2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4018 - Liquidation—Powers

(1) The liquidator shall be empowered to:
(a) Appoint an Assistant Liquidator to act for him/her under this chapter. The Assistant Liquidator shall have all the powers granted by this section to the liquidator. The Assistant Liquidator shall serve for as long as the liquidator may wish.
(b) Contract employees and agents, legal counsel, actuaries, accountants, appraisers, consultants, and such other personnel as he/she may deem necessary to assist him/her in the liquidation.
(c) Set fair compensation for the Assistant Liquidator and the employees and agents, legal counsel, actuaries, accountants, appraisers and consultants, with the approval of the Receivership Court.
(d) Pay reasonable compensation to persons appointed and defray from the funds or assets of the insurer all expenses incurred while taking posession, conserving, conducting, liquidating and disposing of, or otherwise dealing with the business and property of the insurer.
(e) Hold hearings, subpoena witnesses to compel their attendance, administer oaths, examine any person under oath, and compel any person to susbcribe his/her testimony after it has been correctly transcribed; and in connection therewith to require the production of any books, papers, records or other documents which he/she deems relevant to the inquiry.
(f) Collect all debts and moneys due and claims belonging to the insurer, wherever located, and for this purpose:
(i) File timely action in other jurisdictions in order to forestall garnishment and attachment proceedings against such debts;
(ii) Take any other action necessary or expedient to collect, conserve or protect his/her assets or property, including the power to sell, adjust, settle or assign debts for collection upon such terms and conditions deemed most convenient, and
(iii) Exhaust all resources available to the creditors to enforce their claims.
(g) Conduct public and private sales of the property of the insurer with the approval of the Receivership Court.
(h)
(i) Use assets of an insurer under a liquidation order to transfer obligations to an assuming solvent insurer if the transfer can be arranged without prejudice to applicable priorities pursuant to § 4039 of this title.
(ii) Use the assets of an insurer under liquidation to transfer the insurer’s obligations under a surety bond or surety undertaking contract as well as collateral held by the insurer to secure reimbursement obligations of the principals under the surety bond or surety undertaking to an assuming solvent insurer, if the transfer can be arranged without prejudice to applicable priorities under § 4039 of this title. Furthermore, if all insurers, principals, third party claimants, and creditors under the policies, or surety bond or surety undertaking contracts agree, or if the Receivership Court so orders, the estate of the insurer shall no longer be liable for policies or surety bond or surety undertaking contracts after the transfer is completed.
(i) Acquire, mortgage, encumber, lease, improve, sell, transfer, abandon, or otherwise dispose of or deal with, with the approval of the Receivership Court, any property of the insurer at its market value or under such terms and conditions that are fair and reasonable. He/she shall also have the authority to execute, acknowledge and deliver deeds, assignments, releases and other necessary and proper documents to carry out any sale of property or other transaction pertinent to the liquidation.
(j) Borrow money, whether or not secured by the assets of the insurer, and execute and deliver, with the approval of the Receivership Court, all documents needed for such a transaction with the purpose of expediting the liquidation. Any money borrowed may be repaid as an administrative expense and shall have priority over any other Class 1 claim.
(k) Enter into such contracts needed for the execution of the order for liquidation and to affirm or disavow any contract to which the insurer is a party.
(l) Continue the proceedings and to file on behalf of the insurer or in his/her own behalf, each and every one of the suits and other legal proceedings in Puerto Rico or elsewhere, or to abandon the prosecution of claims he/she deems unprofitable to pursue further. If the insurer is dissolved pursuant to § 4017 of this title, he/she shall have the power to apply to any court in Puerto Rico or elsewhere, for permission to have the insurer substitute him/her as plaintiff.
(m) Proceed with any existing action on behalf of all policyholders, members, creditors or shareholders of the insurer, against any officer of the insurer, or against any other person.
(n) Take possession and transfer any records and property of the insurer to the offices of the Commissioner or to any other place as may be convenient for the efficient and orderly execution of the liquidation. The guaranty associations and the foreign guaranty associations shall have reasonable access to the records of the insurer, as may be necessary, so that they can carry out their statutory obligations.
(o) Deposit in one or more banks in Puerto Rico the amounts required to defray current administrative expenses and the distributions of dividends to the policyholders.
(p) Invest prudently and in accordance to Chapter 6 of this Code, the amounts not currently needed, unless the Receivership Court orders otherwise.
(q) File any necessary documents with the corresponding Property Registry in Puerto Rico, or with any other registry wherever any property of the insurer is located.
(r) Assert all defenses available to the insurer against third parties, including statutes of limitations, fraud and usury. A waiver of any defense by the insurer after a petition for liquidation has been filed shall not bind the liquidator. Whenever a guaranty association or a foreign guaranty association has an obligation to assume the defense in a lawsuit, the liquidator shall give precedence to such an obligation and may only assume it in the absence of a defense by such guaranty associations.
(s) Exercise and enforce all the rights, remedies and powers of any creditor, shareholder, policyholder or member, including the power to void any transfer or lien that may be granted by law and which is not included in §§ 4023 and 4025 of this title.
(t) Intervene in any proceeding wherever instituted, that might lead to the appointment of a receiver or a trustee, and to act as receiver or trustee when the appointment is offered.
(u) Enter into agreements with a receiver or a Commissioner of any State regarding the rehabilitation, liquidation, conservation or dissolution of an insurer doing business in both jurisdictions.
(v) The liquidator shall not be obligated to defend the insurer in any action against the insurer or an insured party. Any insured party not defended by a guaranty association may provide for his/her own defense and include the cost thereof as part of his/her claim, if such a defense was part of the obligation of the insurer. The right of the liquidator to contest coverage on a particular claim shall be preserved with no need for an express reservation of rights.
(w) The liquidator is hereby vested with all the rights of the entity or entities in liquidation.
(2) The enumeration of the powers and authority of the liquidator in this section shall not be construed as a limitation upon the liquidator and does not exclude in any manner the right to take other actions or engage in other acts not specifically enumerated or otherwise provided for to the extent necessary or appropriate for the accomplishment of or in aid of liquidation purposes.
History —Ins. Code, added as § 40.180 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 18.