NY Ins L § 7405 (2021)
2021 New York Laws ISC - Insurance Article 74 - Rehabilitation, Liquidation, Conservation and Dissolution of Insurers 7405 - Order of Liquidation; Rights and Liabilities.

§  7405. Order of liquidation; rights and liabilities. (a) An order to liquidate  the  business  of  a  domestic  insurer  shall   direct   the superintendent and his successors in office, as liquidator, forthwith to take  possession  of  the  property of such insurer and to liquidate the business of the same and deal with such property and  business  of  such insurer  in  their own names as superintendents or in the insurer's name as the court may direct, and to give notice to all creditors to  present their claims.  (b) The superintendent and his successors shall be vested by operation of law with the title to all property, contracts and rights of action of such  insurer as of the date of the entry of the order so directing them to liquidate. The filing or recording of such order in any record office of the state shall impart the same notice that a deed, bill of  sale  or other  evidence  of  title  duly filed or recorded by such insurer would have imparted. The rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members and  all  other  persons interested  in its estate shall, unless otherwise directed by the court, be fixed as of the date the order is entered in the office of the  clerk of  the  county  where such insurer had its principal office on the date the proceeding commenced, subject, however, to the provisions of section seven thousand four hundred thirty-three of this article to  the  rights of claimants holding contingent claims.  (c)  The  liquidator  of  any  domestic  insurance  corporation  shall reinsure  all  its  policy  obligations  in  any   solvent   corporation authorized  to do business in this state if the unearned premium reserve of the insurer is sufficient to effect such reinsurance. If such reserve is insufficient for  that  purpose,  the  liquidator  shall  reinsure  a percentage  of  each policy obligation of the insurer outstanding to the extent that the reserve may be sufficient for that purpose. No  contract of  reinsurance  shall be entered into by the liquidator except pursuant to an order of the court in which the liquidator was appointed directing the reinsurance and establishing the general  form  of  the  reinsurance contract.  (d)  An order to liquidate the business of the United States branch of an alien insurer having trusteed assets in this state shall  be  in  the same terms as those hereinbefore prescribed, except that only the assets of the business of such United States branch shall be included therein.  (e)  Where  the trustee of a mortgage series consisting in whole or in part of certificated  mortgage  investments  guaranteed  by  a  domestic insurer  has distributed all of the trust estate collateral, or has been permitted by court order to abandon all or part of such  collateral  not distributed,  the  court,  by  order,  may,  upon  the  consent  of  the liquidator  of  the  insurer,  direct  the  superintendent,  upon  being furnished  with  a  list  of  certificate  holders  certified  to by the trustee, to record subsequent transfers of certificates and  charge  and collect  a  reasonable fee therefor, and distribute dividends applicable thereto upon liquidation of company assets in his hands, to  the  record owners  of  such  certificates,  and  make and deduct from such dividend payments a  reasonable  charge  for  such  services.  The  duty  of  the superintendent  under such order shall terminate upon the termination of the liquidation proceedings.  (f) (1) No later than one hundred eighty days after a final  order  of liquidation  with an adjudication of insolvency of an insurer by a court of competent jurisdiction of this state, the liquidator may in his  sole discretion  make  application to the court for approval of a proposal to disburse assets out of marshalled assets, from  time  to  time  as  such assets  become available, to any fund established by article seventy-six of this chapter, article six-A of the workers' compensation law and  any  foreign entity performing a similar function, having obligations because of  such  insolvency.  If  the  liquidator  determines  that  there  are insufficient assets to disburse,  the  application  authorized  by  this subsection  shall  be considered satisfied by a filing by the liquidator stating the reasons for this determination.  (2) Such proposal shall at least include provisions for:  (A) reserving amounts for the payment of expenses  of  administration, claims  of  secured creditors to the extent of the value of the security held, and claims falling within the priorities  established  in  section seven thousand four hundred twenty-six of this article;  (B)  disbursement  of  the  assets  marshalled  to date and subsequent disbursement of assets as they become available;  (C) disbursements to the funds and  entities  entitled  thereto  under this  subsection  in amounts estimated to be at least equal to all claim payments for which such funds or entities could  assert  claims  against the  liquidator,  and if the assets available for disbursement from time to time do not at least equal such claim payments, then disbursements in the amount of available assets;  (D) equitable allocation of disbursements to each  of  such  funds  or entities;  (E) the securing by the liquidator from each of such funds or entities of  an  agreement to return to the liquidator such assets, together with income earned on assets previously disbursed, as may be required to  pay claims  of  secured  creditors  and claims falling within the priorities established in section seven thousand four hundred  twenty-six  of  this article in accordance with such priorities. No bond shall be required of any such fund or entity; and  (F)  a  full  report  to  be  made  by each such fund or entity to the liquidator accounting for all assets so disbursed to the fund or entity, all disbursements made therefrom, any  income  earned  by  the  fund  or entity on such assets and any other matters as the court may direct.  (3)  Notice  of  such  application  shall  be  given to such funds and entities and to the commissioners of insurance of each  of  the  states. Any such notice shall be deemed to have been given when deposited in the United  States  certified  mails,  first class postage prepaid, at least thirty days prior to submission of such application to the court. Action on the application may be taken by the court if the required notice  has been  given  and  the  liquidator's proposal complies with subparagraphs (A), (B) and (D) of paragraph two of this subsection.  (g) (1) No later than one hundred twenty days after  the  end  of  the calendar  or  fiscal year of a domestic insurance corporation subject to rehabilitation or liquidation, upon whichever standard  the  corporation conducts  its  financial  affairs, the rehabilitator or liquidator shall submit to the department an annual report of the preceding  calendar  or fiscal  year's  activity  of  such corporation. Such report, which shall pertain  only  to  such  corporation's  activities  and  those  of   the rehabilitator  or  liquidator  as they relate to such corporation, shall include a  financial  review  of  the  assets  and  liabilities  of  the corporation, the claims accrued or paid in that period, and a summary of all  other  corporate  activity  and  a  narrative of the actions of the rehabilitator or liquidator respecting such corporation.  (2) No later than August first of  each  year,  the  rehabilitator  or liquidator  shall  submit to the department and the legislature separate or combined annual  financial  statements  for  the  domestic  insurance corporations  subject  to  rehabilitation or liquidation. Upon whichever standard each corporation conducts  its  respective  financial  affairs, showing  their condition at last calendar year end or at the last fiscal year end ending on or prior to last calendar year end, together with  an  opinion or other report of an independent certified public accountant on such  financial  statements, provided that such corporations were placed into rehabilitation or liquidation prior  to  the  commencement  of  the calendar or fiscal years covered by such financial statements.  (3)  No  later  than  August first of each year, the superintendent as receiver shall submit to the department and the  legislature  an  annual financial  statement of the liquidation bureau showing its cash receipts and disbursements for the prior calendar year, together with an  opinion or  other  report  of an independent certified public accountant on such financial statement.  (4) The reports and statements required under this subsection shall be separate and apart from other  reports  and  statements  issued  by  the liquidation  bureau  of  the  department  in  the  normal  course of its business.