2023 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 insurer  other  than  a  life  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:
(A)  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.
(B)  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.
(C)  Class  three. Claims of the federal government except those under
class two above.
(D) 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.
(E)  Class  five.  Claims  of state and local governments except those
under class two above.
(F) Class six. Claims of general creditors including, but not  limited
to, claims arising under reinsurance contracts.
(G)  Class  seven.  Claims  filed  late or any other claims other than
claims under class eight or class nine below.
(H) Class eight. Claims for advanced or borrowed funds  made  pursuant
to section one thousand three hundred seven of this chapter.
(I)  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.