31A-27a-505 - Avoidance of property title transfers.
31A-27a-505. Avoidance of property title transfers.
(1) The rehabilitator or liquidator has the creditor's rights described in this Subsection(1), without regard to any knowledge of the rehabilitator or liquidator or any creditor.
(a) (i) The rehabilitator or liquidator is considered to:
(A) have extended credit to the insurer on the day on which the rehabilitation orliquidation petition is filed; and
(B) have obtained on the day described in Subsection (1)(a)(i) a judicial lien on all theinsurer's property on which a creditor under a contract could obtain a judicial lien.
(ii) The rehabilitator or liquidator:
(A) may avoid a transfer that would be avoidable by the type of creditor described in thisSubsection (1)(a); and
(B) has all the other rights and powers of the type of creditor described in this Subsection(1)(a).
(b) (i) The rehabilitator or liquidator is considered to:
(A) have extended credit to the insurer on the day on which the rehabilitation orliquidation petition filed; and
(B) have obtained on the day described in this Subsection (1)(b)(i), with respect to thatcredit extension, an execution against the insurer on that same date that is returned unsatisfied.
(ii) The rehabilitator or liquidator:
(A) may avoid a transfer that would be avoidable by the type of creditor described in thisSubsection (1)(b); and
(B) has all the other rights and powers of the type of creditor described in this Subsection(1)(b).
(c) The rehabilitator or liquidator:
(i) is considered to be a bona fide purchaser of the insurer's real property on the day onwhich the rehabilitation or liquidation petition is filed; and
(ii) has the rights and powers of a bona fide purchaser to avoid other transfers of theinsurer's realty.
(2) (a) The rehabilitator or liquidator may avoid a transfer of an interest of the insurer inproperty or an obligation incurred by the insurer that is voidable under applicable law by acreditor holding an unsecured claim.
(b) This Subsection (2) does not apply to secured claims.
(3) (a) Except as provided in Subsections (3)(b) and (c), the rehabilitator or liquidatormay avoid a transfer of property of the estate that:
(i) occurs after the day on which the petition for rehabilitation or liquidation is filed; and
(ii) is not authorized under this chapter or by the court.
(b) (i) Subject to Subsection (3)(b)(ii), a transfer is valid against the rehabilitator orliquidator to the extent of any value, including services if it occurs:
(A) after the day on which the petition is filed; and
(B) before the day on which the order for rehabilitation or liquidation is entered.
(ii) The value described in Subsection (3)(b)(i) does not include the satisfaction orsecuring of a debt:
(A) that arises before the day on which the petition is filed;
(B) which is given after the date described in this Subsection (3)(b) in exchange for thetransfer; and
(C) notwithstanding the transferee's knowledge or lack of knowledge of the petition.
(c) (i) Subject to Subsection (3)(c)(ii), the rehabilitator or liquidator may not avoid atransfer of real property under Subsection (3)(a) to:
(A) a good faith purchaser:
(I) if the good faith purchaser is without knowledge of the petition for rehabilitation orliquidation; and
(II) for present fair consideration; or
(B) a purchaser at a judicial sale.
(ii) Notwithstanding Subsection (3)(c)(i), the rehabilitator or liquidator may avoid atransfer of real property under Subsection (3)(a) if a copy of the petition is filed in the office ofthe county recorder before the transfer is so far perfected that a bona fide purchaser of theproperty against whom applicable law permits that type of transfer to be perfected cannot acquirean interest that is superior to the interest of the good faith purchaser or judicial sale purchaser.
(iii) Unless a copy of the petition is filed before the transfer is perfected, a good faithpurchaser of real property under a transfer which the rehabilitator or liquidator may avoid underthis section has a lien on the property transferred:
(A) if the good faith purchaser:
(I) is without knowledge of the petition for rehabilitation or liquidation at the time of thetransfer; and
(II) pays less than present fair consideration; and
(B) to the extent of the present consideration given.
(4) An action or proceeding under Subsection (1) or (2) may not be commenced after theearlier of:
(a) two years after the day on which a rehabilitator is appointed under Section31A-27a-301 or a liquidator is appointed under Section 31A-27a-401; or
(b) the day on which the rehabilitation is terminated under Subsection 31A-27a-304(3) orthe liquidation is terminated under Section 31A-27a-802.
(5) An action or proceeding under Subsection (3) may not be commenced after the earlierof:
(a) two years after the day on which the transfer sought to be avoided is made; or
(b) the day on which the rehabilitation is terminated under Subsection 31A-27a-304(3) orthe liquidation is terminated under Section 31A-27a-802.
Enacted by Chapter 309, 2007 General Session