§ 59A-41-44 — Priorities in distribution

New Mexico § 59A-41-44

• Jurisdiction: New Mexico
• Ch. 59A: Insurance Code
• Art. 41: Conservation, Rehabilitation and Liquidation

Text

The priority of claims and order of distribution of the insurer's assets on liquidation shall be as stated in this section. The first fifty dollars ($50.00) of the amount allowed on each property, casualty or fidelity claim in the classes under Subsections B through F of this section, shall be deducted from the claim and included in the class under Subsection I of this section. Claims may not be cumulated by assignment to avoid application of the fifty dollar ($50.00) deductible provision. Subject to the fifty dollar ($50.00) deduction, every claim in each class shall be paid in full or adequate funds retained for payment before the members of the next class receive any payment. No subclasses shall be established within any class. Subject to the foregoing, the order of distribution and of priority shall be as follows: A. administration costs. The costs and expenses of administration, including but not limited to the actual and necessary costs of preserving or recovering the assets of the insurer, compensation for all services rendered in the liquidation, necessary filing fees, fees and mileage payable to witnesses, attorney's fees in reasonable amount and the reasonable expenses of a guaranty association for unallocated loss adjustment expense; B. wages. Debts due to employees of the insurer for services performed, not to exceed one thousand dollars ($1,000) to each employee, and earned within three months before commencement of delinquency proceedings. The insurer's officers shall not be entitled to the benefit of this priority. Such priority shall be in lieu of any other similar priority authorized by law as to wages or compensation of employees; C. loss claims. All claims under policies or contracts for losses incurred, including third party claims and all claims of guaranty associations not specified in Subsection A of this section. That portion of any loss for which indemnification is provided by other benefits or advantages recovered or recoverable by the claimant shall not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment made by an employer to his employee shall be treated as a gratuity; D. unearned premiums. Claims under nonassessable policies for unearned premiums or other premium refunds; E. residual classification. All other claims, including claims of the federal or any state or local government, not falling within other classes under this section. Claims, including those of any governmental body, for a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary loss sustained from the act, transaction or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to the class of claims under Subsection K of this section; F. judgments. Claims based solely on judgments. If a claimant files a claim and bases it both on the judgment and on the underlying facts, the claim shall be considered by the liquidator, who shall give the judgment such weight as he deems appropriate. The claim as allowed shall receive the priority it would receive in absence of the judgment. If the judgment is larger than the allowance on the underlying claim, the remaining portion of the judgment shall be treated as if it were a claim based solely on a judgment, except that, to the extent such judgment was obtained through fraud or collusion, it shall be disallowed; G. interest on claims already paid. Interest at the legal rate compounded annually on all claims in the classes under Subsections A through I of this section, from date of petition for liquidation or the date on which the claim becomes due, whichever is later, until the date on which the dividend is declared. The liquidator, with the court's approval, may make reasonable classifications of claims for purposes of computing interest, may make approximate computations and may ignore certain classifications and time periods as de minimis; H. miscellaneous subordinated claims. The remaining claims or portions of claims not already paid, with interest as in Subsection G of this section: (1) the first fifty dollars ($50.00) of each claim in the classes under Subsections B through F of this section, subordinated under this section; (2) claims subordinated by Section 59A-41-45 NMSA 1978; (3) claims filed late except as provided otherwise in Subsection C of Section 59A-41-41 NMSA 1978; (4) portions of claims subordinated under Subsection E of this section; (5) claims or portions of claims payment of which is provided by other benefits or advantages recovered or recoverable by the claimant; and (6) claims not otherwise provided for in this section; I. preferred ownership claims. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Interest at the legal rate shall be added to each claim, as in Subsections G and H of this section; and J. proprietary claims. The claims of shareholders or other owners.

Legislative History

Laws 1984, ch. 127, § 736; 1993, ch. 320, § 97.