§ 38a-920 — (Formerly Sec. 38-438). Liquidation orders. Financial reports: Contents and filings. Handling of claim obligations. Appointment of judge to supervise liquidation. Preference of claims. Appeals.

Connecticut § 38a-920

• Jurisdiction: Connecticut
• Title 38a: Insurance
• Ch. 704c: Insurers Rehabilitation and Liquidation Act and Termination of Domestic Life Insurance Companies

Text

(a) An order to liquidate the business of a domestic insurer shall appoint the commissioner and his successors in office as liquidator and shall direct the liquidator to take possession of the assets of the insurer and to administer them under the general supervision of the court. The commissioner shall be entitled to request the administrative judge of the superior court for the judicial district of Hartford to appoint a single judge to supervise the liquidation and hear any cases or controversies arising out of or related to the liquidation. Liquidation proceedings shall be exempt from any dormancy or similar program maintained by the court for the early closure of civil actions. The liquidator shall be vested by operation of law with the title to all of the property, contracts, and rights of action and all of the books and records of the insurer ordered liquidated, wherever located, as of the entry of the final order of liquidation. The filing or recording of the order with the clerk of the Superior Court and with the recorder of deeds of the town in which its principal office or place of business is located, or, in the case of real estate with the recorder of deeds of the town where the property is located, shall impart the same notice as a deed, bill of sale, or other evidence of title duly filed or recorded with that recorder of deeds would have imparted. (b) Upon issuance of the order, the rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members and all other persons interested in its estate shall become fixed as of the date of entry of the order of liquidation, except as provided in sections 38a-921 and 38a-939 unless otherwise fixed by the Superior Court. (c) An order to liquidate the business of an alien insurer domiciled in this state shall be in the same terms and have the same legal effect as an order to liquidate a domestic insurer, except that the assets and the business in the United States shall be the only assets and business included therein. (d) At the time of petitioning for an order of liquidation, or at any time thereafter, the commissioner, after making appropriate findings of an insurer's insolvency, may petition the court for a judicial declaration of such insolvency. After providing such notice and hearing as it deems proper the court may make the declaration. (e) Any order issued under this section shall require the liquidator to submit financial reports to the court. Financial reports shall include, at a minimum, a statement of the assets and liabilities of the insurer and all funds received or disbursed by the liquidator during the current period. Financial reports shall be filed within one year of the liquidation order and at least annually thereafter. (f) (1) Not later than five days after the initiation of an appeal of an order of liquidation, which order has not been stayed, the commissioner shall present for the court's approval a plan for the continued performance of the defendant company's policy claim obligations, including the duty to defend the insured under liability insurance policies, during the pendency of an appeal. Such plan shall provide for the continued performance and payment of policy claim obligations in the normal course of events, notwithstanding the grounds alleged in support of the order of liquidation including the ground of insolvency. In the event the defendant company's financial condition will not, in the judgment of the commissioner, support the full performance of all policy claim obligations during the appeal pendency period, the plan may prefer the claims of certain policyholders and claimants over creditors and interested parties as well as other policyholders and claimants, as the commissioner finds to be fair and equitable considering the relative circumstances of such policyholders and claimants. The court shall examine the plan submitted by the commissioner and if it finds the plan to be in the best interests of the parties, the court shall approve the plan. No action shall lie against the commissioner or any of his deputies, agents, clerks, assistants or attorneys by any party based on preference in an appeal pendency plan approved by the court. (2) The appeal pendency plan shall not supersede or affect the obligations of any insurance guaranty association. (3) Any such plans shall provide for equitable adjustments to be made by the liquidator to any distributions of assets to guaranty associations, in the event that the liquidator pays claims from assets of the estate, which would otherwise be the obligations of any particular guaranty association but for the appeal of the order of liquidation, such that all guaranty associations equally benefit on a pro rata basis from the assets of the estate. In the event an order of liquidation is set aside upon any appeal, the company shall not be released from delinquency proceedings unless and until funds advanced by any guaranty association, including reasonable administrative expenses in connection therewith relating to obligations of the company, shall be repaid in full, together with interest at the judgment rate of interest or unless an arrangement for repayment thereof has been made with the consent of all applicable guaranty associations.

Legislative History

(P.A. 79-382, S. 18; P.A. 88-230, S. 1, 12; P.A. 90-92, S. 1, 2; P.A. 92-93, S. 14; P.A. 93-142, S. 4, 7, 8; P.A. 95-220, S. 4–6; P.A. 98-214, S. 11.) History: Sec. 38-438 transferred to Sec. 38a-920 in 1991; P.A. 92-93 amended Subsec. (e) re financial reports and filings and re appeal pendency plans for continued performance of obligations; P.A. 98-214 amended Subsec. (a) to delete “forthwith” and to allow commissioner to request the administrative judge of Superior Court to appoint a judge to supervise liquidation and hear related cases, and to exempt liquidation proceedings from dormancy or similar programs maintained by the court, amended Subsec. (b) to allow the Superior Court to fix the rights and liabilities of enumerated persons, amended Subsec. (e) to make technical changes and to substitute “a statement of the assets and liabilities” for “the assets and liabilities”, and amended Subsec. (f) to substitute “not later than” for “within” and to delete a comma in Subdiv. (3) (Revisor's note: P.A. 88-230, 90-98, 93-142 and 95-220 authorized substitution of “judicial district of Hartford” for “judicial district of Hartford-New Britain” in public and special acts of the 1998 regular and special sessions of the General Assembly, effective September 1, 1998).