2006 New York Code - Order Of Liquidation; Rights And Liabilities.

 
    §  7405. Order of liquidation; rights and liabilities. (a) An order to
  liquidate  the  business  of  a  domestic  insurer  shall   direct   the
  superintendent and his successors in office, as liquidator, forthwith to
  take  possession  of  the  property of such insurer and to liquidate the
  business of the same and deal with such property and  business  of  such
  insurer  in  their own names as superintendents or in the insurer's name
  as the court may direct, and to give notice to all creditors to  present
  their claims.
    (b) The superintendent and his successors shall be vested by operation
  of law with the title to all property, contracts and rights of action of
  such  insurer as of the date of the entry of the order so directing them
  to liquidate. The filing or recording of such order in any record office
  of the state shall impart the same notice that a deed, bill of  sale  or
  other  evidence  of  title  duly filed or recorded by such insurer would
  have imparted. The rights and liabilities of any such insurer and of its
  creditors, policyholders, shareholders, members and  all  other  persons
  interested  in its estate shall, unless otherwise directed by the court,
  be fixed as of the date the order is entered in the office of the  clerk
  of  the  county  where such insurer had its principal office on the date
  the proceeding commenced, subject, however, to the provisions of section
  seven thousand four hundred thirty-three of this article to  the  rights
  of claimants holding contingent claims.
    (c)  The  liquidator  of  any  domestic  insurance  corporation  shall
  reinsure  all  its  policy  obligations  in  any   solvent   corporation
  authorized  to do business in this state if the unearned premium reserve
  of the insurer is sufficient to effect such reinsurance. If such reserve
  is insufficient for  that  purpose,  the  liquidator  shall  reinsure  a
  percentage  of  each policy obligation of the insurer outstanding to the
  extent that the reserve may be sufficient for that purpose. No  contract
  of  reinsurance  shall be entered into by the liquidator except pursuant
  to an order of the court in which the liquidator was appointed directing
  the reinsurance and establishing the general  form  of  the  reinsurance
  contract.
    (d)  An order to liquidate the business of the United States branch of
  an alien insurer having trusteed assets in this state shall  be  in  the
  same terms as those hereinbefore prescribed, except that only the assets
  of the business of such United States branch shall be included therein.
    (e)  Where  the trustee of a mortgage series consisting in whole or in
  part of certificated  mortgage  investments  guaranteed  by  a  domestic
  insurer  has distributed all of the trust estate collateral, or has been
  permitted by court order to abandon all or part of such  collateral  not
  distributed,  the  court,  by  order,  may,  upon  the  consent  of  the
  liquidator  of  the  insurer,  direct  the  superintendent,  upon  being
  furnished  with  a  list  of  certificate  holders  certified  to by the
  trustee, to record subsequent transfers of certificates and  charge  and
  collect  a  reasonable fee therefor, and distribute dividends applicable
  thereto upon liquidation of company assets in his hands, to  the  record
  owners  of  such  certificates,  and  make and deduct from such dividend
  payments a  reasonable  charge  for  such  services.  The  duty  of  the
  superintendent  under such order shall terminate upon the termination of
  the liquidation proceedings.
    (f) (1) No later than one hundred eighty days after a final  order  of
  liquidation  with an adjudication of insolvency of an insurer by a court
  of competent jurisdiction of this state, the liquidator may in his  sole
  discretion  make  application to the court for approval of a proposal to
  disburse assets out of marshalled assets, from  time  to  time  as  such
  assets  become available, to any fund established by article seventy-six
  of this chapter, article six-A of the workers' compensation law and  any
  foreign entity performing a similar function, having obligations because
  of  such  insolvency.  If  the  liquidator  determines  that  there  are
  insufficient assets to disburse,  the  application  authorized  by  this
  subsection  shall  be considered satisfied by a filing by the liquidator
  stating the reasons for this determination.
    (2) Such proposal shall at least include provisions for:
    (A) reserving amounts for the payment of expenses  of  administration,
  claims  of  secured creditors to the extent of the value of the security
  held, and claims falling within the priorities  established  in  section
  seven thousand four hundred twenty-six of this article;
    (B)  disbursement  of  the  assets  marshalled  to date and subsequent
  disbursement of assets as they become available;
    (C) disbursements to the funds and  entities  entitled  thereto  under
  this  subsection  in amounts estimated to be at least equal to all claim
  payments for which such funds or entities could  assert  claims  against
  the  liquidator,  and if the assets available for disbursement from time
  to time do not at least equal such claim payments, then disbursements in
  the amount of available assets;
    (D) equitable allocation of disbursements to each  of  such  funds  or
  entities;
    (E) the securing by the liquidator from each of such funds or entities
  of  an  agreement to return to the liquidator such assets, together with
  income earned on assets previously disbursed, as may be required to  pay
  claims  of  secured  creditors  and claims falling within the priorities
  established in section seven thousand four hundred  twenty-six  of  this
  article in accordance with such priorities. No bond shall be required of
  any such fund or entity; and
    (F)  a  full  report  to  be  made  by each such fund or entity to the
  liquidator accounting for all assets so disbursed to the fund or entity,
  all disbursements made therefrom, any  income  earned  by  the  fund  or
  entity on such assets and any other matters as the court may direct.
    (3)  Notice  of  such  application  shall  be  given to such funds and
  entities and to the commissioners of insurance of each  of  the  states.
  Any such notice shall be deemed to have been given when deposited in the
  United  States  certified  mails,  first class postage prepaid, at least
  thirty days prior to submission of such application to the court. Action
  on the application may be taken by the court if the required notice  has
  been  given  and  the  liquidator's proposal complies with subparagraphs
  (A), (B) and (D) of paragraph two of this subsection.
    (g) No later than one  hundred  twenty  days  after  the  end  of  the
  calendar  or  fiscal year of a domestic insurance corporation subject to
  rehabilitation or liquidation, upon whichever standard  the  corporation
  conducts  its  financial  affairs, the rehabilitator or liquidator shall
  submit to the department an annual report of the preceding  calendar  or
  fiscal  year's  activity  of  such corporation. Such report, which shall
  pertain  only  to  such  corporation's  activities  and  those  of   the
  rehabilitator  or  liquidator  as they relate to such corporation, shall
  include a  financial  review  of  the  assets  and  liabilities  of  the
  corporation, the claims accrued or paid in that period, and a summary of
  all  other  corporate  activity  and  a  narrative of the actions of the
  rehabilitator or liquidator respecting  such  corporation.  This  report
  shall be separate and apart from other reports issued by the liquidation
  bureau of the department in the normal course of its business.