40-3315. Liquidation or rehabilitation of insurer; what is recoverable by receiver.
40-3315
40-3315. Liquidation or rehabilitation of insurer; what is recoverable byreceiver.(a) If an order for liquidation or rehabilitation of adomestic insurer has been entered, the receiver appointed under such ordershall have a right to recover on behalf of the insurer:
(1) From any parent corporation or holding company or person or affiliatewho otherwise controlled the insurer, the amount of distributions, other thandistributions of shares of the same class of stock, paid by the insurer on itscapital stock; or
(2) any payment in the form of a bonus, termination settlement orextraordinary lump-sum salary adjustment made by the insurer or its subsidiaryor subsidiaries to a director, officer or employee, where the distribution orpayment pursuant to paragraph (1) or this paragraph (2) is made at any timeduring the oneyear preceding the petition for liquidation, conservation or rehabilitation, asthe case may be, subject to the limitations of subsections (b), (c) and (d).
(b) No such distribution shall be recoverable if the parent or affiliateshows that when paid such distribution was lawful and reasonable, and that theinsurer did not know and could not reasonably have known that such distributionmight adversely affect the ability of the insurer to fulfill such insurer'scontractualobligations.
(c) Any person who was a parent corporation or holding company or a personwho otherwise controlled the insurer or affiliate at the time suchdistributions were paid shall be liable up to the amount of distributions orpayments under subsection (a) such person received. Any person who otherwisecontrolled the insurer at the time such distributions were declared shall beliable up to the amount of distributions such person would have received ifthey had been paid immediately. If two or more persons are liable with respectto the same distributions, they shall be jointly and severally liable.
(d) The maximum amount recoverable under this subsection shall be the amountneeded in excess of all other available assets of the impaired or insolventinsurer to pay the contractual obligations of the impaired or insolvent insurerand to reimburse any guaranty funds.
(e) To the extent that any person liable under subsection (c) is insolventor otherwise fails to pay claims due from such person pursuant to suchparagraph, such person'sparent corporation or holding company or person who otherwise controlled it atthe time the distribution was paid, shall be jointly and severally liable forany resulting deficiency in the amount recovered from such parent corporationor holding company or person who otherwise controlled such person.
History: L. 1991, ch. 138, § 3; July 1.