38.2-1509 - Powers of Commission when authorized to rehabilitate or liquidate insurers by court order; disbursement of available assets to an association, etc.
§ 38.2-1509. Powers of Commission when authorized to rehabilitate orliquidate insurers by court order; disbursement of available assets to anassociation, etc.
A. Whenever the Commission is authorized by order of the Circuit Court of theCity of Richmond to rehabilitate or liquidate any domestic insurer other thanan insurer writing exclusively title, fidelity and surety, credit or oceanmarine insurance, the Commission shall disburse the assets as they becomeavailable to an association. Disbursal shall not be made until an applicationhas been filed with the Commission by an association for an insolventinsurer's available assets.
B. The Commission shall disburse the assets of an insolvent insurer as theybecome available in the following manner:
1. Pay, after reserving for the payment of the costs and expenses ofadministration, according to the following priorities: (i) claims of securedcreditors with a perfected security interest not voidable under § 38.2-1513to the extent of the value of their security, (ii) claims of the associationsfor "covered claims" and "contractual obligations" as defined in §§38.2-1603 and 38.2-1701 and claims of other policyholders arising out ofinsurance contracts apportioned without preference, (iii) taxes owed to theUnited States and other debts owed to any person, including the UnitedStates, which by the laws of the United States are entitled to priority, (iv)wages entitled to priority as provided in § 38.2-1514, and (v) othercreditors; and
2. Equitably allocate disbursements to each of the entitled associations; and
3. Secure an agreement from each of the entitled associations requiring thereturn to the Commission of any assets previously disbursed to theassociation required to pay claims entitled to priority in subdivision 1 ofthis subsection. No bond shall be required of any entitled association; and
4. Require a full report to be made by the association to the Commissionaccounting for all assets disbursed to the association, all disbursementsmade from these assets, any interest earned on these assets and any othermatter as the Commission may require.
C. The Commission shall provide for disbursements to the association in anamount estimated at least equal to the claim payments made or to be made bythe association for which the association could assert a claim against theCommission. In addition, the Commission shall provide that if the assetsavailable for disbursement do not equal or exceed the amount of claimpayments made or to be made by the associations, then disbursements shall bein the amount of available assets.
D. The Commission shall notify the affected associations and thecommissioners of insurance in the other states of any disbursement madeaccording to this section. The notice shall be deemed given when sent bycertified mail at least thirty days prior to disbursement.
(1978, c. 696, § 38.1-133.1; 1979, c. 385; 1986, c. 562; 1996, c. 81.)