(1) (a) 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 this part 5, 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.
(b) Any preference may be avoided by the liquidator if:
(I) The insurer was insolvent at the time of the transfer; or
(II) The transfer was made within four months before the filing of the
petition; or
(III) The creditor receiving it or to be benefited thereby or the agent of any
such creditor 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
(IV) 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 person held such position, or any shareholder
holding directly or indirectly more than five percent 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.
(c) 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 the purchaser. 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.
(d) Notwithstanding paragraph (b) of this subsection (1) and any other
provision of this title, a liquidator or receiver shall not avoid any preference arising
under or in connection with a federal home loan bank security agreement or any
pledge agreement, security agreement, collateral agreement, guarantee
agreement, or other similar arrangement or credit enhancement relating to a
security agreement to which a federal home loan bank is a party.
(2) (a) (I) 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.
(II) 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.
(b) (I) 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.
(II) 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.
(c) The provisions of this subsection (2) shall apply whether or not there are
or were creditors who might have obtained liens or persons who might have become
bona fide purchasers.
(3) (a) 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.
(b) 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 (2) 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 (2) 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.
(4) A transfer of property for or on account of a new and contemporaneous
consideration which is deemed under subsection (2) 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.
(5) If any lien deemed voidable under paragraph (b) of subsection (1) of this
section has been dissolved by the furnishing of a bond or other obligation and the
surety 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 this part 5 which results in a liquidation order, the indemnifying transfer or
lien shall also be deemed voidable.
(6) The property affected by any lien deemed voidable under subsections (1)
and (5) 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.
(7) The district court in and for the city and county of Denver 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.
(8) The liability of the 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 (7) of this section to the extent of the
amount paid to the liquidator.
(9) 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 such insurer.
(10) If an insurer shall, directly or indirectly, within four months before the
filing of a successful petition for liquidation under this part 5, or at any time in
contemplation of a proceeding to liquidate it, pay money or transfer property to an
attorney-at-law for services rendered or to be rendered, the transactions 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 benefits of the estate; except that, where 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 provision of subparagraph (IV) of paragraph (b)
of subsection (1) of this section.
(11) (a) 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 any such person 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 a reasonable cause to so believe if
the transfer was made within four months before the date of filing of a successful
petition for liquidation.
(b) Every person receiving any property from the insurer or the benefit
thereof as a preference voidable under subsection (1) of this section shall be
personally liable therefor and shall be bound to account to the liquidator.
(c) Nothing in this subsection (11) shall prejudice any other claim by the
liquidator against any person.