Sec. 38a-905. (Formerly Sec. 38-423). Definitions.
Sec. 38a-907. (Formerly Sec. 38-425). Injunctions, orders and stays. Exception.
Sec. 38a-928. (Formerly Sec. 38-446). Fraudulent transfers prior to petition.
Sec. 38a-930. (Formerly Sec. 38-448). Voidable preferences and liens. Exceptions.
Sec. 38a-905. (Formerly Sec. 38-423). Definitions. For the purposes of sections 38a-903 to 38a-961, inclusive, and section 38a-963:
(1) “Alien insurer domiciled in this state” means a United States branch.
(2) “Ancillary state” means any state other than a domiciliary state.
(3) “Commissioner” means the Insurance Commissioner.
(4) “Commodity contract” means: (A) A contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a board of trade designated as a contract market by the Commodity Futures Trading Commission under the Commodity Exchange Act (7 USC 1 et seq.) or board of trade outside the United States; (B) an agreement that is subject to regulation under Section 19 of the Commodity Exchange Act (7 USC 1, et seq.) and that is commonly known to the commodities trade as a margin account, margin contract, leverage account or leverage contract; or (C) an agreement or transaction that is subject to regulation under section 4c(b) of the Commodity Exchange Act (7 USC 1 et seq.) and that is commonly known to the commodities trade as a commodity option.
(5) “Creditor” means a person having any claim, whether matured or unmatured, liquidated or unliquidated, secured or unsecured, absolute, fixed or contingent.
(6) “Delinquency proceeding” means any proceeding instituted against an insurer for the purpose of liquidating, rehabilitating, reorganizing or conserving such insurer, and any summary proceeding under section 38a-912. “Formal delinquency proceeding” means any liquidation or rehabilitation proceeding.
(7) “Doing business”, “doing insurance business” and the “business of insurance”, includes any of the following acts, whether effected by mail or otherwise: (A) The issuance or delivery of contracts of insurance, either to persons resident in or covering a risk located in this state; (B) the solicitation of applications for such contracts or other negotiations preliminary to the execution of such contracts; (C) the collection of premiums, membership fees, assessments or other consideration for such contracts; (D) the transaction of matters subsequent to execution of such contracts and arising out of them; or (E) operating under a license or certificate of authority, as an insurer, issued by the Insurance Department.
(8) “Domiciliary state” means the state in which an insurer is incorporated or organized, or, in the case of an alien insurer, its state of entry.
(9) “Fair consideration” is given for property or obligation: (A) When in exchange for such property or obligation, as a fair equivalent therefor, and in good faith, property is conveyed or services are rendered or an obligation is incurred or an antecedent debt is satisfied; or (B) when such property or obligation is received in good faith to secure a present advance or antecedent debt in an amount not disproportionately small as compared to the value of the property or obligation obtained.
(10) “Foreign country” has the same meaning as provided in section 38a-1.
(11) “Forward contract” means a contract, other than a commodity contract, for the purchase, sale or transfer of a commodity, as defined in Section 1 of the Commodity Exchange Act (7 USC 1 et seq.), or any similar good, article, service, right or interest that is presently or in the future becomes the subject of dealing in the forward contract trade, or product or by-product thereof, with a maturity date more than two days after the date the contract is entered into, including, but not limited to, a repurchase transaction, reverse repurchase transaction, unallocated hedge transaction, deposit, loan, option, allocated transaction or a combination of these or option on any of them.
(12) “General assets” includes all property, real, personal or otherwise, not specifically mortgaged, pledged, deposited or otherwise encumbered for the security or benefit of specified persons or classes of persons. As to specifically encumbered property, “general assets” includes all such property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. Assets held in trust and on deposit for the security or benefit of all policyholders or all policyholders and creditors, in more than a single state, shall be treated as general assets.
(13) “Guaranty association” means the Connecticut Insurance Guaranty Association established pursuant to sections 38a-836 to 38a-853, inclusive, the Connecticut Life and Health Insurance Guaranty Association established pursuant to sections 38a-858 to 38a-875, inclusive, and any other similar entity created by the General Assembly for the payment of claims of insolvent insurers. “Foreign guaranty association” means any similar entities created by the legislature of any other state.
(14) “Insolvency” and “insolvent” have the same meanings as provided in section 38a-1.
(15) “Insurer” means any person who has done, purports to do, is doing or is licensed to do an insurance business, and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization, supervision or conservation by, any insurance commissioner. For purposes of sections 38a-903 to 38a-961, inclusive, any other persons included under section 38a-904 shall be deemed to be insurers.
(16) “Netting agreement” means a contract or agreement, including terms and conditions incorporated by reference therein, including a master agreement, which master agreement, together with all schedules, confirmations, definitions and addenda thereto and transactions under any thereof, shall be treated as one netting agreement, that (A) documents one or more transactions between the parties to the agreement for or involving one or more qualified financial contracts and (B) provides for the netting or liquidation of qualified financial contracts or present or future payment obligations or payment entitlements thereunder, including liquidation or closeout values relating to such obligations or entitlements, among the parties to the netting agreement.
(17) “Preferred claim” means any claim with respect to which the terms of sections 38a-903 to 38a-961, inclusive, accord priority of payment from the general assets of the insurer.
(18) “Qualified financial contract” means a commodity contract, forward contract, repurchase agreement, securities contract, swap agreement and any similar agreement that the commissioner determines to be a qualified financial contract for the purposes of this chapter.
(19) “Receiver” means receiver, liquidator, rehabilitator or conservator, as the context requires.
(20) “Reciprocal state” means any state other than this state in which in substance and effect sections 38a-920, 38a-954, 38a-955 and 38a-957 to 38a-959, inclusive, are in force and in which provisions are in force, requiring that the commissioner or equivalent official be the receiver of a delinquent insurer and in which some provision exists for the avoidance of fraudulent conveyances and preferential transfers.
(21) “Repurchase agreement” and “reverse repurchase agreement” mean an agreement, including related terms, that provides for the transfer of certificates of deposit, eligible bankers' acceptances, or securities that are direct obligations of, or that are fully guaranteed as to principal and interest by, the United States or an agency of the United States against the transfer of funds by the transferee of the certificates of deposit, eligible bankers' acceptances or securities with a simultaneous agreement by the transferee to transfer to the transferor certificates of deposit, eligible bankers' acceptances or securities as described in this subdivision, at a date certain not later than one year after the transfers or on demand, against the transfer of funds. For the purposes of this subdivision, the items that may be subject to an agreement include mortgage-related securities, a mortgage loan, and an interest in a mortgage loan, and shall not include any participation in a commercial mortgage loan, unless the commissioner determines to include the participation within the meaning of the term.
(22) “Secured claim” means any claim secured by an asset that is not a general asset. “Secured claim” also includes claims which have become liens upon specific assets by reason of judicial process prior to four months before the commencement of delinquency proceedings. “Secured claim” does not include a special deposit claim or a claim arising from a constructive or resulting trust.
(23) “Securities contract” means a contract for the purchase, sale or loan of a security, including an option for the repurchase or sale of a security, certificate of deposit, or group or index of securities, including an interest therein or based on the value thereof, or an option entered into on a national securities exchange relating to foreign currencies, or the guarantee of a settlement of cash or securities by or to a securities clearing agency. For the purposes of this subdivision, “security” includes a mortgage loan, mortgage-related securities, and an interest in any mortgage loan or mortgage-related security.
(24) “Special deposit claim” means any claim secured by a deposit made pursuant to a state statute for the security or benefit of a limited class or classes of persons, but does not include any claim secured by general assets.
(25) “State” has the same meaning as provided in section 38a-1.
(26) “Swap agreement” means an agreement, including the terms and conditions incorporated by reference in an agreement, that is a rate swap agreement, basis swap, commodity swap, forward rate agreement, interest rate future, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap agreement, rate floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency future, or currency option or any other similar agreement, and includes any combination of agreements and an option to enter into an agreement.
(27) “Transfer” includes the sale and every other and different mode, direct or indirect, of disposing of or of parting with property or with an interest therein, or with the possession thereof or of fixing a lien upon property or upon an interest therein, absolutely or conditionally, voluntarily, by or without judicial proceedings. The retention of a security title to property delivered to a debtor shall be deemed a transfer suffered by the debtor.
(28) “United States branch” has the same meaning as provided in section 38a-58b.
(P.A. 79-382, S. 3; P.A. 80-482, S. 3, 4, 345, 348; P.A. 90-243, S. 164; P.A. 92-93, S. 3; P.A. 98-214, S. 3; P.A. 03-199, S. 7; P.A. 14-123, S. 24; P.A. 25-87, S. 9.)
History: P.A. 80-482 abolished the department of business regulation and restored its division of insurance as an independent department (as it was prior to creation of business regulation department in P.A. 77-614), thus allowing omission of reference to business regulation department in insurance commissioner's title; P.A. 90-243 amended the definitions for “foreign country”, “insolvency” and “insolvent”; Sec. 38-423 transferred to Sec. 38a-905 in 1991; P.A. 92-93 made technical corrections for statutory consistency; P.A. 98-214 changed definition designators from Subsecs. to Subdivs., added definitions for “commodity contract”, “forward contract”, “netting agreement”, “qualified financial contract”, “'repurchase agreement' and ‘reverse repurchase agreement'”, “securities contract” and “swap agreement”, amended the definition of “doing business” to apply definition to the terms “doing insurance business” and the “business of insurance” and to include contracts of insurance covering a risk located in this state, amended the definition of “general assets” to substitute “includes” for “means”, amended definition of “guaranty association” to delete “now or hereafter created” and similar phrase and to substitute “General Assembly” for “legislature of this state”, amended definition of “secured claim” to replace existing definition with new definition, and made technical changes; P.A. 03-199 redefined “swap agreement” in Subdiv. (25); P.A. 14-123 added new Subdiv. (1) re definition of “alien insurer domiciled in this state”, redesignated existing Subdivs. (1) to (23) as Subdivs. (2) to (24), deleted former Subdiv. (24) and added new Subdiv. (25) re definition of “state”, redesignated existing Subdivs. (25) and (26) as Subdivs. (26) and (27), added Subdiv. (28) re definition of “United States branch” and made technical changes, effective June 6, 2014; P.A. 25-87 added reference to Sec. 38a-963 in introductory language.
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Sec. 38a-907. (Formerly Sec. 38-425). Injunctions, orders and stays. Exception. (a) The conservation, rehabilitation and liquidation of insurance companies and other persons subject to the provisions of sections 38a-903 to 38a-961, inclusive, are a matter of vital public interest and affect the relationships between insureds and their insurers.
(1) Except as provided in subsection (c) of this section, an application or petition under sections 38a-912, 38a-914, 38a-915, 38a-918, 38a-919 and 38a-920, shall operate as an automatic stay applicable to all persons, other than the receiver, which shall be permanent and survive the entry of an order of conservation, rehabilitation or liquidation, and which shall prohibit: (A) The transaction of further business; (B) the transfer of property; (C) interference with the receiver or with a proceeding under said sections; (D) waste of the insurer's assets; (E) dissipation and transfer of bank accounts; (F) the institution or further prosecution of any actions or proceedings in which the insurer is a party; (G) the obtaining of preferences, judgments, attachments, garnishments, or liens against the insurer, its assets or its policyholders; (H) the levying of execution against the insurer, its assets, or its policyholders; (I) the making of any sale or deed for nonpayment of taxes or assessments that would lessen the value of the assets of the insurer; (J) the withholding from the receiver of books, accounts, documents, or other records relating to the business of the insurer; or (K) any other threatened or contemplated action that might lessen the value of the insurer's assets or prejudice the rights of policyholders, creditors, or shareholders, or the administration of any proceeding under said sections.
(2) Notwithstanding any other provision of law, no bond shall be required of the commissioner as a prerequisite for the issuance of any injunction or restraining order pursuant to this section.
(3) Upon motion of a person subject to the stay, the court, after notice to the receiver and a hearing, may modify or grant relief from the stay, provided said person shall have the burden of proof and shall establish by clear and convincing evidence that such relief should be granted.
(4) All matters that may be stayed, enjoined or barred under this section and all matters involving its interpretation or operation shall remain within the exclusive jurisdiction of the domiciliary receivership court.
(b) The receiver may apply to any court outside of the state for the relief described in subsection (a) of this section.
(c) Notwithstanding the provisions of subsections (a) and (b) of this section or any other provision of this chapter, no person, for a period of not more than ten business days from the date of an order instituting a delinquency proceeding, whether formal, informal, administrative or judicial, shall be stayed, enjoined or barred from exercising or enforcing any right or cause of action under any pledge, security, credit, collateral, loan, advance, reimbursement or guarantee agreement or arrangement or any similar agreement or arrangement or other credit enhancement to which a Federal Home Loan Bank, as defined in 12 USC 1422, as amended from time to time, is a party.
(P.A. 79-382, S. 5; P.A. 98-214, S. 4; P.A. 25-87, S. 10.)
History: Sec. 38-425 transferred to Sec. 38a-907 in 1991; P.A. 98-214 amended Subsec. (a) to replace introductory language authorizing restraining orders and injunctions with language re the vital public interest in the conservation, rehabilitation and liquidation of insurance companies, et al., inserted introductory language following Subdiv. (a)(1) designator concerning the operation of, and prohibitions under, applications or petitions, redesignated former Subdivs. as Subparas., limited newly designated Subsec. (a)(1)(F) to actions or proceedings in which the insurer is a party and added new Subdivs. (2) to (4), inclusive, re bonds, relief from stay and jurisdiction, respectively; P.A. 25-87 amended Subsec. (a)(1) to add “Except as provided in subsection (c) of this section,” and added Subsec. (c) re exception to automatic stay when a Federal Home Loan Bank is a party.
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Sec. 38a-928. (Formerly Sec. 38-446). Fraudulent transfers prior to petition. (a) Every transfer made or suffered and every obligation incurred by an insurer within one year prior to the filing of a successful petition for rehabilitation or liquidation under sections 38a-903 to 38a-961, inclusive, is fraudulent as to then existing and future creditors if made or incurred without fair consideration, or with the intent to hinder, delay, or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under said sections, which is fraudulent under this section, may be avoided by the receiver, except as to a person who in good faith is a purchaser, lienor, or obligee for a present fair equivalent value, and except that any purchaser, lienor, or obligee, who in good faith has given a consideration less than fair for such transfer, lien, or obligation, may retain the property, lien or obligation as security for repayment. The court may, on due notice, order any such transfer or obligation to be preserved for the benefit of the estate, and in that event, the receiver shall succeed to and may enforce the rights of the purchaser, lienor, or obligee.
(b) (1) A transfer of property other than real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee under subsection (c) of section 38a-930.
(2) A transfer of real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee.
(3) A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created.
(4) Any transfer not perfected prior to the filing of a petition for liquidation shall be deemed to be made immediately before the filing of the successful petition.
(5) The provisions of this subsection apply whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers.
(c) Any transaction of the insurer with a reinsurer shall be deemed fraudulent and may be avoided by the receiver under subsection (a) of this section if: (1) The transaction consists of the termination, adjustment, or settlement of a reinsurance contract in which the reinsurer is released from any part of its duty to pay the originally specified share of losses that had occurred prior to the time of the transaction, unless the reinsurer gives a present fair equivalent value for the release; and (2) any part of the transaction took place within one year prior to the date of filing of the petition through which the receivership was commenced.
(d) Any person receiving property from the insurer or any benefit thereof which is a fraudulent transfer under subsection (a) of this section shall be personally liable therefor and shall be bound to account to the liquidator.
(e) Notwithstanding the provisions of subsections (a) to (d), inclusive, of this section or any other provision of this chapter, no receiver or any other person shall avoid any transfer or obligation that arises under or in connection with any pledge, security, credit, collateral, loan, advance, reimbursement or guarantee agreement or arrangement or any similar agreement or arrangement or other credit enhancement to which a Federal Home Loan Bank, as defined in 12 USC 1422, as amended from time to time, is a party, that is made, suffered or incurred prior to or after the filing of a successful petition for rehabilitation or liquidation under sections 38a-903 to 38a-961, inclusive. Such transfer or obligation may be avoided by the receiver or other person if such transfer or obligation was made, suffered or incurred with the intent to hinder, delay or defraud the insurer, the receiver or existing or future creditors.
(P.A. 79-382, S. 26; P.A. 92-93, S. 20; P.A. 25-87, S. 11.)
History: Sec. 38-446 transferred to Sec. 38a-928 in 1991; P.A. 92-93 added new Subsec. (d) re personal liability to liquidator for receipt of property and made technical corrections for statutory consistency; P.A. 25-87 amended Subsec. (a) to replace “actual” with “the” and added Subsec. (e) re receiver or person prohibited from avoiding transfer or obligation considered fraudulent where Federal Home Loan Bank is a party, unless transfer or obligation made, suffered or incurred with intent to hinder, delay or defraud.
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Sec. 38a-930. (Formerly Sec. 38-448). Voidable preferences and liens. Exceptions. (a)(1) A preference is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the insurer within one year before the filing of a successful petition for liquidation under sections 38a-903 to 38a-961, inclusive, the effect of which transfer may be to enable the creditor to obtain a greater percentage of this debt than another creditor of the same class would receive. If a liquidation order is entered while the insurer is already subject to a rehabilitation order, then such transfers shall be deemed preferences if made or suffered within one year before the filing of the successful petition for rehabilitation, or within two years before the filing of the successful petition for liquidation, whichever time is shorter.
(2) Except as provided in subdivision (5) of this subsection, any preference may be avoided by the liquidator if: (A) The insurer was insolvent at the time of the transfer; (B) the transfer was made within four months before the filing of the petition; (C) the creditor receiving it or to be benefited thereby or such creditor's agent acting with reference thereto had, at the time when the transfer was made, reasonable cause to believe that the insurer was insolvent or was about to become insolvent; or (D) the creditor receiving it was an officer, or any employee or attorney or other person who was in fact in a position of comparable influence in the insurer to an officer whether or not such employee, attorney or other person held such position, or any shareholder holding directly or indirectly more than five per cent of any class of any equity security issued by the insurer, or any other person, firm, corporation, association, or aggregation of persons with whom the insurer did not deal at arm's length.
(3) Where the preference is voidable, the liquidator may recover the property, or if it has been converted, its value from any person who has received or converted the property, except where a bona fide purchaser or lienor has given less than fair equivalent value, such purchaser or lienor shall have a lien upon the property to the extent of the consideration actually given by such purchaser or lienor. Where a preference by way of lien or security title is voidable, the court may on due notice order the lien or title to be preserved for the benefit of the estate, in which event the lien or title shall pass to the liquidator.
(4) Notwithstanding subdivisions (1) to (3), inclusive, of this subsection, a transfer pursuant to a commutation of a reinsurance agreement that is approved by the commissioner or the commissioner's designated appointee under section 38a-962d shall not be voidable as a preference. For the purposes of this subdivision, a commutation of a reinsurance agreement is the elimination of all present and future obligations between the parties, arising from the reinsurance agreement, in exchange for a current consideration.
(5) Notwithstanding the provisions of subdivision (2) of this subsection or any other provision of this chapter, no preference that arises under or in connection with any pledge, security, credit, collateral, loan, advance, reimbursement or guarantee agreement or arrangement or any similar agreement or arrangement or other credit enhancement to which a Federal Home Loan Bank, as defined in 12 USC 1422, as amended from time to time, is a party shall be avoided by the liquidator or any other person.
(b) (1) A transfer of property other than real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee.
(2) A transfer of real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee.
(3) A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created.
(4) A transfer not perfected prior to the filing of a petition for liquidation shall be deemed to be made immediately before the filing of the successful petition.
(5) The provisions of this subsection apply whether or not there are or were creditors who might have obtained liens or persons who might have become bona fide purchasers.
(c) (1) A lien obtainable by legal or equitable proceedings upon a simple contract is one arising in the ordinary course of such proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution, or like process, whether before, upon, or after judgment or decree and whether before or upon levy. It does not include liens which under applicable law are given a special priority over other liens which are prior in time.
(2) A lien obtainable by legal or equitable proceedings could become superior to the rights of a transferee, or a purchaser could obtain rights superior to the rights of a transferee within the meaning of subsection (b) of this section, if such consequences would follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. Such a lien could not, however, become superior and such a purchase could not create superior rights for the purpose of subsection (b) of this section through any acts subsequent to the obtaining of such a lien or subsequent to such a purchase which require the agreement or concurrence of any third party or which require any further judicial action, or ruling.
(d) A transfer of property for or on account of a new and contemporaneous consideration which is deemed under subsection (b) of this section to be made or suffered after the transfer because of delay in perfecting it does not thereby become a transfer for or on account of an antecedent debt if any acts required by the applicable law to be performed in order to perfect the transfer as against liens or bona fide purchasers' rights are performed within twenty-one days or any period expressly allowed by the law, whichever is less. A transfer to secure a future loan, if such a loan is actually made, or a transfer which becomes security for a future loan, shall have the same effect as a transfer for or on account of a new and contemporaneous consideration.
(e) If any lien deemed voidable under subdivision (2) of subsection (a) of this section has been dissolved by the furnishing of a bond or other obligation, the surety on which has been indemnified directly or indirectly by the transfer of or the creation of a lien upon any property of an insurer before the filing of a petition under sections 38a-903 to 38a-961, inclusive, which results in a liquidation order, the indemnifying transfer or lien shall also be deemed voidable.
(f) The property affected by any lien deemed voidable under subsections (a) and (e) of this section shall be discharged from such lien, and that property and any of the indemnifying property transferred to or for the benefit of a surety shall pass to the liquidator, except that the court may on due notice order any such lien to be preserved for the benefit of the estate and the court may direct that such conveyance be executed as may be proper or adequate to evidence the title of the liquidator.
(g) The Superior Court shall have summary jurisdiction of any proceeding by the liquidator to hear and determine the rights of any parties under this section. Reasonable notice of any hearing in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other like obligation. Where an order is entered for the recovery of indemnifying property in kind or for the avoidance of an indemnifying lien, the court, upon application of any party in interest, shall in the same proceeding ascertain the value of the property or lien, and if the value is less than the amount for which the property is indemnity or than the amount of the lien, the transferee or lienholder may elect to retain the property or lien upon payment of its value, as ascertained by the court, to the liquidator, within such reasonable times as the court shall fix.
(h) The liability of a surety under a releasing bond or other like obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and avoided by the liquidator, or where the property is retained under subsection (g) of this section to the extent of the amount paid to the liquidator.
(i) If a creditor has been preferred, and afterward in good faith gives the insurer further credit without security of any kind, for property which becomes a part of the insurer's estate, the amount of the new credit remaining unpaid at the time of the petition may be set off against the preference which would otherwise be recoverable from him.
(j) If an insurer, directly or indirectly, within four months before the filing of a successful petition for liquidation under sections 38a-903 to 38a-961, inclusive, or at any time in contemplation of a proceeding to liquidate it, pays money or transfers property to an attorney-at-law for services rendered or to be rendered, the transaction may be examined by the court on its own motion or shall be examined by the court on petition of the liquidator and shall be held valid only to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the liquidator for the benefit of the estate, provided if the attorney is in a position of influence in the insurer or an affiliate thereof payment of any money or the transfer of any property to the attorney-at-law for services rendered or to be rendered shall be governed by the provisions of subdivision (2) of subsection (a) of this section.
(k) (1) Every officer, manager, employee, shareholder, member, subscriber, attorney, or any other person acting on behalf of the insurer who knowingly participates in giving any preference when he has reasonable cause to believe the insurer is or is about to become insolvent at the time of the preference shall be personally liable to the liquidator for the amount of the preference. It is permissible to infer that there is reasonable cause to so believe if the transfer was made within four months before the date of filing of the successful petition for liquidation.
(2) Every person receiving any property from the insurer or the benefit thereof as a preference voidable under subsection (a) shall be personally liable therefor and shall be bound to account to the liquidator.
(3) Nothing in this subsection shall prejudice any other claim by the liquidator against any person.
(P.A. 79-382, S. 28; P.A. 85-613, S. 105, 154; P.A. 17-198, S. 7; P.A. 18-68, S. 22; P.A. 25-87, S. 12.)
History: P.A. 85-613 made technical change in Subsec. (k); Sec. 38-448 transferred to Sec. 38a-930 in 1991; P.A. 17-198 amended Subsec. (a) by replacing “he” with “such employee, attorney or other person” in Subdiv. (2)(D), making technical changes in Subdivs. (2) and (3), and adding Subdiv. (4) re transfer pursuant to commutation of reinsurance agreement, effective July 1, 2017; P.A. 18-68 made technical changes in Subsec. (j); P.A. 25-87 amended Subsec. (a) by adding “Except as provided in subdivision (5) of this subsection,” in Subdiv. (2) and by adding Subdiv. (5) re no preference shall be avoided by liquidator or person where Federal Home Loan Bank is a party.
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Sec. 38a-963. Collateral rights and requirements of Federal Home Loan Banks during delinquency proceedings. With respect to an insurer that is subject to any delinquency proceedings, whether formal, informal, administrative or judicial, and is a member of a Federal Home Loan Bank, as defined in 12 USC 1422, as amended from time to time:
(1) If such bank exercises such bank's rights regarding collateral pledged by such insurer, such bank shall repurchase, not later than seven business days after such delinquency proceeding, and to the extent such bank determines in good faith that such repurchase is permissible under applicable laws and regulations and such bank's capital plan and is consistent with such bank's current capital stock practices applicable to such bank's entire membership, any outstanding capital stock that is in excess of the amount of stock of such bank that such insurer is required to hold as a minimum investment.
(2) After the appointment of a receiver for such insurer, such bank shall provide to such receiver, not later than ten business days after a request from such receiver, a process and establish a timeline for all of the following:
(A) The release of such insurer's collateral that exceeds the amount required to support remaining secured obligations of such insurer after any repayment of loans as determined in accordance with applicable agreements between such bank and such insurer;
(B) The release of such insurer's collateral that remains after repayment in full of all outstanding secured obligations of such insurer;
(C) The payment of any fees owed by such insurer and the operation, maintenance, closure or disposition of deposits and other accounts such insurer may have with such bank; and
(D) The possible redemption or repurchase of the stock of such bank or excess stock of any class that such insurer is required to hold as a member of such bank.
(3) Upon request from a receiver of such insurer, such bank shall provide to such receiver any available options for such insurer to renew or restructure a loan. Any such options shall be subject to market conditions, the terms of such insurer's outstanding loans, the applicable policies of such bank and such bank's compliance with federal laws and regulations.
(P.A. 25-87, S. 13.)
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