§ 27-14.3-31 - Fraudulent transfer after petition. - Rhode Island Statutes

SECTION 27-14.3-31

   § 27-14.3-31  Fraudulent transfer afterpetition. – (a) After a petition for rehabilitation or liquidation has been filed, atransfer of any of the real property of the insurer made to a person acting ingood faith shall be valid against the receiver if made for a present fairequivalent value or, if not made for a present fair equivalent value, then tothe extent of the present consideration actually paid for it, for the amountthe transferee shall have a lien on the transferred property. The commencementof a proceeding in rehabilitation or liquidation shall be constructive noticeupon the recording of a copy of the petition for or order of rehabilitation orliquidation with the recorder of deeds in the city or town where any realproperty in question is located. The exercise by a court of the United Statesor any state or jurisdiction to authorize or effect a judicial sale of realproperty of the insurer within any county in any state shall not be impaired bythe pendency of a proceeding unless the copy is recorded in the county prior tothe consummation of the judicial sale.

   (b) After a petition for rehabilitation or liquidation hasbeen filed and before either the receiver takes possession of the property ofthe insurer or an order of rehabilitation or liquidation is granted:

   (1) A transfer of any of the property of the insurer, otherthan real property, made to a person acting in good faith shall be validagainst the receiver if made for a present fair equivalent value or, if notmade for a present fair equivalent value, then valid to the extent of thepresent consideration actually paid for it, for the amount the transferee shallhave a lien on the transferred property;

   (2) A person indebted to the insurer or holding property ofthe insurer may, if acting in good faith, pay the indebtedness or deliver theproperty, or any part of the property, to the insurer or upon his or her order,with the same effect as if the petition were not pending;

   (3) A person having actual knowledge of the pendingrehabilitation or liquidation shall be deemed not to act in good faith; and

   (4) A person asserting the validity of a transfer under thissection shall have the burden of proof. Except as provided in this section, notransfer by or on behalf of the insurer after the date of the petition forliquidation by any person other than the liquidator shall be valid against theliquidator.

   (c) Every person receiving any property from the insurer orany benefit of the property which is a fraudulent transfer under subsection (a)of this section shall be personally liable for it and shall be bound to accountto the liquidator.

   (d) Nothing in this chapter shall impair the negotiability ofcurrency or negotiable instruments.