§ 26.1-06.1-25 — Fraudulent transfers prior to petition

North Dakota § 26.1-06.1-25

• Jurisdiction: North Dakota
• Title 26.1: Insurance
• Ch. 26.1-06.1: Insurance Company Rehabilitation and Liquidation

Text

1. 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 this
chapter is fraudulent as to then existing and future creditors if made or incurred without
fair consideration, or with actual 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 this chapter, 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.
2. a. A transfer of property other than real property must 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 3 of section 26.1-06.1-27.

b. A transfer of real property must 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.
c. A transfer which creates an equitable lien may not be deemed to be perfected if
there are available means by which a legal lien could be created.
d. Any transfer not perfected prior to the filing of a petition for liquidation must be
deemed to be made immediately before the filing of the successful petition.
e. 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.
3. Any transaction of the insurer with a reinsurer must be deemed fraudulent and may be
avoided by the receiver under subsection 1 if:
a. 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 transactions, unless the reinsurer gives a present fair equivalent value for the
release; and
b. 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.
4. Every person receiving any property from the insurer or any benefit thereof which is a
fraudulent transfer under subsection 1 is personally liable therefor and is bound to
account to the liquidator.