§ 7434 — Distribution of assets

New York § 7434

• Jurisdiction: New York
• Law ISC: Insurance
• Art. 74: Rehabilitation, Liquidation, Conservation and Dissolution of Insurers

Text

§ 7434. Distribution of assets. (a) (1) Upon the recommendation of the\nsuperintendent, and under the direction of the court, distribution\npayments shall be made in a manner that will assure the proper\nrecognition of priorities and a reasonable balance between the\nexpeditious completion of the liquidation and the protection of\nunliquidated and undetermined claims. The priority of distribution of\nclaims from an insolvent insurer other than a life insurer in any\nproceeding subject to this article shall be in accordance with the order\nin which each class of claims is set forth in this paragraph and as\nprovided in this paragraph. Every claim in each class shall be paid in\nfull or adequate funds retained for such payment before the members of\nthe next class receive any payment. No subclasses shall be established\nwithin any class. No claim by a shareholder, policyholder or other\ncreditor shall be permitted to circumvent the priority classes through\nthe use of equitable remedies. The order of distribution of claims shall\nbe:\n (A) Class one. Claims with respect to the actual and necessary costs\nand expenses of administration, incurred by the liquidator,\nrehabilitator or conservator under this article.\n (B) Class two. All claims under policies including such claims of the\nfederal or any state or local government for losses incurred, third\nparty claims, claims for unearned premiums, and all claims of a security\nfund, guaranty association or the equivalent except claims arising under\nreinsurance contracts.\n (C) Class three. Claims of the federal government except those under\nclass two above.\n (D) Class four. Claims for wages owing to employees of an insurer\nagainst whom a proceeding under this article is commenced for services\nrendered within one year before commencement of the proceeding, not\nexceeding one thousand two hundred dollars to each employee, and claims\nfor unemployment insurance contributions required by article eighteen of\nthe labor law. Such priority shall be in lieu of any other similar\npriority which may be authorized by law.\n (E) Class five. Claims of state and local governments except those\nunder class two above.\n (F) Class six. Claims of general creditors including, but not limited\nto, claims arising under reinsurance contracts.\n (G) Class seven. Claims filed late or any other claims other than\nclaims under class eight or class nine below.\n (H) Class eight. Claims for advanced or borrowed funds made pursuant\nto section one thousand three hundred seven of this chapter.\n (I) Class nine. Claims of shareholders or other owners in their\ncapacity as shareholders.\n (2) Severability. If any classification or priority provided for in\nparagraph one of this subsection is held to be unconstitutional or\notherwise invalid, the remaining classifications and priorities shall\ncontinue in effect.\n (b) No creditor shall be entitled to interest on any dividend by\nreason of delay in payment of such dividend.\n (c) Any claimant of another state or foreign country who is entitled\nto, or receives, a dividend upon his claim out of a statutory deposit or\nthe proceeds of any qualifying bond or other asset located in such other\nstate or foreign country shall not be entitled to any further dividend\nfrom the superintendent until all other claimants of the same class\nirrespective of residence or place of the acts or contracts upon which\ntheir claims are based shall have received an equal dividend upon their\nclaims. After such equalization, such claimant shall be entitled to\nshare in the distribution of further dividends by the superintendent\nlike all other creditors of the same class wherever residing.\n (d) If, after an adjudication of insolvency, a mutual insurer is found\nclearly solvent upon re-examination, its surplus shall be distributed\namong all persons, partnerships or corporations whose membership did not\ncease earlier than five years prior to the date on which the insurer\nceased issuing policies. The distribution shall be in the proportion\nwhich the total premium contributions of each such member during his or\nits entire membership in the insurer bear to the total premium\ncontributions of all such members entitled under this subsection to any\ndistributive share of such surplus.\n (e) The provisions of this section shall apply to distributions made\nafter the effective date of this subsection in any proceeding under this\narticle, regardless of the date such proceeding was commenced under this\narticle, provided that the foregoing provisions of this subsection shall\nnot apply to distributions made pursuant to a final court order of\ndistribution entered on or before the effective date of this subsection.\n