reglab/statecodes huggingface dataset:
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4002 - Persons covered

The proceedings authorized by this chapter may be applied to:
(1) Any insurer who through an existing authorization granted by the Commissioner is transacting, or has transacted insurance business in or from Puerto Rico, and against whom claims arising from that business may exist now or in the future.
(2) Any insurer who purports to transact insurance business in Puerto Rico.
(3) Any other person organized or in the process of organizing in Puerto Rico with the intention of transacting insurance business.
(4) Any fraternal charitable society or health services organization which has been authorized or is authorized to do business in Puerto Rico.
(5) Any other type of insurer created pursuant to the special provisions of this Code.
History —Ins. Code, added as § 40.020 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 2.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4006 - Cooperation of officers, owners and employees

(1) Any officer, manager, director, trustee, owner, employee or authorized representative of an insurer and any other person with authority over, or in charge of any segment of the insurer’s affairs, shall cooperate with the Commissioner in any proceeding under this chapter or in any investigation preliminary to the proceeding. The term “person” as used in this section, shall include any person who exercises control directly or indirectly over the activities of the insurer through any holding company or other affiliate of the insurer. “To cooperate” shall include, but shall not be limited to the following:
(a) To reply promptly in writing to any inquiry from the Commissioner requesting such a reply, and
(b) to make available to the Commissioner any books, accounts, documents or other records or information or property of, or pertaining to the insurer which are in his/her possession, custody or control.
(2) No person shall obstruct or interfere with the Commissioner in the course of a receivership proceeding or an investigation preliminary or incidental thereto.
(3) This section shall not be construed to abridge otherwise existing legal rights, including the right to contest a petition for liquidation or other receivership proceedings or other orders.
(4) Any person included in subsection (1) of this section who fails to cooperate with the Commissioner or any person who obstructs or interferes with the Commissioner in the course of a receivership proceeding or any investigation preliminary or incidental thereto, or who violates any order the Commissioner has issued validly under this chapter may:
(a) Be sanctioned with imprisonment for a fixed term of one (1) year; if there were aggravating circumstances, the fixed penalty may be increased to a maximum of two (2) years; if there were extenuating circumstances, it may be reduced to a minimum of six (6) months and one (1) day.
The court, in its discretion, may impose the established fixed penalty of imprisonment, a penalty of a fine not greater than fifty thousand dollars ($50,000) or both, or
(b) after a hearing, be subject to the imposition by the Commissioner of a fine which shall not exceed fifty thousand dollars ($50,000) and furthermore be subject to the revocation or suspension of any insurance licenses issued by the Commissioner.
History —Ins. Code, added as § 40.060 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 6.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4007 - Immunity

There shall be no civil liability on the part of, and no cause of action of any nature shall arise against, the Commissioner or his/her representatives for any action or omission by them in the discharge of their powers and duties under this chapter.
History —Ins. Code, added as § 40.070 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 7.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4008 - Continuation of receivership proceedings

(1) The provisions of this chapter shall not apply to the receivership proceedings commenced before the date of effectiveness of this act, unless the Receivership Court, by request of the Commissioner, and after notice and holding of a hearing to show cause, directs that all or part of this chapter be applicable to such proceedings.
(2) No person, director, officer or shareholder of an insurer that has been subject to a receivership proceeding may contract, solicit or accept new businesses on behalf of the insurer.
History —Ins. Code, added as § 40.080 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 8.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4010 - Rehabilitation—Orders

(1) An order to rehabilitate the business of a domestic insurer or a foreign insurer domiciled in Puerto Rico, shall appoint the Commissioner and his/her successors in office as the rehabilitator, and shall direct the rehabilitator forthwith to take possession of the assets of the insurer and to administer them under the exclusive general supervision of the court. The filing or recording of the order with the Clerk of the Court of First Instance where the main office of the insurer is located or its main business is conducted, and in the case of real estate, with the property registrar where said assets are located, and in the case of personal property, with the registry where they may be recorded or any other registry of personal property, shall have the same effect of public notice as a deed, a bill of sale or any other evidence of title duly filed and recorded with the Property Registry would have upon third parties. The order to rehabilitate the insurer shall vest title in the rehabilitator over all the insurer’s assets.
(2) Any order issued under this section shall require the rehabilitator to be accountable solely to the Receivership Court. These reports shall be rendered as frequently as specified by the court in the order; Provided, however, That said reports must be filed at least every six (6) months.
(3) The entry of a rehabilitation order shall not constitute an anticipatory breach of any of the insurer’s contracts.
History —Ins. Code, added as § 40.100 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 10.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4012 - Rehabilitation—Actions by and against the rehabilitator

(1) Any court of Puerto Rico before which any action or proceeding in which the insurer is a party, or is obliged to defend a party, is pending when a rehabilitation order against the insurer is entered, shall stay the action or proceeding for ninety (90) days or for such additional time as may be necessary for the rehabilitator to obtain proper representation and prepare for ulterior proceedings. The rehabilitator shall take whichever action he/she may deem necessary in respect to the pending litigation in the interests of justice and for the protection of creditors, policyholders, and the public. The rehabilitator shall immediately consider all litigation pending outside of Puerto Rico and shall whenever necessary petition stays from the courts having jurisdiction over such litigation so as to protect the estate of the insurer.
(2) No statute of limitation or defense of laches shall run with respect to any action by or against the insurer between the date of filing a petition for the appointment of a rehabilitator for the insurer and the order granting or denying such a petition. Any action by or against the insurer that might have been commenced when the petition was filed may be commenced within ninety (90) days after the rehabilitation order is issued or the petition is denied.
(3) Any guaranty association or foreign guaranty association covering life or disability insurance shall have standing to appear in any court proceeding concerning the rehabilitation of a life or disability insurer if such an association would have to act or might become liable to act as a result of the rehabilitation.
History —Ins. Code, added as § 40.120 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 13.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4013 - Rehabilitation—Termination

(1) Whenever the Commissioner believes that further efforts to rehabilitate an insurer would substantially increase the risk of loss to policyholders, creditors or the general public, or that the same would be futile, he/she may petition the Receivership Court for a liquidation order. A petition under this paragraph shall have the same effect as a petition under § 4014 of this title. The rehabilitator shall coordinate a transition plan for the liquidation with guaranty associations that may be obliged under a liquidation proceeding.
(2) The protection of the interests of the insured parties, plaintiffs and the general public requires the efficient and prompt management of all obligations under an insurance policy, reason for which, if the payment of the obligations under the policies of an insurer under rehabilitation is suspended for a period of six (6) months at any time after the rehabilitator is appointed as such and he/she has not submitted a plan to the Receivership Court, as provided in § 4011 of this title, the rehabilitator may petition the Receivership Court for a liquidation order or seek an order to extend the suspension period, after showing just cause therefor.
(3) The rehabilitator may petition the Receivership Court at any time for an order to terminate the rehabilitation of an insurer. The Receivership Court shall also allow the directors of the insurer to petition an order to terminate the rehabilitation and may order payment from the estate of the insurer of such costs and other expenses related to their petition if the petition is granted. If the Receivership Court finds that rehabilitation has been accomplished and that grounds for rehabilitation under § 4009 of this title no longer exist, it shall order that possession of property and control over business be restored to the insurer. The Receivership Court may also reach that conclusion and issue such an order at any time motu proprio.
History —Ins. Code, added as § 40.130 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 14.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4014 - Liquidation—Grounds

The Commissioner may petition the Court of First Instance for an order authorizing him/her to liquidate a domestic insurer or an alien insurer domiciled in Puerto Rico based on:
(1) Any grounds for a rehabilitation order as specified in § 4009 of this title, except for subsections (6), (13), (14), and (15) thereof, whether or not there has been a previous order directing the rehabilitation of the insurer;
(2) that the insurer is insolvent, or
(3) that the holders of a majority of the insurer’s voting stock petition for liquidation or consent thereto pursuant to this chapter.
History —Ins. Code, added as § 40.140 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 15.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4015 - Liquidation—Orders

(1) An order to liquidate the business of a domestic insurer shall appoint the Commissioner or any successor in office as the liquidator and authorize him/her to take immediate possession of the assets of the insurer and administer the same under the exclusive general supervision of the Receivership Court. The liquidator shall be legally vested with title to all the property, contracts and rights of action, and to all the books and records of the insurer ordered to be liquidated, wherever located, as of the date of entry of the final liquidation order. The liquidator shall be empowered to negotiate and reduce to cash, wholly or partially, any assets that may be needed to pay for the administration of the liquidation, provided he/she obtains the maximum yield possible in said negotiation. The filing or recording of the order with the Clerk of the Part of the Court of First Instance where the main office of the insurer is located, or its main business is conducted, and in the case of real estate, with the Property Registrar where said property is located, and in the case of personal property, in the Registry where the same may be recorded, shall have the same effect of notice as a deed, a bill of sale, or any other evidence of title duly filed and recorded with the Property Registry would have upon third parties.
(2) Upon issuance of the order, the rights and obligations of any such insurer and of his/her policyholders creditors, shareholders, members and all other persons interested in his/her estate shall be defined as they exist on the date the order of liquidation is issued, except as provided in §§ 4016 and 4034 of this title.
(3) An order to liquidate the business of an alien insurer domiciled in Puerto Rico shall be on equal terms and have the same legal effect as an order to liquidate a domestic insurer, except that the assets and the businesses in any state shall be the only assets and businesses included therein.
(4) At the time of petitioning for an order of liquidation, or at any time thereafter, the Commissioner, after making appropriate findings of an insurer’s insolvency, may petition the court for a judicial declaration of such insolvency. After the corresponding notices and hearings, the court may issue the declaration.
(5) Any order issued under this section shall require the liquidator to be accountable solely to the court. These reports shall be rendered at such intervals as specified by the court in its order; Provided, however, That said reports shall be rendered at least every six (6) months.
(6) In the event that a liquidation order is rendered ineffective, the insurer shall not be released from the liquidation proceeding until the insurer complies with the conditions provided in § 4042a of this title.
History —Ins. Code, added as § 40.150 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 16.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4016 - Liquidation—Continuation of coverage

(1) All policies, other than life or disability insurance in effect at the time of issuance of an order of liquidation, shall only continue in effect for the lesser of the following periods:
(a) Thirty (30) days from the date of the liquidation order;
(b) the expiration of the policy coverage;
(c) the date in which the insured replaced the insurance policy with equivalent insurance in another insurer, or has otherwise terminated the policy;
(d) the liquidator has transferred the policy obligations pursuant to § 4018(1)(h) of this title.
(e) The date proposed by the liquidator and approved by the Receivership Court to cancel coverage.
(2) An order of liquidation under § 4015 of this title shall terminate the policy coverage at the time specified in subsection (1) of this section for the purpose of any other statute.
(3) Life or disability policies shall continue in force for the period and under the terms provided by any applicable guaranty association or foreign guaranty association.
(4) Life or disability policies, or any period or coverage thereof not covered by a guaranty association or foreign guaranty association shall terminate as provided in subsections (1) and (2) of this section.
(5) The cancellation of any bond or surety undertaking shall not release any cosurety or guarantor.
(6) Except as otherwise provided in this chapter, the obligations of the insolvent insurer’s reinsurers shall not cease by the termination of policies ceded to reinsurers.
History —Ins. Code, added as § 40.160 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 17.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4017 - Liquidation—Dissolution

(1) The Commissioner may petition for an order to dissolve the corporate existence of a domestic insurer or the branch of an alien insurer domiciled in Puerto Rico at the time he/she applies for liquidation. The court shall order the dissolution of the insurer by petition of the Commissioner at the time or after the liquidation order is granted. If dissolution has not been ordered previously, it shall be effected by legal effect upon the discharge of the liquidator if the insurer is insolvent, but the court may order the dissolution upon the discharge of the liquidator if the insurer is under a liquidation order for some other reason.
History —Ins. Code, added as § 40.170 on Aug. 17, 1991, No. 72, § 1.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4020 - Liquidation—General agents authorized representatives and producers; duties

(1) Any person who receives a notice in the manner prescribed in § 4019(1)(c) of this title to the effect that an insurer with which he/she placed business as a general agent, authorized representative or producer is subject to a liquidation order, shall give notice of the liquidation order within thirty (30) days following the notice. The notice shall be sent by first-class mail, evidenced through a certificate of mailing, to every policyholder or any other person named in every policy issued by the insurer through the general agent, authorized representative or producer to the last address that appears on the corresponding records. A policy shall be deemed issued through a general agent, authorized representative or producer if any of the latter has proprietary interest on the maturity of the policy or if the authorized representative has had in his/her power a copy of the policy at any time during the life thereof, except when the ownership on the maturity of the policy has been transferred to another person. The written notice shall include the name and address of the insured party and of the general agent, authorized representative or producer, the identification of the affected policy and the nature of the liquidation proceeding, including the termination of coverage as described in § 4016 of this title. Any general agent, authorized representative or producer who is bound to give notice pursuant to this section shall render to the liquidator a sworn report of compliance not later than forty-five (45) days [following] the notification of the order.
(2) Any general agent, authorized representative or producer who fails to give notice of having rendered a compliance report, as required by subsection (1) of this section, may be subject to a fine that shall not exceed five thousand dollars ($5,000) and the suspension of his/her license, after a hearing before the Commissioner.
Regardless of the proprietary interest of the authorized representative, if any, on the maturity of the policy, the liquidator shall have the sole power to determine when and under what terms and conditions the policy is cancelled or transferred.
History —Ins. Code, added as § 40.200 on Aug. 17, 1991, No. 72, § 1; Jan. 19, 2006, No. 10, § 9; Dec. 14, 2007, No. 206, § 20.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4022 - Liquidation—Collection and list of assets

(1) As soon as feasible, after a liquidation order, but not later than one hundred and eighty (180) days thereafter, the liquidator shall prepare in duplicate a financial report of the insurer which includes at least a balance sheet and an income and expense report. This report shall be continually submitted to the Receivership Court at intervals specified by the Receivership Court in the liquidation order; Provided, That this report shall be submitted at least every six (6) months. The Receivership Court may request any other information it deems appropriate.
(2) The guaranty association shall submit a report to the liquidator within one hundred and twenty (120) days after the liquidation order is issued and subsequently every four (4) months. The report shall be submitted using the format provided therefor by the National Association of Insurance Commissioners. Said report shall also be submitted to the Receivership Court.
(3) The liquidator shall reduce the assets, with the authorization of the Receivership Court, to a degree of liquidity consistent with the effective execution of the liquidation, except as provided in § 4015(1) of this title.
(4) A petition to the court for the distribution of assets under § 4031 of this title meets the requirements of subsection (1) of this section.
History —Ins. Code, added as § 40.220 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 22.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4023 - Liquidation—Fraudulent transfers prior to petition

(1) Any transfer made and completed and any obligation incurred by an insurer within two (2) years prior to successfully filing a petition for rehabilitation or liquidation pursuant to this chapter, is fraudulent as to then existing and future creditors if made or incurred without just cause or with an actual intent to hinder, delay or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer subject to a rehabilitation or liquidation proceeding pursuant to this chapter, and which is fraudulent according to this section, may be voided by the receiver, except as to a person who in good faith is a purchaser, lienor, or obligee for a fair equivalent value and except when a purchaser, lienor or obligee who in good faith has given a consideration less than fair for such transfer or lien or obligation may retain the property, lien or obligation as security for repayment. The court may order, on due notice, that any transfer or obligation for which a consideration less than fair has been given to be preserved for the benefit of the estate and in such an event, the receiver shall succeed to and may exercise the rights of the purchaser, lienor or obligee.
(2)
(a) A transfer of property other than real property, shall be deemed to have been made and completed when it has been so perfected that no subsequent lien obtained by legal or equitable proceedings on an oral contract could become superior to the rights of the transferee pursuant to § 4025(3) of this title.
(b) A transfer of real property shall be deemed to have been made or completed when it becomes so perfected that no subsequent bona fide purchaser of the insurer can obtain rights superior to those of the transferee.
(c) Any transfer not perfected prior to the filing of a petition for liquidation shall be deemed to have been made immediately before the filing of the successful petition.
(d) The provisions of this subsection shall apply whether or not there are or have been creditors who might have obtained a lien or whether or not there are or have been persons who might have been bonafide purchasers.
(3) Any transaction of the insurer with a reinsurer shall be deemed fraudulent and may be voided by the receiver under subsection (1) of this section if:
(a) The transaction consists of the termination, adjustment, or liquidation of a reinsurance contract in which the reinsurer is released from complying with any part of his/her obligation to pay the originally specified share of losses that had occurred prior to the date of the transaction, unless the reinsurer gives a fair value for the release, and
(b) part of the transaction took place within three years prior to the date of filing of the petition through which the receivership was commenced.
History —Ins. Code, added as § 40.230 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 23.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4024 - Liquidation—Fraudulent transfers after the petition

(1) After a petition for rehabilitation or liquidation has been filed, the transfer of any of the real property of the insurer to a bona fide purchaser shall be valid against the receiver if fair value was paid, and if fair value was not paid, the transferee or purchaser shall retain a lien on the property up to the value paid for said property. The commencement of a proceeding in rehabilitation or liquidation shall be constructive notice upon the recording of a copy of the petition for an order of rehabilitation or liquidation with the Property Registrar wherever the real property in question is located. The power of any United States Federal Court or the court of any state or any other jurisdiction to effect or authorize a judicial sale of real property of the insurer in any county or municipality in a state shall not be impaired by the pendency of such a proceeding unless the copy of the aforesaid petition is recorded prior to the consummation of the sale in the section of the Property Registry corresponding to the county or municipality.
(2) After a petition for rehabilitation or liquidation has been filed and before the receiver takes possesion of the property of the insurer, or before an order of rehabilitation or liquidation is granted:
(a) The transfer of any property of the insurer, other than real property, made to a person acting in good faith shall be valid for the receiver if made for its fair value or if not made for its fair value the transferee shall have a lien on the property to the extent of the value paid for it.
(b) A person indebted to the insurer or holding property of the insurer may, if acting in good faith, pay the debt or return the property, or any part thereof, to the insurer or upon his order, with the same effect as if the petition were not pending.
(c) A person having knowledge of the pending rehabilitation or liquidation shall be deemed not to act in good faith.
(d) A person asserting the validity of a transfer under this section shall have the burden of proof. Except as provided in this section, no transfer by or on behalf of the insurer made after the date of the petition for rehabilitation or liquidation by a person other than the rehabilitator or liquidator shall be valid against the aforementioned.
(3) None of the provisions of this chapter shall impair the negotiability of currency or other negotiable instruments.
History —Ins. Code, added as § 40.240 on Aug. 17, 1991, No. 72, § 1.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4026 - Liquidation—Claims of holders of void or voidable rights

(1) No claim of a creditor who has received or acquired a preference, lien, transfer, assignment or encumbrance which is voidable under this chapter shall be allowed, unless said creditor surrenders such a preference, lien, transfer, assignment or encumbrance. If the voidance is effected by a proceeding in which a final judgment has been entered, the claim shall not be allowed, unless the money is paid or the property returned to the liquidator within thirty (30) days [following] the date of entering the final judgment, except that the Receivership Court may grant additional time if there is an appeal or any other continuation of the proceeding.
(2) A claim allowable under subsection (1) of this section by reason of avoidance, be it voluntary or not, or a preference, lien, transfer, assignment or encumbrance may be filed as an excused late filing under § 4032 of this title if filed within thirty (30) days from the date of voidance or within the additional time granted by the court according to subsection (1) of this section.
History —Ins. Code, added as § 40.260 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 25.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4027 - Liquidation—Set-offs and counterclaims

(1) Mutual debts or mutual credits between the insurer and another person in relation to any action or proceeding pursuant to this chapter shall be set-off and the balance shall only be allowed or paid as provided in subsection (2) of this section and § 4030 of this title.
(2) No setoff or counterclaim shall be allowed in favor of any person where:
(a) The obligation of the insurer to the person does not entitle the aforesaid to participate as a claimant of the insurer’s assets at the date of filing of the petition for liquidation;
(b) the obligation of the insurer to the other person was purchased by or transferred to the person so that it would be used as a set-off;
(c) the obligation of the insurer is owed to an affiliate or entity, and there is no written assignment of the obligation executed more than one hundred and twenty (120) days before the date on which the petition for liquidation is filed;
(d) the obligation of the person is owed to an affiliate or entity other than the insurer, and there is no written assignment of the obligation executed more than one hundred and twenty (120) days before the date on which the petition for liquidation is filed;
(e) the obligation of the person is to pay an assessment imposed on members or subscribers of the insurer, or to pay the balance on a subscription to the capital stock of the insurer, or the same is in any other way in the nature of a capital contribution, or
(f) the obligation of the person is to pay premiums to the insurer, whether earned or not.
History —Ins. Code, added as § 40.270 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 26.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4030 - Liquidation—Recovery of premiums owed

(1)
(a) Every general agent, authorized representative, producer, proxy, premium financing company or any other person other than the insured party responsible for the payment of a premium, shall be obligated to pay to the liquidator any amount due to the insurer on account of the portion of the premiums earned at the time of the liquidation declaration, as shown on the records of the insurer. Regarding any part of the unearned premium that has been collected, the general agent, authorized representative, producer or proxy shall be governed by the provisions of § 952h of this title. Neither credits, nor setoffs, or both, shall be allowed to a general agent, authorized representative, producer, proxy or premium financing company for any amounts that the general agent, authorized representative, producer, proxy or premium financing company has advanced to the insurer on behalf of, but in the absence of payment by, the insured party.
(b) The general agent, authorized representative, producer or proxy shall be obligated to return to the liquidator the unearned commissions of the premiums remitted to the insurer.
(c) An insured shall be bound to pay any unpaid earned premiums due the insurer at the time of the declaration of liquidation, as shown on the records of the insurer.
(2) Upon satisfactory evidence of a violation of the provisions of this section, the Commissioner may pursue either one or both of the following courses of action:
(a) Suspend or revoke, or refuse to renew the licenses of such infringer or infringers.
(b) Impose an administrative penalty of not more than one thousand dollars ($1,000) for each violation of this section by said party or parties. For the purpose of the imposition of this fine, the placement or issuance of each insurance policy shall be considered as a separate violation.
History —Ins. Code, added as § 40.300 on Aug. 17, 1991, No. 72, § 1; Jan. 19, 2006, No. 10, § 9; Dec. 14, 2007, No. 206, § 30.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4032 - Liquidation—Filing of claims

(1) The liquidator shall be given proof of every claim, in the form required by § 4033 of this title on or before the last day for filing specified in the notice required pursuant to § 4019 of this title, except that it shall not be necessary to present proof of claims for cash surrender values or other investment values in life insurance and annuities unless the liquidator expressly so requires.
(2) The liquidator may permit a claimant making a late claim to share in the distributions, whether past or future, as if the claim were not late, to the extent that the payment does not prejudice the orderly administration of the liquidation, under the following circumstances:
(a) The existence of the claim was not known to the claimant and he/she filed the same ninety (90) days after learning about it;
(b) A transfer to a creditor was voided pursuant to §§ 4023 and 4025 of this title, or was voluntarily surrendered pursuant to § 4026 of this title and the filing of the claim meets the provisions of § 4026 of this title.
(c) The valuation, pursuant to § 4038 of this title, of the security held by a secured creditor shows a deficiency which is claimed within thirty (30) days after the valuation.
(3) The liquidator shall permit late claims to share in the distributions, whether past or future, as if they were not late, if they are claims of a guaranty association or a foreign guaranty association for the reimbursement of paid covered claims, or for expenses incurred, or both, subsequent to the last day for filing and if the payments were made and the expenses incurred as provided by law.
(4) The liquidator may consider any claim filed late, which is not covered by subsection (2) of this section, and may permit it to receive distributions which were subsequently declared for claims of the same or lower priority if the payment does not prejudice the orderly administration of the liquidation. The claimant who files a claim belatedly shall receive at each distribution the same percentage of the amount allowed on his/her claim which is then being paid to claimants with a lower priority. The procedure shall so continue until his/her claim has been paid in full.
History —Ins. Code, added as § 40.320 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 32.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4033 - Liquidation—Claims form

(1) The claims form shall consist of a statement sworn to and signed by the claimant which includes all of the following when applicable:
(a) The particulars of the claim, including the consideration given for it;
(b) identification and amount of the security involved in the claim;
(c) payments made on the debt, if any;
(d) that the sum claimed is legitimately owed and that there is no set-off, counterclaim, or defense to the claim;
(e) any right of priority of payment or other specific rights alleged by the claimant;
(f) a copy of the written instrument on which the claim is founded, and
(g) name and address of the claimant and his/her legal representative, if any.
(2) No claim shall be considered or allowed if it does not contain all applicable information stipulated in subsection (1) of this section. The liquidator may require that a form prescribed by him/her be used and that other information and documentation be included.
(3) The liquidator may require at any time that the claimant submit information or evidence supplementary to that which is required by subsection (1) of this section and may take testimony under oath or pledge, require the production of statements, or otherwise obtain additional information or evidence.
(4) No judgment or order against the insured or the insurer entered after the filing of a successful petition for liquidation, nor any judgment or order against the insured or the insurer entered at any time by default or collusion, will have to be considered as evidence of liability or of quantum of damages. No judgment or order against the insured or the insurer issued within four months prior to the filing of the petition will have to be considered as evidence of liability or of the quantum of damages.
(5) All claims of a guaranty association or a foreign guaranty association shall be in such form and shall contain the proof agreed upon by the association and the liquidator.
History —Ins. Code, added as § 40.330 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 33.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4034 - Liquidation—Special claims

(1) The claim of a third party claimant which is contingent only on his/her first obtaining a judgment against the insured shall be considered and allowed as if there were no such contingency.
(2) A claim may be allowed, even if contingent, if it is filed in accordance with § 4032 of this title. It may be allowed and may participate in all the distributions declared after the filing, to the extent that it does not prejudice the orderly administration of the liquidation.
(3) Claims which are not payable because their due date has not expired, shall be treated as payable claims, except that their future value may be discounted at the legal rate of interest.
(4) The claims of directors, principal officers or other persons performing similar functions or with similar authority pursuant to employment contracts, are limited to payment for services rendered before the issuance of any order of rehabilitation or liquidation pursuant to the provisions of §§ 4010 and 4015 of this title.
History —Ins. Code, added as § 40.340 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 34.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4036 - Liquidation—Evaluation of claims

(1) When a claim is denied in whole or in part by the liquidator, written notice of the determination shall be given to the claimant or his/her representative by first-class mail at the address shown [on] the claims form. Within thirty (30) days after the notice has been mailed, the claimant may file his/her objections with the liquidator. If no such filing is made, the claimant may not further object to the determination.
(2) Regarding the determination of the liquidator, the claimant may resort to the Receivership Court for a review.
(3) The provisions of this section shall not apply to disputes with respect to determinations of coverage by a guaranty association as part of its statutory obligations.
History —Ins. Code, added as § 40.360 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 36.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4037 - Liquidation—Claims of surety

Whenever a creditor whose claim is secured, in whole or in part, by the undertaking of another person, fails to prove and file the claim, the other person may do so in the creditor’s name and shall be subrogated to the rights of the creditor, when the claim has been filed by the creditor or by the other party in the creditor’s name, to the extent that he/she has discharged his/her undertaking. In the absence of an agreement to the contrary with the creditor, the other person shall not be entitled to any distribution whatsoever until the amount paid to the creditor, in the undertaking plus the distributions paid on the claim to the creditor from the insurer’s estate, equal the amount of the creditor’s total claim. Any amount received in excess by the creditor shall be held by him/her in trust for such other person. It shall not be understood that the term “other person” as used in this section applies to a guaranty association or a foreign guaranty association.
History —Ins. Code, added as § 40.370 on Aug. 17, 1991, No. 72, § 1.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4038 - Liquidation—Secured creditor’s claims

(1) The value of any security held by a secured creditor shall be determined in one of the following ways, as the court may direct:
(a) By converting the same into money according to the terms of the agreement pursuant to which the security was delivered to such creditors, or
(b) by agreement, arbitration, settlement or litigation between the creditor and liquidator.
(2) The determination shall be made under the supervision and control of the court with due regard for the recommendations of the liquidator. The amount so determined shall be credited upon the secured claim and any deficiency shall be treated as an unsecured claim. Were the claimant to surrender his security to the liquidator the entire claim shall be deemed as unsecured.
(3)
(a) A surety has paid any losses and adjustment expenses under a surety bond contract before any petition for liquidation and the principal posts collaterals to the surety that have not been used to reimburse said losses and adjustment expenses and at the time of the petition said collaterals have not been credited against the payments made, the liquidator shall have first priority over any other person to use collateral to reimburse losses and adjustment expenses incurred by a surety before the petition for liquidation.
(b) If the principal under a surety bond or contract pledges any collateral to secure his/her obligation of reimbursing to the insurer any claim of a creditor under the surety bond or contract, such a claim shall be satisfied first out of the collateral or the collateral’s proceeds.
(c) When paying a claim to a creditor under a bond or surety contract secured by collateral, the liquidator shall retain a sufficient sum to pay for any other potential claim against the collateral.
(d) If the collateral is insufficient to pay in full all possible claims under clause (b) of this subsection, the claims shall be paid on a pro rata basis and creditors shall have a claim for any deficiency, subject to the provisions of § 4032 of this title.
(e) If the term to file a claim against a bond or surety has expired and all claims have been satisfied in full, the remaining collateral shall be returned to the principal.
[(4)] The liquidator may recover from any property securing a covered claim, the reasonable, necessary costs and expenses of preserving, or disposing of, said property, up to the total sum of the claim.
History —Ins. Code, added as § 40.380 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 37.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4040 - Liquidation—Recommendations to the court

(1) The liquidator shall review all claims duly filed in the liquidation and shall make such further investigations as deemed necessary. He/she may adjust, settle or otherwise negotiate the amounts for which claims shall be recommended to the court except when the liquidator is required by law to accept claims as settled by any other person or organization, including any guaranty association or foreign guaranty association. Unresolved disputes shall be treated as provided in § 4036 of this title. As soon as possible the court shall be presented with a report of the claims filed with recommendations. The report shall include the name and address of each claimant and the amount of the claim finally recommended, if any. If the insurer has issued annuities or life insurance policies, the liquidator shall report the persons to whom, according to the records of the insurer, amounts are owed as cash surrender values or other investment values and the amounts owed.
(2) The court may approve, reject or modify the report on claims presented by the liquidator. The liquidator shall regard as allowed claims those claims included in the report which are not modified by the court within a period of sixty (60) days after being filed, subject to subsequent modifications by the court in accordance with § 4036 of this title. No claim under an insurance policy shall be allowed for an amount in excess of the applicable policy limits.
History —Ins. Code, added as § 40.400 on Aug. 17, 1991, No. 72, § 1.
2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 40 - Rehabilitation and Liquidation (§§ 4001 — 4054) › § 4041 - Liquidation—Distribution of assets

Under the supervision of the Receivership Court, the liquidator shall pay the distributions in such a way that they will ensure the proper acknowledgement of priorities and create a reasonable balance between the prompt completion of the liquidation and the protection of unliquidated and undetermined claims, including third party claims. All claims approved within the same class shall be paid at the same percent.
History —Ins. Code, added as § 40.410 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 38.