§ 27-14.3-22 - Liquidation orders. - Rhode Island Statutes

SECTION 27-14.3-22

   § 27-14.3-22  Liquidation orders. –(a) An order to liquidate the business of a domestic insurer shall appoint thecommissioner and his or her successors in office liquidator, and shall directthe liquidator to take possession of the assets of the insurer and toadminister them under the general supervision of the court. The liquidatorshall be vested by operation of law with the title to all of the property,contracts, and rights of action, and all of the books and records of theinsurer ordered liquidated, wherever located, as of the entry of the finalorder of liquidation. The filing or recording of the order with the clerk ofthe superior court for the county of Providence and the recorder of deeds ofthe city or town in which its principal office or place of business is locatedor, in the case of real estate, with the recorder of deeds of the city or townwhere the property is located, shall impart the same notice as a deed, bill ofsale, or other evidence of title duly filed or recorded with that recorder ofdeeds would have imparted.

   (b) Upon issuance of the order, the rights and liabilities ofany insurer and of its creditors, policyholders, shareholders, members, and allother persons interested in its estate shall become fixed as of the date ofentry of the order of liquidation, except as provided in §§27-14.3-23 and 27-14.3-41.

   (c) An order to liquidate the business of an alien insurerdomiciled in this state shall be on the same terms and have the same legaleffect as an order to liquidate a domestic insurer, except that the assets andthe business in the United States shall be the only assets and businessincluded in the order.

   (d) At the time of petitioning for an order of liquidation,or at any time after this, the commissioner, after making appropriate findingsof an insurer's insolvency, may petition the court for a judicial declarationof insolvency. After providing any notice and hearing that it deems proper, thecourt may make the declaration.

   (e) Any order issued under this section shall requirefinancial reports to the court by the liquidator. Financial reports shallinclude at a minimum the assets and liabilities of the insurer and all fundsreceived or disbursed by the liquidator during the current period. Financialreports shall be filed within one year of the liquidation order and at leastannually after this.

   (f) Within five (5) days after the initiation of an appeal ofan order of liquidation, which order has been stayed, the commissioner shallpresent for the court's approval a plan for the continued performance of thedefendant company's policy claims obligations, including the duty to defendinsured under liability insurance policies, during the pendency of an appeal.The plan shall provide for the continued performance and payment of policyclaims obligations in the normal course of events, notwithstanding the groundsalleged in support of the order of liquidation, including the ground ofinsolvency. In the event the defendant company's financial condition will not,in the judgment of the commissioner, support the full performance of all policyclaims obligations during the appeal pendency period, the plan may prefer theclaims of certain policyholders and claimants over creditors and interestedparties and other policyholders and claimants, as the commissioner finds to befair and equitable considering the relative circumstances of the policyholdersand claimants. The court shall examine the plan submitted by the commissionerand if it finds the plan to be in the best interests of the parties, the courtshall approve the plan. No action shall lie against the commissioner or any ofhis or her deputies, agents, clerks, assistants, or attorneys by any partybased on preference in an appeal pendency plan approved by the court.

   (g) The appeal pendency plan shall not supersede or affectthe obligations of any insurance guaranty association.

   (h) Any appeal pendency plan shall provide for equitableadjustments to be made by the liquidator to any distributions of assets toguaranty associations, in the event that the liquidator pays claims from theassets of the estate, which would be the obligations of any particular guarantyassociation but for the appeal of the order of liquidation, so that allguaranty associations equally benefit on a pro rata basis from the assets ofthe estate. In the event an order of liquidation is set aside upon any appeal,the company shall not be released from delinquency proceedings unless and untilall funds advanced by any guaranty association, including reasonableadministrative expenses in connection with the proceedings relating toobligations of the company, shall be repaid in full, together with interest atthe judgment rate of interest or unless an arrangement for repayment has beenmade with the consent of all applicable guaranty associations.