40-3633. Mutual debts and mutual credits; setoff; accounting statements; debts currently due and payable.
40-3633
40-3633. Mutual debts and mutual credits; setoff; accounting statements;debts currently due and payable.(a) Mutual debts or mutual credits whether arising out of oneor more contracts between the insurer andanotherperson in connection with any action or proceeding under this act, shall besetoffand the balance only shall be allowed or paid, except as provided insubsections (b) and (c) of this section.
(b) No setoff, except as provided in K.S.A. 40-3602, and amendments thereto,shall be allowed in favor of any person where:
(1) The obligation of the insurer to the person would not at the date of thefiling of a petition for liquidation entitle the person to share as a claimantin the assets of the insurer;
(2) the obligation of the insurer to the person was purchased by ortransferred to the person with a view to its being used as a setoff;
(3) the obligation of the insurer is owed to an affiliate of such person, orany other entity or association other than the person;
(4) the obligation of the person is owed to an affiliate of the insurer, orany other entity or association other than the insurer;
(5) the obligations of the person is to pay an assessment levied against themembers or subscribers of the insurer, or is to pay a balance upon asubscription to the capital stock of the insurer, or is in any other way in thenature of a capital contribution; or
(6) the obligations between the person and the insurer ariseout of transactions where either the person or the insurer has assumed risksand obligations from the other party and then has ceded back to that partysubstantially the same risks and obligations.
(c) The receiver shall provide persons with accounting statementsidentifying debts which are currently due and payable. Accounts currently dueand payable as identified by such accounting statements shall be promptly paidto the receiver. However, persons making such payments may setoff against suchpayments mutual credits currently due and payable by the insurer and may assertsetoff of mutual credits which become due and payable from the insurer in thefuture. Notwithstanding K.S.A. 40-3641, the receiver shall promptlyand fully refund to the extent of the person's prior payments any mutualcredits so asserted that may become due and payable to the person by theinsurer.
(d) This section shall apply to all contracts entered into, renewed,extended or amended on or after the effective date of this act.
History: L. 1991, ch. 125, § 29; July 1.