§ 31-3932.12 — Liquidation and rehabilitation.

District of Columbia § 31-3932.12

• Jurisdiction: District of Columbia
• Title 31: Insurance and Securities.
• Ch. 39A: Captive Insurance Companies (2004).
• Subch. II: Special Purpose Financial Captive Insurance Companies.

Text

(1) Notwithstanding the provisions of Chapter 13 of this title , the Commissioner may apply to the Superior Court of the District of Columbia for an order authorizing the Commissioner to conserve, rehabilitate, or liquidate an SPFC domiciled in the District on one or more of the following grounds:

(A) There has been embezzlement, wrongful sequestration, dissipation, or diversion of the assets of the SPFC intended to be used to pay amounts owed to the counterparty or the holders of SPFC securities; or

(B) The SPFC is insolvent and the holders of a majority in outstanding principal amount of each class of SPFC securities request or consent to conservation, rehabilitation, or liquidation pursuant to this subchapter.

(2) The court shall not grant relief provided by paragraph (1)(A) of this subsection unless, after notice and a hearing, the Commissioner, who shall have the burden of proof, establishes by clear and convincing evidence that relief should be granted.

(b) Notwithstanding another provision in this subchapter, rules promulgated under this subchapter, or another applicable law or rule, upon any order of conservation, rehabilitation, or liquidation of an SPFC, the receiver shall manage the assets and liabilities of the SPFC pursuant to this subchapter.

(1) With respect to amounts recoverable under an SPFC contract, the amount recoverable by the receiver shall not be reduced or diminished as a result of the entry of an order of conservation, rehabilitation, or liquidation with respect to the counterparty, notwithstanding another provision in the contracts or other documentation governing the SPFC insurance securitization.

(2) Notwithstanding the provisions of Chapter 13 of this title , an application or petition, or a temporary restraining order or injunction issued pursuant to Chapter 13 of this title , with respect to a counterparty shall not prohibit the transaction of a business by an SPFC, including any payment by an SPFC made pursuant to an SPFC security, or any action or proceeding against an SPFC or its assets.

(3) Notwithstanding the provisions of Chapter 13 of this title , the commencement of a summary proceeding or other interim proceeding commenced before a formal delinquency proceeding with respect to an SPFC, and any order issued by the court, shall not prohibit:

(A) The payment by an SPFC made pursuant to an SPFC security or SPFC contract; or

(B) The SPFC from taking any action required to make the payment.

(d) Notwithstanding Chapter 13 of this title , or other laws of the District:

(1) A receiver of a counterparty shall not void a nonfraudulent transfer by a counterparty to an SPFC of money or other property made pursuant to an SPFC contract; and

(2) A receiver of an SPFC shall not void a nonfraudulent transfer by the SPFC of money or other property made to a counterparty pursuant to an SPFC contract or made to or for the benefit of any holder of an SPFC security on account of the SPFC security.

(e) With the exception of the fulfillment of the obligations under an SPFC contract, and notwithstanding another provision of this subchapter or other laws of the District, the assets of an SPFC, including assets held in trust, shall not be consolidated with or included in the estate of a counterparty in any delinquency proceeding against the counterparty pursuant to the provisions of this subchapter for any purpose, including, distribution to creditors of the counterparty.

Legislative History

Mar. 17, 2005, D.C. Law 15-262, § 212; as added Mar. 14, 2007, D.C. Law 16-285, § 2(b), 54 DCR 944; Mar. 25, 2009, D.C. Law 17-353, § 165(c), 56 DCR 1117