56-9-316 - Transfers of property after filing of petition for rehabilitation or liquidation Effect. - Tennessee Statutes

56-9-316. Transfers of property after filing of petition for rehabilitation or liquidation Effect.

(a)  (1)  After a petition for rehabilitation or liquidation has been filed, a transfer of any of the real property of the insurer made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value, or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred.

     (2)  The commencement of a proceeding in rehabilitation or liquidation shall be constructive notice upon the recording of a copy of the petition for or order of rehabilitation or liquidation with the recorder of deeds in the county where any real property in question is located.

     (3)  The exercise by a court of the United States or any state or jurisdiction to authorize or effect a judicial sale of real property of the insurer within any county in any state shall not be impaired by the pendency of such a proceeding unless the copy is recorded in the county prior to the consummation of the judicial sale.

(b)  (1)  After a petition for rehabilitation or liquidation has been filed, and before either the receiver takes possession of the property of the insurer or an order of rehabilitation or liquidation is granted:

          (A)  A transfer of any of the property of the insurer, other than real property, made to a person acting in good faith is valid against the receiver if made for a present fair equivalent value, or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred;

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

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

          (D)  A person asserting the validity of a transfer under this section has the burden of proof.

     (2)  Except as elsewhere provided in this section, no transfer by or on behalf of the insurer after the date of the petition for liquidation by any person other than the liquidator shall be valid against the liquidator.

(c)  Every person receiving any property from the insurer or any benefit that is a fraudulent transfer under subsection (a) is personally liable therefor and is bound to account to the liquidator.

(d)  Nothing in this chapter impairs the negotiability of currency or negotiable instruments.

[Acts 1991, ch. 142, § 4.]