroactive cancellation of any contracts of the insurer, unless such revocation or cancellation is done by the rehabilitator pursuant to section 7053. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
(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, assistants and other personnel as deemed necessary. The compensation of the special deputy, counsel, clerks, and assistants and all expenses of taking possession of the insurer and of conducting the proceedings shall be fixed by the Commissioner, with the approval of the Court and shall be paid out of the funds or assets of the insurer. The persons appointed under this section shall serve at the pleasure of the Commissioner. In the event that the property of the insurer does not contain sufficient cash or liquid assets to defray the administrative costs incurred, the Commissioner may advance the costs so incurred out of any appropriation for the maintenance of the Department. Amounts so advanced for expenses of administration shall be repaid to the Commissioner for the use of the Department out of the first available money of the insurer.
(c) If it appears to the Rehabilitator that there has been criminal or tortious conduct, or breach of any contractual or fiduciary obligation detrimental to the insurer by any officer, manager, agent, broker, employee or other person, he or she may pursue all appropriate legal remedies on behalf of the insurer.
(d) If the Rehabilitator determines that reorganization, consolidation, conversion, reinsurance, merger or other transformation of the insurer is appropriate, he or she shall prepare a plan to effect such changes. Upon application of the Rehabilitator for approval of the plan, and after such notice and hearings as the Court may prescribe, the Court may either approve or disapprove the plan proposed, or may modify it and approve it as modified. A plan approved under this subsection shall be, in the judgment of the Court, fair and equitable to all parties concerned. If the plan is approved, the Rehabilitator shall carry out the plan. In the case of a life insurer, the plan proposed may include the imposition of liens upon the policies of the company, if all rights of shareholders are first relinquished. A plan for a life insurer may also propose imposition of a moratorium upon loan and cash surrender rights under policies, for such period and to such an extent as may be necessary.
(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 of Washington County for an order of liquidation. A petition under this subsection shall have the same effect as a petition under section 7056 of this title. The court shall permit the directors of the insurer to take such actions as are reasonably necessary to defend against the petition but may order payment from the estate of the insurer of costs and other expenses of defense only if the directors make a showing to the satisfaction of the court that they incurred such expenses in good faith and with a reasonable belief that they would prevail.
(b) The protection of the interests of insureds, claimants and the public requires the timely performance of all insurance policy obligations. If the payment of policy obligations is suspended in substantial part for a period of six months at any time after the appointment of the rehabilitator and the rehabilitator has not filed an application for approval of a plan under subsection 7053(d) of this title, the rehabilitator shall petition the court for an order of liquidation on grounds of insolvency.
(2) the insurer is in such condition that the further transaction of business would be hazardous, financially or otherwise, to its policyholders, its creditors or the public. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
(a) 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 the general supervision of the court. The liquidator shall be vested by operation of law with the title to all the property, contracts and rights of action, and all the books and records of the insurer ordered liquidated, wherever located, as of the entry of the final order of liquidation. The filing or recording of the order with the superior court of Washington County or the town clerk of the town in which its principal office or place of business is located; or, in the case of real estate, with the town clerk of the town where the property is located, shall impart the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with that town clerk would have imparted.
(b) Upon issuance of the order, the rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members and all other persons interested in its estate shall become fixed as of the date of entry of the order of liquidation, except as provided in sections 7058 and 7076 of this title.
(3) Fix the reasonable compensation of employees and agents, legal counsel, actuaries, accountants, appraisers and consultants with the approval of the court.
(5) Hold hearings, subpoena witnesses to compel their attendance, administer oaths, examine any person under oath, and compel any person to subscribe to testimony after it has been correctly reduced to writing; and in connection with such proceedings, require the production of any books, papers, records or other documents which he or she deems relevant to the inquiry.
(B) do such other acts as are necessary or expedient to collect, conserve or protect its assets or property, including the power to sell, compound, compromise or assign debts for purposes of collection upon such terms and conditions as he or she deems best; and
(10) Acquire, hypothecate, encumber, lease, improves sell, transfer, abandon, or otherwise dispose of or deal with, any property of the insurer at its market value or upon such terms and conditions as are fair and reasonable. He or she shall also have power to execute, acknowledge, and deliver any and all deeds, assignments, releases and other instruments necessary or proper to effectuate any sale of property or other transaction in connection with the liquidation.
(14) Prosecute any action which may exist in behalf of the creditors, members, policyholders or shareholders of the insurer against any officer of the insurer, or any other person.
(22) Enter into agreements with any receiver or commissioner of any other state relating to the rehabilitation, liquidation, conservation or dissolution of an insurer doing business in both states.
(2) The extended period to report claims made available by the liquidator shall be subject to the terms of the policy to which it relates. The liquidator shall make available such extended period within 60 days after the order of liquidation at a charge to be determined by the liquidator subject to approval of the court. Such offer shall be deemed rejected unless it is accepted in writing and the charge is paid within 90 days after the order of liquidation. No commissions, premium taxes, assessments or other fees shall be due on the charge pertaining to the extended period to report claims.
(b) An agent who fails to give notice or file a report of compliance as required in subsection (a) of this section may be subject to payment of a penalty of not more than $1,000.00 and may have his or her license suspended, after a hearing held by the commissioner. (Added 1991, No. 45, § 2, eff. May, 29, 1991)
(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 future creditors if made or incurred without fair consideration, or with actual intent to hinder, delay or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under this chapter, which is fraudulent under this section, may be avoided by the receiver, except as to a person who in good faith is a purchaser, lienor, or obligee, for a present fair equivalent value, and except that a purchaser, lienor, or obligee, who in good faith has given a consideration less than fair for such transfer, lien, or obligation, may retain the property, lien or obligation as security for repayment. The court may, on due notice, order any such transfer or obligation to be preserved for the benefit of the estate, and in that event, the receiver shall succeed to and may enforce the rights of the purchaser, lienor, or obligee.
(k)(1) Every officer, manager, employee, shareholder, member, subscriber, attorney or any other person acting on behalf of the insurer who knowingly participates in giving any preference when he or she has reasonable cause to believe the insurer is or is about to become insolvent at the time of the preference shall be personally liable to the liquidator for the amount of the preference. It is permissible to infer that there is a reasonable cause to so believe if the transfer was made within four months before the date of filing of this successful petition for liquidation.
(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, conveyance, transfer, assignment or encumbrance. If the avoidance is effected by a proceeding in which a final judgment has been entered, the claim shall not be allowed unless the money is paid or the property is delivered to the liquidator within 30 days from the date of the entering of the final judgment, except that the court having jurisdiction over the liquidation may allow further time if there is an appeal or other continuation of the proceeding.
(b) A claim allowable under subsection (a) of this section by reason of the avoidance, whether voluntary or involuntary, of a preference, lien, conveyance, transfer, assignment or encumbrance, may be filed as an excused late filing under section 7074 of this title if filed within 30 days from the date of the avoidance, or within the further time allowed by the court under subsection (a) of this section. (Added 1991, No. 45, § 2, eff. May 29, 1991.)
(c) The receiver shall provide persons with accounting statements identifying debts which are currently due and payable. Where a person owes to the insurer currently due and payable balances, against which the person asserts setoff of mutual credits which may become due and payable from the insurer in the future, the person shall promptly pay to the receiver the currently due and payable amount, provided that, notwithstanding section 7081 of this title, the receiver shall promptly and fully refund, to the extent of the person's prior payments, any mutual credits that become due and payable to the person by the insurer. (Added 1991, No. 45, § 2, eff. date, see note set below.)
(c) Before the commissioner shall take any action as set forth in subsection (b) of this section, he or she shall give written notice to the person, company, association or exchange accused of violating the law, stating specifically the nature of the alleged violation; and fixing a time and place, at least ten days thereafter, when a hearing on the matter shall be held. After hearing, or upon failure of the accused to appear at the hearings, the commissioner, if he or she shall find a violation, shall impose one or both of the penalties provided by subsection (b) of this section as he or she deems advisable.
(5) a full report to be made by each association to the liquidator accounting for all assets so disbursed to the association, all disbursements made therefrom, any interest earned by the association on such assets and any other matter as the court may direct.
(2) a transfer to a creditor was avoided under sections 7065 through 7067 of this title, or was voluntarily surrendered under section 7068 of this title, and the filing satisfies the conditions of section 7068; or
(2) by agreement, arbitration, compromise or litigation between the creditor and the liquidator.