Bill Text: CT SB00187 | 2014 | General Assembly | Comm Sub
Bill Title: An Act Concerning Federal Home Loan Banks And The Insurers Rehabilitation And Liquidation Act.
Spectrum: Committee Bill
Status: (Introduced - Dead) 2014-04-23 - Moved to Foot of the Calendar, Senate [SB00187 Detail]
Download: Connecticut-2014-SB00187-Comm_Sub.html
General Assembly |
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February Session, 2014 |
*_____SB00187BA____040114____* |
AN ACT CONCERNING FEDERAL HOME LOAN BANKS AND THE INSURERS REHABILITATION AND LIQUIDATION ACT.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. Section 38a-907 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):
(a) The conservation, rehabilitation and liquidation of insurance companies and other persons subject to the provisions of sections 38a-903 to 38a-961, inclusive, are a matter of vital public interest and affect the relationships between insureds and their insurers.
(1) An application or petition under sections 38a-912, 38a-914, 38a-915, 38a-918, 38a-919 and 38a-920, shall operate as an automatic stay applicable to all persons, other than the receiver, which shall be permanent and survive the entry of an order of conservation, rehabilitation or liquidation, and which shall prohibit: (A) The transaction of further business; (B) the transfer of property; (C) interference with the receiver or with a proceeding under said sections; (D) waste of the insurer's assets; (E) dissipation and transfer of bank accounts; (F) the institution or further prosecution of any actions or proceedings in which the insurer is a party; (G) the obtaining of preferences, judgments, attachments, garnishments, or liens against the insurer, its assets or its policyholders; (H) the levying of execution against the insurer, its assets, or its policyholders; (I) the making of any sale or deed for nonpayment of taxes or assessments that would lessen the value of the assets of the insurer; (J) the withholding from the receiver of books, accounts, documents, or other records relating to the business of the insurer; or (K) any other threatened or contemplated action that might lessen the value of the insurer's assets or prejudice the rights of policyholders, creditors, or shareholders, or the administration of any proceeding under said sections.
(2) Notwithstanding any other provision of law, no bond shall be required of the commissioner as a prerequisite for the issuance of any injunction or restraining order pursuant to this section.
(3) Upon motion of a person subject to the stay, the court, after notice to the receiver and a hearing, may modify or grant relief from the stay, provided said person shall have the burden of proof and shall establish by clear and convincing evidence that such relief should be granted.
(4) All matters that may be stayed, enjoined or barred under this section and all matters involving its interpretation or operation shall remain within the exclusive jurisdiction of the domiciliary receivership court.
(b) The receiver may apply to any court outside of the state for the relief described in subsection (a) of this section.
(c) Notwithstanding subsections (a) and (b) of this section or any other provision of this chapter, no person shall be stayed, enjoined or barred from exercising or enforcing any right or cause of action under any pledge, security, credit, loan, advance, reimbursement or guarantee agreement or arrangement or any similar agreement or arrangement or other credit enhancement to which a Federal Home Loan Bank, as defined in 12 USC 1422, as amended from time to time, is a party.
Sec. 2. Section 38a-928 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):
(a) 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 sections 38a-903 to 38a-961, inclusive, 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 said sections, 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.
(b) (1) A transfer of property other than real property shall 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 (c) of section 38a-930.
(2) A transfer of real property shall 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.
(3) A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created.
(4) Any transfer not perfected prior to the filing of a petition for liquidation shall be deemed to be made immediately before the filing of the successful petition.
(5) 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.
(c) Any transaction of the insurer with a reinsurer shall be deemed fraudulent and may be avoided by the receiver under subsection (a) of this section if: (1) 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 transaction, unless the reinsurer gives a present fair equivalent value for the release; and (2) 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.
(d) Any person receiving property from the insurer or any benefit thereof which is a fraudulent transfer under subsection (a) of this section shall be personally liable therefor and shall be bound to account to the liquidator.
(e) Notwithstanding subsections (a) to (d), inclusive, of this section or any other provision of this chapter, no receiver or any other person shall avoid any transfer or obligation that arises under or in connection with any pledge, security, credit, loan, advance, reimbursement or guarantee agreement or arrangement or any similar agreement or arrangement or other credit enhancement to which a Federal Home Loan Bank, as defined in 12 USC 1422, as amended from time to time, is a party, that is made, suffered or incurred prior to or after the filing of a successful petition for rehabilitation or liquidation under sections 38a-903 to 38a-961, inclusive. Such transfer or obligation may be avoided by the receiver or other person if such transfer or obligation was made, suffered or incurred with actual intent to hinder, delay or defraud the insurer, the receiver or existing or future creditors.
Sec. 3. Subsection (a) of section 38a-930 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):
(a) (1) A preference is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the insurer within one year before the filing of a successful petition for liquidation under sections 38a-903 to 38a-961, inclusive, the effect of which transfer may be to enable the creditor to obtain a greater percentage of this debt than another creditor of the same class would receive. If a liquidation order is entered while the insurer is already subject to a rehabilitation order, then such transfers shall be deemed preferences if made or suffered within one year before the filing of the successful petition for rehabilitation, or within two years before the filing of the successful petition for liquidation, whichever time is shorter.
(2) Any preference may be avoided by the liquidator if: (A) The insurer was insolvent at the time of the transfer; (B) the transfer was made within four months before the filing of the petition; (C) the creditor receiving it or to be benefited thereby or his agent acting with reference thereto had, at the time when the transfer was made, reasonable cause to believe that the insurer was insolvent or was about to become insolvent; or (D) the creditor receiving it was an officer, or any employee or attorney or other person who was in fact in a position of comparable influence in the insurer to an officer whether or not he held such position, or any shareholder holding directly or indirectly more than five per centum of any class of any equity security issued by the insurer, or any other person, firm, corporation, association, or aggregation of persons with whom the insurer did not deal at arm's length.
(3) Notwithstanding subdivision (2) of this subsection or any other provision of this chapter, no preference that arises under or in connection with any pledge, security, credit, loan, advance, reimbursement or guarantee agreement or arrangement or any similar agreement or arrangement or other credit enhancement to which a Federal Home Loan Bank, as defined in 12 USC 1422, as amended from time to time, is a party shall be avoided by the liquidator or any other person.
[(3)] (4) Where the preference is voidable, the liquidator may recover the property, or if it has been converted, its value from any person who has received or converted the property, except where a bona fide purchaser or lienor has given less than fair equivalent value, he shall have a lien upon the property to the extent of the consideration actually given by him. Where a preference by way of lien or security title is voidable, the court may on due notice order the lien or title to be preserved for the benefit of the estate, in which event the lien or title shall pass to the liquidator.
Sec. 4. (NEW) (Effective October 1, 2014) With respect to an insurer that is subject to any delinquency proceedings and is a member of a Federal Home Loan Bank, as defined in 12 USC 1422, as amended from time to time:
(1) If said bank exercises its rights regarding collateral pledged by such insurer, said bank shall repurchase, to the extent said bank determines in good faith that such repurchase is permissible under applicable laws and regulations and said bank's capital plan and is consistent with said bank's current capital stock practices applicable to its entire membership, any outstanding capital stock that is in excess of the amount of stock of said bank that such insurer is required to hold as a minimum investment.
(2) After the appointment of a receiver for such insurer, said bank shall provide, not later than ten business days after a request from such receiver, a process and establish a timeline for all of the following:
(A) The release of such insurer's collateral that exceeds the amount required to support remaining secured obligations of such insurer after any repayment of loans as determined in accordance with applicable agreements between said bank and such insurer;
(B) The release of such insurer's collateral that remains after repayment in full of all outstanding secured obligations of such insurer;
(C) The payment of any fees owed by such insurer and the operation of deposits and other accounts such insurer may have with said bank; and
(D) The possible redemption or repurchase of the stock of said bank or excess stock of any class that such insurer is required to hold as a member of said bank.
(3) Upon request from a receiver of such insurer, said bank shall provide any available options for such insurer to renew or restructure a loan to defer associated prepayment fees. Any such options shall be subject to market conditions, the terms of such insurer's outstanding loans, the applicable policies of said bank and said bank's compliance with federal laws and regulations.
This act shall take effect as follows and shall amend the following sections: | ||
Section 1 |
October 1, 2014 |
38a-907 |
Sec. 2 |
October 1, 2014 |
38a-928 |
Sec. 3 |
October 1, 2014 |
38a-930(a) |
Sec. 4 |
October 1, 2014 |
New section |
INS |
Joint Favorable Subst. |
|
BA |
Joint Favorable |