§ 188

Grounds for rehabilitation and liquidation of a domestic company or an unauthorized foreign or alien company. Whenever any domestic company or any unauthorized foreign or alien company: 1. is insolvent; 2. has failed or refused to submit its books, papers, accounts, records or affairs to the reasonable inspection or examination of the Director or his actuaries, supervisors, deputies, or examiners; 3. has concealed, removed, altered, destroyed or failed to establish and maintain books, records, documents, accounts, vouchers and other pertinent material adequate for the determination of its financial condition by examination under Sections 132 through 132.7 or has failed to properly administer claims and to maintain claims records which are adequate for the determination of its outstanding claims liability; 4. has failed or refused to observe an order of the Director to make good within the time prescribed by law any deficiency, whenever its capital and minimum required surplus, if a stock company, or its required surplus, if a company other than stock, has become impaired; 5. has, by articles of consolidation, contract of reinsurance or otherwise, transferred or attempted to transfer its entire property or business not in conformity with this Code, or entered into any transaction the effect of which is to merge substantially its entire property or business in any other company without having first obtained the written approval of the Director under this Code; 6. is found to be in such condition that its further transaction of business would be hazardous to its policyholders, or to its creditors, or to the public; 7. has violated its charter or any law of this State or has exceeded or is exceeding its corporate powers; 8. has an officer who has refused upon reasonable demand to be examined under oath touching its affairs; 9. is found to be in such condition that it could not meet the requirements for organization and authorization as required by law, except as to the amount of the original surplus required of a stock company in Section 13, and except as to the amount of the surplus required of a mutual company in excess of the minimum surplus required by this Code to be maintained, or either an authorized control level event or a mandatory control level event as set forth in Article IIA exists; 10. has ceased for the period of one year to transact insurance business; 11. has commenced, or has attempted to commence, any voluntary liquidation or dissolution proceeding, or any proceeding to procure the appointment of a receiver, liquidator, rehabilitator, sequestrator, or a similar officer for itself; 12. is a party, whether plaintiff or defendant in any proceeding in which an application is made for the appointment of a receiver, custodian, liquidator, rehabilitator, sequestrator, or similar officer for such company or its property, or a receiver, custodian, liquidator, rehabilitator, sequestrator or similar officer, for such company or its property is appointed by any court, or such appointment is imminent; 13. consents by a majority of its directors, stockholders or members; 14. has not organized and obtained a certificate authorizing it to commence the transaction of its business within the period of time prescribed by the sections of this Code under which it is or proposes to be organized; or 15. has failed or refused to pay any valid final judgment within 30 days after the rendition thereof, or whenever it appears to the Director that any person has committed a violation of Article VIII 1/2 with the result described in Section 131.26, sufficient grounds shall be deemed to exist for the commencement of rehabilitation or liquidation proceedings. With respect to a domestic company, the Director must report, and with respect to an unauthorized foreign or alien company, the Director may report any such case to the Attorney General of this State whose duty it shall be to apply forthwith by complaint on relation of the Director in the name of the People of the State of Illinois, as plaintiff, to the Circuit Court of Cook County, the Circuit Court of Sangamon County, or the circuit court of the county in which such company has, or last had its principal office, for an order to rehabilitate or liquidate the defendant company as provided in this Article, and for such other relief as the nature of the case and the interests of its policyholders, creditors, members, stockholders or the public may require. When, upon investigation, the Director finds that a company is engaged in any aspect of the business of insurance on behalf of or in association with any domestic insurance company, against which a receivership proceeding has been or is being filed under this Article, in a manner that appears to be detrimental to policyholders, creditors, members, shareholders, or the public, the Director may report such case to the Attorney General of this State, whose duty it is to apply forthwith by complaint on relation of the Director in the name of the People of the State of Illinois, as plaintiff, to the court in which the receivership proceeding is pending for an order to appoint the Director as receiver to assume control of the assets and operation of the company pending a complete investigation and determination of the rights of the policyholders, creditors, members, shareholders, and the general public.

Legislative History

(Source: P.A. 92-140, eff. 7-24-01.)