§ 38-14-150 — Rehabilitation and liquidation.

South Carolina § 38-14-150

• Jurisdiction: South Carolina
• Title 38: INSURANCE
• Ch. 14: SPECIAL PURPOSE REINSURANCE VEHICLE MODEL ACT

Text

(A) The provisions of Chapter 27 of this title apply to a SPRV, except to the extent modified below. (B)(1) Notwithstanding the provisions of Chapter 27, the director, or his designee, may apply by petition to the circuit court for an order authorizing the director, or his designee, to conserve, rehabilitate, or liquidate a SPRV domiciled in this State on one or more of the following grounds: (a) there has been embezzlement, wrongful sequestration, dissipation, or diversion of the assets of the SPRV intended to be used to pay amounts owed to the ceding insurer or the holders of SPRV securities; or (b) the SPRV is insolvent and the holders of a majority in outstanding principal amount of each class of SPRV securities request or consent to conservation, rehabilitation, or liquidation under this chapter. (2) The court must not grant relief under item (1)(a) unless, after notice and a hearing, the director, or his designee, who must have the burden of proof, establishes by clear and convincing evidence that relief must be granted. (C) Notwithstanding any contrary provision in this title, the regulations promulgated under this title, or any other applicable law or regulation, upon any order of conservation, rehabilitation, or liquidation of the SPRV, the receiver must be bound to deal with the SPRV's assets and liabilities in accordance with the requirements set forth in this chapter. (D) With respect to amounts recoverable under a SPRV contract, the amount recoverable by the receiver must not be reduced or diminished as a result of the entry of an order of conservation, rehabilitation, or liquidation with respect to the ceding insurer, notwithstanding any provisions to the contrary in the contracts or other documentation governing the SPRV insurance securitization. (1) Notwithstanding the provisions of Chapter 27, an application or petition, or any temporary restraining order or injunction issued under Chapter 27, with respect to a ceding insurer must not prohibit the transaction of any business by a SPRV, including any payment by a SPRV made pursuant to a SPRV security, or any action or proceeding against a SPRV or its assets. (2) Notwithstanding the provisions of Chapter 27, the commencement of a summary proceeding or other interim proceeding commenced before a formal delinquency proceeding with respect to a SPRV, and any order issued by the court must not prohibit the payment by a SPRV made pursuant to a SPRV security or SPRV contract or the SPRV from taking any action required to make the payment. (E) Notwithstanding any other provision of Chapter 27 or other state law: (1) a receiver of a ceding insurer may not avoid a nonfraudulent transfer by a ceding insurer to a SPRV of money or other property made pursuant to a SPRV contract; and (2) a receiver of a SPRV may not void a nonfraudulent transfer by the SPRV of money or other property made to a ceding insurer pursuant to a SPRV contract or made to or for the benefit of any holder of a SPRV security on account of the SPRV security. (F) With the exception of the fulfillment of the obligations under a SPRV contract, and notwithstanding any other provisions of this chapter or other law of this State to the contrary, the assets of a SPRV, including assets held in trust, must not be consolidated with or included in the estate of a ceding insurer in any delinquency proceeding against the ceding insurer under this chapter for any purpose including, without limitation, distribution to creditors of the ceding insurer. (G) Notwithstanding any other provision of this chapter: (1) the domiciliary receiver of a SPRV domiciled in another state must be vested by operation of law with the title to all assets, property, contracts, and rights of action, and all books, accounts, and other records of the SPRV located in this State. The domiciliary receiver must have the immediate right to recover all vested property, assets, and causes of action of the SPRV located in this State; (2) an ancillary proceeding may not be commenced or prosecuted in this State against a SPRV domiciled in another state.

Legislative History

HISTORY: 2002 Act No. 259, SECTION 1, eff May 20, 2002.