2023 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.