§ 38-27-220 — Court's seizure order.

(a) The director or his designee may file in the circuit court a petition alleging, with respect to a domestic insurer: (1) that grounds exist that would justify a court order for a formal delinquency proceeding against an insurer under this chapter; (2) that the interests of policyholders, creditors, or the public will be endangered by delay; and (3) the contents of an order considered necessary by the director or his designee. (b) Upon a filing under subsection (a), the court may issue forthwith, ex parte and without a hearing, the requested order which shall direct the department to take possession and control of all or a part of the property, books, accounts, documents, and other records of an insurer and of the premises occupied by it for transaction of its business and, until further order of the court, shall enjoin the insurer and its officers, managers, agents, and employees from disposition of its property and from transaction of its business except with the written consent of the director or his designee. (c) The court shall specify in the order what its duration is, which must be the time the court considers necessary for the department to ascertain the condition of the insurer. On motion of either party or on its own motion, the court may hold any hearings it considers desirable after notice it considers appropriate and may extend, shorten, or modify the terms of the seizure order. The court shall vacate the seizure order if the department fails to commence a formal proceeding under this chapter after having had a reasonable opportunity to do so. An order of the court pursuant to a formal proceeding under this chapter ipso facto vacates the seizure order. (d) Entry of a seizure order under this section does not constitute an anticipatory breach of any contract of the insurer. (e) An insurer subject to an ex parte order under this section may petition the court at any time after the issuance of the order for a hearing and review of the order. The court shall hold the hearing and review not more than fifteen days after the request. A hearing under this subsection may be held privately in chambers and it must be so held if the insurer proceeded against so requests. (f) If, at any time after the issuance of a seizure order, it appears to the court that any person whose interest is or will be substantially affected by the order did not appear at the hearing and has not been served, the court may order that notice be given. An order that notice be given does not stay the effect of any order previously issued by the court.

Legislative History

HISTORY: Former 1976 Code SECTION 38-5-1920 [1982 Act No. 384, SECTION 10] recodified as SECTION 38-27-220 by 1987 Act No. 155, SECTION 1; 1993 Act No. 181, SECTION 610.