NY Ins L § 7434 (2021)
2021 New York Laws ISC - Insurance Article 74 - Rehabilitation, Liquidation, Conservation and Dissolution of Insurers 7434 - Distribution of Assets.

§ 7434. Distribution of assets. (a) (1) Upon the recommendation of the superintendent,  and  under  the  direction  of  the court, distribution payments shall  be  made  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  undetermined  claims. The priority of distribution of claims from an insolvent property/casualty  insurer  in  any  proceeding subject  to  this article shall be in accordance with the order in which each class of claims is set forth in this paragraph and as  provided  in this  paragraph.  Every  claim  in  each  class shall be paid in full or adequate funds retained for such payment before the members of the  next class receive any payment. No subclasses shall be established within any class.  No  claim by a shareholder, policyholder or other creditor shall be permitted to circumvent the  priority  classes  through  the  use  of equitable remedies. The order of distribution of claims shall be:  (i)  Class  one. Claims with respect to the actual and necessary costs and  expenses   of   administration,   incurred   by   the   liquidator, rehabilitator or conservator under this article.  (ii) Class two. All claims under policies including such claims of the federal  or  any  state  or  local government for losses incurred, third party claims, claims for unearned premiums, and all claims of a security fund, guaranty association or the equivalent except claims arising under reinsurance contracts.  (iii) Class three. Claims of the federal government except those under class two above.  (iv) Class four. Claims for wages owing to  employees  of  an  insurer against  whom  a proceeding under this article is commenced for services rendered within one year before  commencement  of  the  proceeding,  not exceeding  one thousand two hundred dollars to each employee, and claims for unemployment insurance contributions required by article eighteen of the labor law. Such priority shall be  in  lieu  of  any  other  similar priority which may be authorized by law.  (v)  Class  five.  Claims  of state and local governments except those under class two above.  (vi) Class six. Claims of general creditors including, but not limited to, claims arising under reinsurance contracts.  (vii) Class seven. Claims filed late or any other  claims  other  than claims under class eight or class nine below.  (viii)  Class  eight.  Claims  for  advanced  or  borrowed  funds made pursuant to section one thousand three hundred seven of this chapter.  (ix) Class nine. Claims of  shareholders  or  other  owners  in  their capacity as shareholders.  (2)  Severability.  If  any classification or priority provided for in paragraph one of this subsection  is  held  to  be  unconstitutional  or otherwise  invalid,  the  remaining classifications and priorities shall continue in effect.  (b) No creditor shall be entitled  to  interest  on  any  dividend  by reason of delay in payment of such dividend.  (c)  Any  claimant of another state or foreign country who is entitled to, or receives, a dividend upon his claim out of a statutory deposit or the proceeds of any qualifying bond or other asset located in such other state or foreign country shall not be entitled to any  further  dividend from  the  superintendent  until  all  other claimants of the same class irrespective of residence or place of the acts or contracts  upon  which their  claims are based shall have received an equal dividend upon their claims. After such equalization, such  claimant  shall  be  entitled  to share  in  the  distribution  of further dividends by the superintendent like all other creditors of the same class wherever residing.  (d) If, after an adjudication of insolvency, a mutual insurer is found clearly solvent upon re-examination, its surplus  shall  be  distributed among all persons, partnerships or corporations whose membership did not cease  earlier  than  five  years prior to the date on which the insurer ceased  issuing  policies.  The  distribution shall be in the proportion which the total premium contributions of each such member during his  or its  entire  membership  in  the  insurer  bear  to  the  total  premium contributions of all such members entitled under this subsection to  any distributive share of such surplus.  (e)  The  provisions of this section shall apply to distributions made after the effective date of this subsection in any proceeding under this article, regardless of the date such proceeding was commenced under this article, provided that the foregoing provisions of this subsection shall not apply to distributions made pursuant  to  a  final  court  order  of distribution entered on or before the effective date of this subsection.