US Laws, Codes, Statutes & Cases

INSURANCE CODE - NOT CODIFIED

CHAPTER 21A. INSURER RECEIVERSHIP ACT

SUBCHAPTER A. GENERAL PROVISIONS


	Sec. 21A.001. CONSTRUCTION AND PURPOSE.  (a) This chapter
may be cited as the Insurer Receivership Act.
	(b)  This chapter may not be interpreted to limit the powers
granted the commissioner under other provisions of law.
	(c)  This chapter shall be liberally construed to support the
purpose stated in Subsection (e).
	(d)  All powers and authority of a receiver under this
chapter are cumulative and are in addition to all powers and
authority that are available to a receiver under law other than this
chapter.
	(e)  The purpose of this chapter is to protect the interests
of insureds, claimants, creditors, and the public generally,
through:
	(1)  early detection of any potentially hazardous condition
in an insurer and prompt application of appropriate corrective
measures;
	(2)  improved methods for conserving and rehabilitating
insurers;
	(3)  enhanced efficiency and economy of liquidation, through
clarification of the law, to minimize legal uncertainty and
litigation;
	(4)  apportionment of any unavoidable loss in accordance
with the statutory priorities set out in this chapter;
	(5)  lessening the problems of interstate receivership by:
	(A)  facilitating cooperation between states in delinquency
proceedings;  and
	(B)  extending the scope of personal jurisdiction over
debtors of the insurer located outside this state;
	(6)  regulation of the business of insurance by the impact of
the law relating to delinquency procedures and related substantive
rules;  and
	(7)  providing for a comprehensive scheme for the
receivership of insurers and those subject to this chapter as part
of the regulation of the business of insurance in this state because
proceedings in cases of insurer insolvency and delinquency are
deemed an integral aspect of the business of insurance and are of
vital public interest and concern.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.002. CONFLICTS OF LAW.  This chapter and the state
law governing insurance guaranty associations constitute this
state's insurer receivership laws and shall be construed together
in a manner that is consistent.  In the event of a conflict between
the insurer receivership laws and the provisions of any other law,
the insurer receivership laws prevail.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.003. COVERED PERSONS.  The provisions of this
chapter apply to all:
	(1)  insurers who are doing or have done an insurance
business in this state and against whom claims arising from that
business may exist now or in the future and to all persons subject
to examination by the commissioner;
	(2)  insurers who purport to do an insurance business in this
state;
	(3)  insurers who have insureds resident in this state;
	(4)  other persons organized or doing insurance business, or
in the process of organizing with the intent to do insurance
business in this state;
	(5)  nonprofit health corporations and all fraternal benefit
societies subject to Chapters 844 and 885, respectively;
	(6)  title insurance companies subject to Title 11;
	(7)  health maintenance organizations subject to Chapter
843;  and
	(8)  surety and trust companies subject to Chapter 7, general
casualty companies subject to Chapter 861, statewide mutual
assessment companies subject to Chapter 881, mutual insurance
companies subject to Chapter 882 or 883, local mutual aid
associations subject to Chapter 886, burial associations subject to
Chapter 888, farm mutual insurance companies subject to Chapter
911, county mutual insurance companies subject to Chapter 912,
Lloyd's plans subject to Chapter 941, reciprocal or interinsurance
exchanges subject to Chapter 942, and fidelity, guaranty, and
surety companies.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.004. DEFINITIONS.  (a) For the purposes of this
chapter:
	(1)  "Affiliate," "control," and "subsidiary" have the
meanings assigned by Chapter 823.
	(2)  "Alien insurer" means an insurer incorporated or
organized under the laws of a jurisdiction that is not a state.
	(3)  "Creditor" or "claimant" means a person having any claim
against an insurer, whether the claim is matured or not, liquidated
or unliquidated, secured or unsecured, absolute, fixed, or
contingent.
	(4)  "Delinquency proceeding" means any proceeding
instituted against an insurer for the purpose of liquidating,
rehabilitating, or conserving the insurer, and any proceeding under
Section 21A.051.
	(5)  "Doing business," including "doing insurance business"
and the "business of insurance," includes any of the following
acts, whether effected by mail, electronic means, or otherwise:
	(A)  the issuance or delivery of contracts of insurance,
either to persons resident or covering a risk located in this state;
	(B)  the solicitation of applications for contracts
described by Paragraph (A) or other negotiations preliminary to the
execution of the contracts;
	(C)  the collection of premiums, membership fees,
assessments, or other consideration for contracts described by
Paragraph (A);
	(D)  the transaction of matters subsequent to the execution
of contracts described by Paragraph (A) and arising out of those
contracts;  or
	(E)  operating as an insurer under a certificate of authority
issued by the department.
	(6)  "Domiciliary state" means the state in which an insurer
is incorporated or organized or, in the case of an alien insurer,
its state of entry.
	(7)  "Foreign insurer" means an insurer domiciled in another
state.
	(8)  "Formal delinquency proceeding" means any
rehabilitation or liquidation proceeding.
	(9)  "General assets" includes:
	(A)  all property of the estate that is not:
	(i)  subject to a secured claim or a valid and existing
express trust for the security or benefit of specified persons or
classes of persons;  or
	(ii)  required by the insurance laws of this state or any
other state to be held for the benefit of specified persons or
classes of persons;  and
	(B)  all property of the estate and the proceeds of that
property in excess of the amount necessary to discharge any secured
claims described by Paragraph (A).
	(10)  "Good faith" means honesty in fact and intention, and
for the purposes of Subchapter F also requires the absence of:
	(A)  information that would lead a reasonable person in the
same position to know that the insurer is financially impaired or
insolvent;  and
	(B)  knowledge regarding the imminence or pendency of any
delinquency proceeding against the insurer.
	(11)  "Guaranty association" means any mechanism mandated by
Article 21.28-C or 21.28-D, Chapter 2602, or other laws of this
state or a similar mechanism in another state that is created for
the payment of claims or continuation of policy obligations of
financially impaired or insolvent insurers.
	(12)  "Impaired" means that an insurer does not have admitted
assets at least equal to all its liabilities together with the
minimum surplus required to be maintained under this code.
	(13)  "Insolvency" or "insolvent" means an insurer:
	(A)  is unable to pay its obligations when they are due;
	(B)  does not have admitted assets at least equal to all its
liabilities;  or
	(C)  has a total adjusted capital that is less than that
required under:
	(i)  Chapter 822, 841, or 843, as applicable;  or
	(ii)  applicable rules or guidelines adopted by the
commissioner under Section 822.210, 841.205, or 843.404.
	(14)  "Insurer" means any person that has done, purports to
do, is doing, or is authorized to do the business of insurance in
this state, and is or has been subject to the authority of or to
liquidation, rehabilitation, reorganization, supervision, or
conservation by any insurance commissioner.  For purposes of this
chapter, any other persons included under Section 21A.003 are
insurers.
	(15)  "Netting agreement" means a contract or agreement,
including terms and conditions incorporated by reference in a
contract or agreement, and a master agreement (which master
agreement, together with all schedules, confirmations,
definitions, and addenda to the agreement and transactions under
the agreement, schedules, confirmations, definitions, or addenda,
are to be treated as one netting agreement) that documents one or
more transactions between the parties to the contract or agreement
for or involving one or more qualified financial contracts and
that, among the parties to the netting agreement, provides for the
netting or liquidation of qualified financial contracts, present or
future payment obligations, or payment entitlements under the
contract or agreement, including liquidation or close-out values
relating to the obligations or entitlements.
	(16)  "New value" means money, money's worth in goods,
services, or new credit, or release by a transferee of property
previously transferred to the transferee in a transaction that is
neither void nor voidable by the insurer or the receiver under any
applicable law, including proceeds of the property.  The term does
not include an obligation substituted for an existing obligation.
	(17)  "Party in interest" means the commissioner, a 10
percent or greater equity security holder in the insolvent insurer,
any affected guaranty association, any nondomiciliary commissioner
for a jurisdiction in which the insurer has outstanding claims
liabilities, and any of the following parties that have filed a
request for inclusion on the service list under Section 21A.007:
	(A)  an insurer that ceded to or assumed business from the
insolvent insurer;  and
	(B)  an equity shareholder, policyholder, third-party
claimant, creditor, and any other person, including any indenture
trustee, with a financial or regulatory interest in the
receivership proceeding.
	(18)  "Person" means individual, aggregation of individuals,
partnership, corporation, or other entity.
	(19)  "Policy" means a written contract of insurance,
written agreement for or effecting insurance, or the certificate
for or effecting insurance, by whatever name.  The term includes all
clauses, riders, endorsements, and papers that are a part of the
contract, agreement, or certificate.  The term does not include a
contract of reinsurance.
	(20)  "Property of the insurer" or "property of the estate"
includes:
	(A)  all right, title, and interest of the insurer in
property, whether legal or equitable, tangible or intangible,
choate or inchoate, and includes choses in action, contract rights,
and any other interest recognized under the laws of this state;
	(B)  entitlements that:
	(i)  existed prior to the entry of an order of rehabilitation
or liquidation;  and
	(ii)  may arise by operation of the provisions of this
chapter or other provisions of law allowing the receiver to avoid
prior transfers or assert other rights;  and
	(C)  all records and data that are otherwise the property of
the insurer, in whatever form maintained, within the possession,
custody, or control of a managing general agent, third-party
administrator, management company, data processing company,
accountant, attorney, affiliate, or other person, including:
	(i)  claims and claim files;
	(ii)  policyholder lists;
	(iii)  application files;
	(iv)  litigation files;
	(v)  premium records;
	(vi)  rate books and underwriting manuals;
	(vii)  personnel records;  and
	(viii)  financial records or similar records.
	(21)  "Qualified financial contract" means a commodity
contract, forward contract, repurchase agreement, securities
contract, swap agreement, and any similar agreement that the
commissioner determines by rule to be a qualified financial
contract for the purposes of this chapter.
	(22)  "Receiver" means liquidator, rehabilitator, or
ancillary conservator, as the context requires.
	(23)  "Receivership" means any liquidation, rehabilitation,
or ancillary conservation, as the context requires.
	(24)  "Receivership court" refers to the court in which a
delinquency proceeding is pending, unless the context requires
otherwise.
	(25)  "Reinsurance" means transactions or contracts by which
an assuming insurer agrees to indemnify a ceding insurer against
all, or a part, of any loss that the ceding insurer might sustain
under the policy or policies that it has issued or will issue.
	(26)  "Secured claim" means any claim secured by an asset
that is not a general asset.  The term includes the right to set off
as provided in Section 21A.209.  The term does not include a claim
arising from a constructive or resulting trust, a special deposit
claim, or a claim based on mere possession.
	(27)  "Special deposit" means a deposit established pursuant
to statute for the security or benefit of a limited class or limited
classes of persons.
	(28)  "Special deposit claim" means any claim secured by a
special deposit.  The term does not include any claim secured by the
general assets of the insurer.
	(29)  "State" means any state, district, or territory of the
United States.
	(30)  "Transfer" includes the sale and every other and
different mode, direct or indirect, of disposing of or of parting
with property or with an interest in property, including a setoff,
or with the possession of property or of fixing a lien upon property
or upon an interest in property, absolutely or conditionally,
voluntarily or involuntarily, by or without judicial proceedings.
The retention of a security title in property delivered to an
insurer is deemed a transfer suffered by the insurer.
	(31)  "Unauthorized insurer" means an insurer doing the
business of insurance in this state that has not received from this
state a certificate of authority or some other type of authority
that allows for doing the business of insurance in this state.
	(b)  For purposes of this chapter, "admitted assets" and
"liabilities" have the meanings assigned by the department in rules
relating to risk-based capital.
	(c)  For purposes of Subsection (a)(21):
	(1)  "Commodity contract" means:
	(A)  a contract for the purchase or sale of a commodity for
future delivery on or subject to the rules of a board of trade
designated as a contract market by the Commodity Futures Trading
Commission under the Commodity Exchange Act (7 U.S.C. Section 1 et
seq.) or a board of trade outside the United States;
	(B)  an agreement that is subject to regulation under Section
19, Commodity Exchange Act (7 U.S.C. Section 23), and that is
commonly known to the commodities trade as a margin account, margin
contract, leverage account, or leverage contract;  or
	(C)  an agreement or transaction that is subject to
regulation under Section 4c(b), Commodity Exchange Act (7 U.S.C.
Section 6c(b)), and that is commonly known to the commodities trade
as a commodity option.
	(2)  "Forward contract" means a contract, other than a
commodity contract, with a maturity date more than two days after
the date the contract is entered into, that is for the purchase,
sale, or transfer of a commodity, as defined by Section 1a,
Commodity Exchange Act (7 U.S.C. Section 1a), or any similar good,
article, service, right, or interest that is presently or in the
future becomes the subject of dealing in the forward contract trade
or product or byproduct of the contract.  The term includes a
repurchase transaction, reverse repurchase transaction,
consignment, lease, swap, hedge transaction, deposit, loan,
option, allocated transaction, unallocated transaction, or a
combination of these or option on any of them.
	(3)  "Repurchase agreement" includes a reverse repurchase
agreement and means an agreement, including related terms, that
provides for the transfer of certificates of deposit, eligible
bankers' acceptances, or securities that are direct obligations of
or that are fully guaranteed as to principal and interest by the
United States against the transfer of funds by the transferee of the
certificates of deposit, eligible bankers' acceptances, or
securities with a simultaneous agreement by the transferee to
transfer to the transferor certificates of deposit, eligible
bankers' acceptances, or securities as described in this
subdivision, on demand or at a date certain not later than one year
after the transfers, against the transfer of funds.  For the
purposes of this subdivision, the items that may be subject to a
repurchase agreement:
	(A)  include mortgage-related securities and a mortgage loan
and an interest in a mortgage loan;  and
	(B)  do not include any participation in a commercial
mortgage loan unless the commissioner determines by rule to include
the participation within the meaning of the term.
	(4)  "Securities contract" means a contract for the
purchase, sale, or loan of a security, including an option for the
repurchase or sale of a security, certificate of deposit, or group
or index of securities or an interest in the group or index or based
on the value of the group or index, an option entered into on a
national securities exchange relating to foreign currencies, or the
guarantee of a settlement of cash or securities by or to a
securities clearing agency.  For the purposes of this subdivision,
the term "security" includes a mortgage loan, a mortgage-related
security, and an interest in any mortgage loan or mortgage-related
security.
	(5)  "Swap agreement" means an agreement, including the
terms and conditions incorporated by reference in an agreement,
that is a rate swap agreement, basis swap, commodity swap, forward
rate agreement, interest rate future, interest rate option, forward
foreign exchange agreement, spot foreign exchange agreement, rate
cap agreement, rate floor agreement, rate collar agreement,
currency swap agreement, cross-currency rate swap agreement,
currency future, or currency option or any other similar agreement.
The term includes any combination agreements described by this
subdivision and an option to enter into any agreement described by
this subdivision.
	(d)  The definitions under this section apply only to this
chapter unless the context of another law requires otherwise.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.005. JURISDICTION AND VENUE.  (a) A delinquency
proceeding may not be commenced under this chapter by a person other
than the commissioner, and a court does not have jurisdiction to
entertain, hear, or determine any delinquency proceeding commenced
by any other person.
	(b)  A court of this state does not have jurisdiction, other
than in accordance with this chapter, to entertain, hear, or
determine any complaint praying for:
	(1)  the liquidation, rehabilitation, seizure,
sequestration, conservation, or receivership of any insurer;  or
	(2)  a stay, injunction, restraining order, or other relief
preliminary, incidental, or relating to proceedings described by
Subdivision (1).
	(c)  The receivership court, as of the commencement of a
delinquency proceeding under this chapter, has exclusive
jurisdiction of all property of the insurer, wherever located,
including property located outside the territorial limits of the
state.  The receivership court has original but not exclusive
jurisdiction of all civil proceedings arising:
	(1)  under this chapter;  or
	(2)  in or related to delinquency proceedings under this
chapter.
	(d)  In addition to other grounds for jurisdiction provided
by the law of this state, a court having jurisdiction of the subject
matter has jurisdiction over a person served pursuant to Rules 21
and 21a, Texas Rules of Civil Procedure, or other applicable
provisions of law in an action brought by the receiver if the person
served:
	(1)  is or has been an agent, or other person who, at any
time, has written policies of insurance for or has acted in any
manner on behalf of an insurer against which a delinquency
proceeding has been instituted, in any action resulting from or
incident to such a relationship with the insurer;
	(2)  is or has been an insurer or reinsurer who, at any time,
has entered into a contract of reinsurance with an insurer against
which a delinquency proceeding has been instituted, or who is an
agent of or for the reinsurer, in any action on or incident to the
reinsurance contract;
	(3)  is or has been an officer, director, manager, trustee,
organizer, promoter, or other person in a position of comparable
authority or influence over an insurer against which a delinquency
proceeding has been instituted, in any action resulting from or
incident to such a relationship with the insurer;
	(4)  at the time of the institution of the delinquency
proceeding against the insurer, is or was holding assets in which
the receiver claims an interest on behalf of the insurer in any
action concerning the assets;  or
	(5)  is obligated to the insurer in any way, in any action on
or incident to the obligation.
	(e)  If, on motion of any party, the receivership court finds
that any action, as a matter of substantial justice, should be tried
in a forum outside this state, the receivership court may enter an
appropriate order to stay further proceedings on the action in this
state.  Except as to claims against the estate, nothing in this
chapter deprives a party of any contractual right to pursue
arbitration.  A party in arbitration may bring a claim or
counterclaim against the estate, but the claim or counterclaim is
subject to Section 21A.209.
	(f)  Service must be made upon the person named in the
petition in accordance with Rules 21 and 21a, Texas Rules of Civil
Procedure.  In lieu of such service, upon application to the
receivership court, service may be made in any manner the
receivership court directs if it is satisfactorily shown by
affidavit:
	(1)  in the case of a corporation, that the officers of the
corporation cannot be served because they have departed from the
state or otherwise concealed themselves with intent to avoid
service;
	(2)  in the case of a Lloyd's plan or reciprocal or
interinsurance exchange, that the individual attorney in fact or
the officers of the corporate attorney in fact cannot be served
because of departure or concealment;  or
	(3)  in the case of an individual, that the person cannot be
served because of the individual's departure or concealment.
	(g)  An action authorized by this section must be brought in
a district court in Travis County.
	(h)  At any time after an order is entered pursuant to
Section 21A.051, 21A.101, or 21A.151, the commissioner or receiver
may transfer the case to the county of the principal office of the
person proceeded against.  In the event of transfer, the court in
which the proceeding was commenced, upon application of the
commissioner or receiver, shall direct its clerk to transmit the
court's file to the clerk of the court to which the case is to be
transferred.  The proceeding, after transfer, shall be conducted in
the same manner as if it had been commenced in the court to which the
matter is transferred.
	(i)  A person may not intervene in any delinquency proceeding
in this state for the purpose of seeking or obtaining payment of any
judgment, lien, or other claim of any kind.  The claims procedure
set forth in this chapter constitutes the exclusive means for
obtaining payment of claims from the receivership estate.  This
provision is not intended to affect the rights conferred on the
guaranty associations by Section 21A.008(l).
	(j)  The foregoing provisions of this section
notwithstanding, the provisions of this chapter do not confer
jurisdiction on the receivership court to resolve coverage disputes
between guaranty associations and those asserting claims against
them resulting from the initiation of a delinquency proceeding
under this chapter.  The determination of any dispute with respect
to the statutory coverage obligations of any guaranty association
by a court or administrative agency or body with jurisdiction in the
guaranty association's state of domicile is binding and conclusive
as to the parties in a delinquency proceeding initiated in the
receivership court, including the policyholders of the insurer.
With respect to a guaranty association's obligations under a
rehabilitation plan, the receivership court has jurisdiction only
if the guaranty association expressly consents to the jurisdiction
of the court.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.006. EXEMPTION FROM FEES.  The receiver may not be
required to pay any filing, recording, transcript, or
authenticating fee to any public officer in this state.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.007. NOTICE, HEARING, AND APPEAL ON MATTERS
SUBMITTED BY RECEIVER FOR RECEIVERSHIP COURT APPROVAL.  (a) Upon
written request to the receiver, a person must be placed on the
service list to receive notice of matters filed by the receiver.  It
is the responsibility of the person requesting notice to inform the
receiver in writing of any changes in the person's address or to
request that the person's name be deleted from the service list.
The receiver may require that the persons on the service list
provide confirmation that they wish to remain on the service list.
Any person who fails to confirm the person's intent to remain on the
service list may be purged from the service list.  Inclusion on the
service list does not confer standing in the delinquency proceeding
to raise, appear, or be heard on any issue.
	(b)  Except as otherwise provided by this chapter, notice and
hearing of any matter submitted by the receiver to the receivership
court for approval under this chapter must be conducted in
accordance with Subsections (c)-(g).
	(c)  The receiver shall file an application explaining the
proposed action and the basis of the proposed action.  The receiver
may include any evidence in support of the application.  If the
receiver determines that any documents supporting the application
are confidential, the receiver may submit them to the receivership
court under seal for in camera inspection.
	(d)  The receiver shall provide notice of the application to
all persons on the service list and any other parties as determined
by the receiver.  Notice may be provided by first class mail postage
paid, electronic mail, or facsimile transmission, at the receiver's
discretion.  For purposes of this section, notice is deemed to be
given on the date that it is deposited with the U.S. Postmaster or
transmitted, as applicable, to the last known address as shown on
the service list.
	(e)  Any party in interest objecting to the application must
file an objection specifying the grounds for the objection not
later than the 20th day after the date of the notice of the filing of
the application or within another period as the receivership court
may set, and must serve copies on the receiver and any other persons
served with the application within the same period.  An objecting
party has the burden of showing why the receivership court should
not authorize the proposed action.
	(f)  If no objection to the application is timely filed, the
receivership court may enter an order approving the application
without a hearing, or hold a hearing to determine if the receiver's
application should be approved.  The receiver may request that the
receivership court enter an order or hold a hearing on an expedited
basis.
	(g)  If an objection is timely filed, the receivership court
may hold a hearing.  If the receivership court approves the
application and, upon a motion by the receiver, determines that the
objection was frivolous or filed merely for delay or for another
improper purpose, the receivership court shall order the objecting
party to pay the receiver's reasonable costs and fees of defending
the action.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.008. INJUNCTIONS AND ORDERS.  (a) The receivership
court may issue any order, process, or judgment, including stays,
injunctions, or other orders, as necessary or appropriate to carry
out the provisions of this chapter or an approved rehabilitation
plan.
	(b)  This chapter may not be construed to limit the ability
of the receiver to apply to a court other than the receivership
court in any jurisdiction to carry out any provision of this chapter
or for the purpose of pursuing claims against any person.
	(c)  Except as provided by Subsection (e) or as otherwise
provided by this chapter and subject to Subsection (g), the
commencement of a delinquency proceeding under this chapter
operates as a stay, applicable to all persons, of:
	(1)  the commencement or continuation, including the
issuance or employment of process, of a judicial, administrative,
or other action or proceeding against the insurer, including an
arbitration proceeding, that was or could have been commenced
before the commencement of the delinquency proceeding under this
chapter, or to recover a claim against the insurer that arose before
the commencement of the delinquency proceeding under this chapter;
	(2)  the enforcement against the insurer or against property
of the insurer of a judgment obtained before the commencement of the
delinquency proceeding under this chapter;
	(3)  any act to obtain or retain possession of property of
the insurer or of property from the insurer or to exercise control
over property or records of the insurer;
	(4)  any act to create, perfect, or enforce any lien against
property of the insurer;
	(5)  any act to collect, assess, or recover a claim against
the insurer that arose before the commencement of a delinquency
proceeding under this chapter;
	(6)  the commencement or continuation of an action or
proceeding against a reinsurer of the insurer, by the holder of a
claim against the insurer, seeking reinsurance recoveries that are
contractually due to the insurer;  and
	(7)  except as provided by Subsection (e)(1), the
commencement or continuation of an action or proceeding by a
governmental unit to terminate or revoke an insurance license.
	(d)  Except as provided in Subsection (e) or as otherwise
provided by this chapter, the commencement of a delinquency
proceeding under this chapter operates as a stay, applicable to all
persons, of any judicial, administrative, or other action or
proceeding, including the enforcement of any judgment, against any
insured that was or could have been commenced before the
commencement of the delinquency proceeding under this chapter, or
to recover a claim against the insured that arose before or after
the commencement of the delinquency proceeding under this chapter
and for which the insurer is or may be liable under a policy of
insurance or is obligated to defend a party.  The stay provided by
this subsection terminates 90 days after the date of appointment of
the receiver, unless, for good cause shown, the stay is extended by
order of the receivership court after notice to any affected
parties and any hearing the receivership court determines is
appropriate.
	(e)  Notwithstanding Subsection (c), the commencement of a
delinquency proceeding under this chapter does not operate as a
stay of:
	(1)  regulatory actions not described by Subsection (c)(7)
that are taken by the commissioners of nondomiciliary states,
including the suspension of licenses;
	(2)  criminal proceedings;
	(3)  any act to perfect or to maintain or continue the
perfection of an interest in property to the extent that the act is
accomplished within any relation back period under applicable law;
	(4)  set off as permitted by Section 21A.209;
	(5)  pursuit and enforcement of nonmonetary governmental
claims, judgments, and proceedings;
	(6)  presentment of a negotiable instrument and the giving of
notice and protesting dishonor of the instrument;
	(7)  enforcement of rights against single beneficiary trusts
established pursuant to and in compliance with laws relating to
credit for reinsurance;
	(8)  termination, liquidation, and netting of obligations
under qualified financial contracts as provided for in Section
21A.261;
	(9)  discharge by a guaranty association of statutory
responsibilities under any law governing guaranty associations;  or
	(10)  any of the following actions:
	(A)  an audit by a governmental unit to determine tax
liability;
	(B)  the issuance to the insurer by a governmental unit of a
notice of tax deficiency;
	(C)  a demand for tax returns;  or
	(D)  the making of an assessment for any tax and issuance of a
notice and demand for payment of the assessment.
	(f)  Except as provided by Subsection (h):
	(1)  the stay of an act against property of the insurer under
Subsection (c) continues until the property is no longer property
of the receivership estate;  and
	(2)  the stay of any other act under Subsection (c) continues
until the earlier of the time the delinquency proceeding is closed
or dismissed.
	(g)  Notwithstanding the provisions of Subsection (c),
claims against the insurer that arose before the commencement of
the delinquency proceeding under this chapter may be asserted as a
counterclaim in any judicial, administrative, or other action or
proceeding initiated by or on behalf of the receiver against the
holder of the claims.
	(h)  On request of a party in interest and after notice and
any hearing the receivership court determines is appropriate, the
receivership court may grant relief from the stay of Subsection (c)
or (d), such as by terminating, annulling, modifying, or
conditioning the stay:
	(1)  for cause as described by Subsection (i);  or
	(2)  with respect to a stay of an act against property under
Subsection (c) if:
	(A)  the insurer does not have equity in the property;  and
	(B)  the property is not necessary to an effective
rehabilitation plan.
	(i)  For purposes of Subsection (h), "cause" includes the
receiver canceling a policy, surety bond, or surety undertaking if
the creditor is entitled, by contract or by law, to require the
insured or the principal to have a policy, surety bond, or surety
undertaking and the insured or the principal fails to obtain a
replacement policy, surety bond, or surety undertaking not later
than the later of:
	(1)  the 30th day after the date the receiver cancels the
policy, surety bond, or surety undertaking;  or
	(2)  the time permitted by contract or law.
	(j)  In any hearing under Subsection (h), the party seeking
relief from the stay has the burden of proof on each issue, which
must be established by clear and convincing evidence.
	(k)  The estate of an insurer that is injured by any wilful
violation of a stay provided by this section is entitled to actual
damages, including costs and attorney's fees.  In appropriate
circumstances, the receivership court may impose additional
sanctions.
	(l)  Any guaranty association or its designated
representative may intervene as a party as a matter of right or
otherwise appear and participate in any court proceeding concerning
a delinquency proceeding if the association is or may become liable
to act as a result of the rehabilitation or liquidation of the
insurer.  Exercise by any guaranty association or its designated
representative of the right to intervene conferred under this
subsection does not constitute grounds to establish general
personal jurisdiction by the courts of this state.  The intervening
guaranty association or its designated representative are subject
to the receivership court's jurisdiction for the limited purpose
for which it intervenes.
	(m)  Notwithstanding any other provision of law, bond may not
be required of the commissioner or receiver in relation to any stay
or injunction under this section.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.009. STATUTES OF LIMITATIONS.  (a) If applicable
law, an order, or an agreement fixes a period within which the
insurer may commence an action, and this period has not expired
before the date of the filing of the initial petition in a
delinquency proceeding, the receiver may commence an action only
before the later of:
	(1)  the end of the period, including any suspension of the
period occurring on or after the filing of the initial petition in a
delinquency proceeding;  or
	(2)  four years after the later of the date of entry of an
order for either rehabilitation or liquidation.
	(b)  Except as provided by Subsection (a), if applicable law,
an order, or an agreement fixes a period within which the insurer
may file any pleading, demand, notice, or proof of claim or loss,
cure a default in a case or proceeding, or perform any other similar
act, and the period has not expired before the date of the filing of
the petition initiating formal delinquency proceedings, the
receiver may file, cure, or perform, as the case may be, only before
the later of:
	(1)  the end of the period, including any suspension of the
period occurring on or after the filing of the initial petition in
the delinquency proceeding;  or
	(2)  60 days after the later of the date of entry of an order
for either rehabilitation or liquidation.
	(c)  If applicable law, an order, or an agreement fixes a
period for commencing or continuing a civil action in a court other
than the receivership court on a claim against the insurer, and the
period has not expired before the date of the initial filing of the
petition in a delinquency proceeding, then the period does not
expire until the later of:
	(1)  the end of the period, including any suspension of the
period occurring on or after the filing of the initial petition in
the delinquency proceeding;  or
	(2)  30 days after termination or expiration of the stay
under Section 21A.008 with respect to the claim.
	(d)  If the otherwise applicable limitations period has not
expired prior to the initial filing of the petition commencing a
delinquency proceeding, any other action or proceeding filed by a
receiver may be commenced at any time within four years after the
date upon which the cause of action accrues or four years after the
date on which the receiver is appointed, whichever is later.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.010. COOPERATION OF OFFICERS, OWNERS, AND
EMPLOYEES.  (a) Any present or former officer, manager, director,
trustee, owner, employee, or agent of any insurer, or any other
persons with authority over or in charge of any segment of the
insurer's affairs, shall cooperate with the commissioner or
receiver in any proceeding under this chapter or any investigation
preliminary to the proceeding.  For purposes of this section:
	(1)  "person" includes any person who exercises control
directly or indirectly over activities of the insurer through any
holding company or other affiliate of the insurer;  and
	(2)  "cooperate" includes:
	(A)  replying promptly in writing to any inquiry from the
commissioner or receiver requesting the reply;  and
	(B)  promptly making available to the commissioner or
receiver any books, accounts, documents, or other records or
information or property of or pertaining to the insurer and in the
person's possession, custody, or control.
	(b)  A person may not obstruct or interfere with the
commissioner or receiver in the conduct of any delinquency
proceeding or any preliminary or incidental investigation.
	(c)  This section may not be construed to abridge otherwise
existing legal rights, including the right to resist a petition for
liquidation or other delinquency proceedings, or other orders.
	(d)  Any person described by Subsection (a) who fails to
cooperate with the commissioner or receiver, or any person who
obstructs or interferes with the commissioner or receiver in the
conduct of any delinquency proceeding or any preliminary or
incidental investigation, or who violates any order validly issued
under this chapter:
	(1)  commits an offense;  and
	(2)  is subject to the imposition by the commissioner of an
administrative penalty not to exceed $10,000 and subject to the
revocation or suspension of any licenses issued by the commissioner
in accordance with Chapters 82 and 84.
	(e)  An offense under Subsection (d) is punishable by a fine
not exceeding $10,000 or imprisonment for not more than one year, or
both fine and imprisonment.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.011. ACTIONS BY AND AGAINST RECEIVER.  (a) An
allegation by the receiver of improper or fraudulent conduct
against any person may not be the basis of a defense to the
enforcement of a contractual obligation owed to the insurer by a
third party, unless the conduct is found to have been materially and
substantially related to the contractual obligation for which
enforcement is sought.
	(b)  A prior wrongful or negligent action of any present or
former officer, manager, director, trustee, owner, employee, or
agent of the insurer may not be asserted as a defense to a claim by
the receiver under a theory of estoppel, comparative fault,
intervening cause, proximate cause, reliance, mitigation of
damages, or otherwise, except that the affirmative defense of fraud
in the inducement may be asserted against the receiver in a claim
based on a contract, and a principal under a surety bond or a surety
undertaking is entitled to credit against any reimbursement
obligation to the receiver for the value of any property pledged to
secure the reimbursement obligation to the extent that the receiver
has possession or control of the property or that the insurer or its
agents commingled or otherwise misappropriated the property.
Evidence of fraud in the inducement is admissible only if the
evidence is contained in the records of the insurer.
	(c)  An action or inaction by the department or the insurance
regulatory authorities in any state may not be asserted as a defense
to a claim by the receiver.
	(d)  Except as provided by Subsection (e), a judgment or
order entered against an insured or the insurer in contravention of
any stay or injunction under this chapter, or at any time by default
or collusion, may not be considered as evidence of liability or of
the amount of damages in adjudicating claims filed in the estate
arising out of the subject matter of the judgment or order.
	(e)  Subsection (d) does not apply to guaranty associations'
claims for amounts paid on settlements and judgments in pursuit of
their statutory obligations.
	(f)  The receiver may not be deemed a governmental entity for
the purposes of any state law awarding fees to a litigant who
prevails against a governmental entity.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.012. UNRECORDED OBLIGATIONS AND DEFENSES OF
AFFILIATES.  (a)  In any proceeding or claim by the receiver, an
affiliate, controlled or controlling person, or present or former
officer, manager, director, trustee, or shareholder of the insurer
may not assert any defense, unless evidence of the defense was
recorded in the books and records of the insurer at or about the
time the events giving rise to the defense occurred and, if required
by statutory accounting practices and procedures, was timely
reported on the insurer's official financial statements filed with
the department.
	(b)  An affiliate, controlled or controlling person, or
present or former officer, manager, director, trustee, or
shareholder of the insurer may not assert any claim, unless the
obligations were recorded in the books and records of the insurer at
or about the time the obligations were incurred and, if required by
statutory accounting practices and procedures, were timely
reported on the insurer's official financial statements filed with
the department.
	(c)  Claims by the receiver against any affiliate,
controlled or controlling person, or present or former officer,
manager, director, trustee, or shareholder of the insurer based on
unrecorded or unreported transactions are not barred by this
section.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.013. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.  (a)
The receiver may assume or reject any executory contract or
unexpired lease of the insurer.
	(b)  Neither the filing of a petition commencing delinquency
proceedings under this chapter nor the entry of an order for a
delinquency proceeding constitutes a breach or anticipatory breach
of any contract or lease of the insurer.
	(c)  If there has been a default in an executory contract or
unexpired lease of the insurer, the receiver may not assume the
contract or lease unless, at the time of the assumption of the
contract or lease, the receiver:
	(1)  cures or provides adequate assurance that the receiver
will promptly cure the default;  and
	(2)  provides adequate assurance of future performance under
the contract or lease.
	(d)  Subsection (c) does not apply to a default that is a
breach of a provision relating to:
	(1)  the insolvency or financial condition of the insurer at
any time before the closing of the delinquency proceeding;
	(2)  the appointment of or taking possession by a receiver in
a case under this chapter or a custodian before the commencement of
the delinquency proceeding;  or
	(3)  the satisfaction of any penalty rate or provision
relating to a default arising from any failure of the insurer to
perform nonmonetary obligations under the executory contract or
unexpired lease.
	(e)  A claim arising from the rejection, under this section
or a plan of rehabilitation, of an executory contract or unexpired
lease of the insurer that has not been assumed shall be determined,
treated, and classified as if the claim had arisen before the date
of the filing of a successful petition commencing the delinquency
proceeding.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.0135. CONTRACTS FOR SPECIAL DEPUTIES.  (a) The
receiver shall use a competitive bidding process in the selection
of any special deputies appointed under Section 21A.102 or 21A.154.
The process must include procedures to promote the participation of
historically underutilized businesses that have been certified by
the Texas Building and Procurement Commission under Section
2161.061, Government Code.
	(b)  A proposal submitted in connection with a bid
solicitation under Subsection (a) must describe the efforts that
have been made to include historically underutilized businesses as
subcontractors and the plan for using the historically
underutilized businesses in the administration of the receivership
estate.  A special deputy appointed under Section 21A.102 or
21A.154 shall make a good faith effort to implement the plan and
shall report to the receiver the special deputy's efforts to
identify and subcontract with historically underutilized
businesses.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.014. IMMUNITY AND INDEMNIFICATION OF RECEIVER AND
ASSISTANTS.  (a) For the purposes of this section, the persons
entitled to immunity and indemnification and those entitled to
immunity only, as applicable, are:
	(1)  all present and former receivers responsible for the
conduct of a delinquency proceeding under this chapter;
	(2)  all of the receiver's present and former assistants,
including:
	(A)  all present and former special deputies and assistant
special deputies engaged by contract or otherwise;
	(B)  all persons whom the receiver, special deputies, or
assistant special deputies have employed to assist in a delinquency
proceeding under this chapter;  and
	(C)  any state employees acting with respect to a delinquency
proceeding under this chapter;  and
	(3)  all of the receiver's present and former contractors,
including all persons with whom the receiver, special deputies, or
assistant special deputies have contracted to assist in a
delinquency proceeding under this chapter, including attorneys,
accountants, auditors, actuaries, investment bankers, financial
advisors, and any other professionals or firms who are retained or
contracted with by the receiver as independent contractors and all
employees of the contractors.
	(b)  The receiver, the receiver's assistants, and the
receiver's contractors have immunity under this chapter, as
described by Subsections (c) and (d).
	(c)  The receiver, the receiver's assistants, and the
receiver's contractors are immune from suit and liability, both
personally and in their representative capacities, for any claim
for damage to or loss of property or personal injury or other civil
liability caused by or resulting from any alleged act, error, or
omission of the receiver or any assistant or contractor that arises
out of or by reason of their duties or employment or is taken at the
direction of the receivership court, providing that the alleged
act, error, or omission is performed in good faith.
	(d)  Any immunity granted by this section is in addition to
any immunity granted by other law.
	(e)  The receiver and the receiver's assistants are entitled
to indemnification under this chapter, as described by Subsections
(f)-(l).
	(f)  If any legal action is commenced against the receiver or
any assistant, whether against the receiver or assistant personally
or in their official capacity, alleging property damage, property
loss, personal injury, or other civil liability caused by or
resulting from any alleged act, error, or omission of the receiver
or any assistant arising out of or by reason of their duties or
employment, the receiver and any assistant are indemnified from the
assets of the insurer for all expenses, attorney's fees, judgments,
settlements, decrees, or amounts due and owing or paid in
satisfaction of or incurred in the defense of the legal action,
unless it is determined upon a final adjudication on the merits that
the alleged act, error, or omission of the receiver or assistant
giving rise to the claim:
	(1)  did not arise out of or by reason of their duties or
employment;  or
	(2)  was caused by intentional or wilful and wanton
misconduct.
	(g)  Attorney's fees and any and all related expenses
incurred in defending a legal action for which immunity or
indemnity is available under this section must be paid from the
assets of the insurer, as the fees and expenses are incurred, and in
advance of the final disposition of the legal action upon receipt of
an agreement by or on behalf of the receiver or assistant to repay
the attorney's fees and expenses, if it is ultimately determined
upon a final adjudication on the merits that the receiver or
assistant is not entitled to immunity or indemnity under this
section.
	(h)  Any indemnification for expense payments, judgments,
settlements, decrees, attorney's fees, surety bond premiums, or
other amounts paid or to be paid from the insurer's assets pursuant
to this section are an administrative expense of the insurer.
	(i)  In the event of any actual or threatened litigation
against a receiver or any assistant for whom immunity or indemnity
may be available under this section, a reasonable amount of funds,
which in the judgment of the receiver may be needed to provide
immunity or indemnity, must be segregated and reserved from the
assets of the insurer as security for the payment of indemnity
until:
	(1)  all applicable statutes of limitation have run;
	(2)  all actual or threatened actions against the receiver or
any assistant have been completely and finally resolved;  and
	(3)  all obligations under this section have been satisfied.
	(j)  Instead of segregating and reserving funds under
Subsection (i), the receiver may, in the receiver's discretion,
obtain a surety bond or make other arrangements that will enable the
receiver to secure fully the payment of all obligations under this
section.
	(k)  If any legal action against an assistant for whom
indemnity may be available under this section is settled prior to
final adjudication on the merits, the receiver must pay the
settlement amount on behalf of the assistant, or indemnify the
assistant for the settlement amount, unless the receiver determines
that the claim:
	(1)  did not arise out of or by reason of the assistant's
duties or employment;  or
	(2)  was caused by the intentional or wilful and wanton
misconduct of the assistant.
	(l)  In any legal action in which a claim is asserted against
the receiver, that portion of any settlement relating to the
alleged act, error, or omission of the receiver is subject to the
approval of the receivership court.  The receivership court may not
approve that portion of the settlement if it determines that the
claim:
	(1)  did not arise out of or by reason of the receiver's
duties or employment;  or
	(2)  was caused by the intentional or wilful and wanton
misconduct of the receiver.
	(m)  Nothing contained or implied in this section may operate
or be construed or applied to deprive the receiver, the receiver's
assistants, or receiver's contractors of any immunity, indemnity,
benefits of law, rights, or defense otherwise available.
	(n)  The immunity and indemnification provided to the
receiver's assistants and the immunity provided to the receiver's
contractors under this section do not apply to any action by the
receiver against that person.
	(o)  Subsection (b) applies to any suit based in whole or in
part on any alleged act, error, or omission that takes place on or
after September 1, 2005.
	(p)  Subsections (e)-(l) apply to any suit that is pending on
or filed after September 1, 2005, without regard to when the alleged
act, error, or omission took place.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.015. APPROVAL AND PAYMENT OF EXPENSES.  (a) The
receiver may pay any expenses under contracts, leases, employment
agreements, or other arrangements entered into by the insurer prior
to receivership, as the receiver deems necessary for the purposes
of this chapter.  The receiver is not required to pay any expenses
that the receiver determines are not necessary, and may reject any
contract pursuant to Section 21A.013.
	(b)  Receivership expenses other than those described in
Subsection (a) must be paid in accordance with Subsections (c)-(f).
	(c)  The receiver shall submit to the receivership court an
application pursuant to Section 21A.007 to approve:
	(1)  the terms of compensation of each special deputy or
contractor with respect to which the total amount of the
compensation is reasonably expected by the receiver for the
duration of the delinquency proceeding to exceed $250,000, or
another amount established by the receivership court;  and
	(2)  any other anticipated expense in excess of $25,000, or
another amount established by the receivership court.
	(d)  The receiver may, as the receiver deems appropriate,
submit an application to approve any compensation, anticipated
expenses, or incurred expenses not described by Subsection (c)(1).
	(e)  The receiver may pay any expenses not requiring
receivership court approval and any expenses approved by the
rehabilitation or liquidation order as the expenses are incurred.
	(f)  The approval of expenses by the receivership court does
not prejudice the right of the receiver to seek any recovery,
recoupment, disgorgement, or reimbursement of fees based on
contract or causes of action recognized in law or in equity.
	(g)  On a quarterly basis, or as otherwise provided by the
receivership court, the receiver shall submit to the receivership
court a report summarizing the expenses incurred during the period.
	(h)  Receivership court approval may not be required to pay
expenses incurred by the receiver in connection with the appeal of
an order of the receivership court.
	(i)  All expenses of receivership shall be paid from the
assets of the insurer, except as provided by this subsection.  In
the event that the property of the insurer does not contain
sufficient cash or liquid assets to defray the expenses incurred,
the commissioner may advance funds from the account established
under Section 21A.304(c).  Any amounts advanced shall be repaid to
the account out of the first available money of the insurer.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.016. FINANCIAL REPORTING.  (a) Not later than the
120th day after the date of entry of an order of receivership by the
receivership court, and at least quarterly after that date, the
receiver shall file a financial report with the receivership court.
A financial report filed under this subsection at a minimum, must
include:
	(1)  a statement of the assets and liabilities of the
insurer;
	(2)  the changes in those assets and liabilities;  and
	(3)  all funds received or disbursed by the receiver during
the period covered by the report.
	(b)  The receivership court shall require a financial report
filed under Subsection (a) to comply with all receivership
financial reporting requirements specified by the National
Association of Insurance Commissioners and adopted in this state by
rule by the commissioner.
	(c)  Not later than the 120th day after the date of entry of
an order of liquidation by the receivership court, and at least
quarterly after that date, or at other intervals as may be agreed to
between the liquidator and the guaranty associations, but in no
event less than annually, each affected guaranty association shall
file reports with the liquidator.  The reports must be in a format
compatible with that specified by the National Association of
Insurance Commissioners.  Reports under this subsection shall be
filed with the receivership court.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.017. RECORDS.  (a) Upon entry of an order of
rehabilitation or liquidation, the receiver is vested with title to
all of the books, documents, papers, policy information, and claim
files, and all other records of the insurer, of whatever nature, in
whatever medium, and wherever located, regardless of whether the
records are in the custody and control of a third-party
administrator, managing general agent, attorney, or other
representative of the insurer.  The receiver may immediately take
possession and control of all of the records of the insurer, and of
the premises where the records are located.  A third-party
administrator, managing general agent, attorney, or other
representative of the insurer shall release all records described
by this subsection to the receiver, or the receiver's designee, at
the request of the receiver.  A guaranty association that has or may
have obligations under a policy issued by the insurer has the right,
with the receiver's approval, to take actions as are necessary to
obtain directly from any third-party administrator, managing
general agent, attorney, or other representative of the insurer all
records described by this section that pertain to the insurer's
business and that are appropriate or necessary for the guaranty
association to fulfill the association's statutory obligations.
	(b)  The receiver has the authority to certify the records of
a delinquent insurer described by Subsection (a) and the records of
the receiver's office created and maintained in connection with a
delinquent insurer, as follows:
	(1)  records of a delinquent insurer may be certified by the
receiver in an affidavit stating that the records:
	(A)  are true and correct copies of records of the insurer;
and
	(B)  were received from the custody of the insurer or found
among its effects;  and
	(2)  records created by or filed with the receiver's office
in connection with a delinquent insurer may be certified by the
receiver's affidavit stating that the records are true and correct
copies of records maintained by the receiver's office.
	(c)  Original books, documents, papers, and other records,
or copies of original records certified under Subsection (b), when
admitted in evidence, are prima facie evidence of the facts
disclosed.
	(d)  The records of a delinquent insurer held by the receiver
may not be considered records of the department for any purposes,
and Chapter 552, Government Code, does not apply to those records.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.

SUBCHAPTER B. PROCEEDINGS


	Sec. 21A.051. RECEIVERSHIP COURT'S SEIZURE ORDER.  (a) The
commissioner may file in a district court of Travis County a
petition with respect to an insurer domiciled in this state, an
unauthorized insurer, or, pursuant to Section 21A.401, a foreign
insurer:
	(1)  alleging that grounds exist that would justify a court
order for a formal delinquency proceeding against the insurer under
this chapter;
	(2)  alleging that the interests of policyholders,
creditors, or the public will be endangered by delay;  and
	(3)  setting forth the contents of a seizure order deemed to
be necessary by the commissioner.
	(b)  Upon a filing under Subsection (a), the receivership
court may issue, ex parte and without notice or hearing, the
requested seizure order directing the commissioner 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 receivership court, enjoining the insurer and
its officers, managers, agents, and employees from disposition of
its property and from the transaction of its business except with
the written consent of the commissioner.  Any person having
possession or control of and refusing to deliver any of the books,
records, or assets of a person against whom a seizure order has been
issued commits an offense.  An offense under this subsection is
punishable in the manner described by Section 21A.010(e).
	(c)  A petition that prays for injunctive relief must be
verified by the commissioner or the commissioner's designee, but
need not plead or prove irreparable harm or inadequate remedy at
law.  The commissioner shall provide only the notice as the
receivership court may require.
	(d)  The receivership court shall specify in the seizure
order the duration of the seizure order, which shall be a period the
receivership court deems necessary for the commissioner to
ascertain the condition of the insurer.  On motion of the
commissioner or the insurer, or the court's own motion, the
receivership court may, from time to time, hold hearings as it deems
desirable after notice as it deems appropriate, and may extend,
shorten, or modify the terms of the seizure order.  The receivership
court shall vacate the seizure order if the commissioner fails to
commence a formal delinquency proceeding under this chapter after
having had a reasonable opportunity to do so.  An order of the
receivership court pursuant to a formal proceeding under this
chapter vacates the seizure order.
	(e)  Entry of a seizure order under this section does not
constitute a breach or an anticipatory breach of any contract of the
insurer.
	(f)  An insurer subject to an ex parte seizure order under
this section may petition the receivership court at any time after
the issuance of a seizure order for a hearing and review of the
seizure order.  The receivership court shall hold the hearing and
conduct the review not later than the 15th day after the date of the
request.  A hearing under this subsection may be held privately in
chambers, and a hearing shall be held privately in chambers if the
insurer proceeded against so requests.
	(g)  If, at any time after the issuance of a seizure order, it
appears to the receivership court that any person whose interest is
or will be substantially affected by the seizure order did not
appear at the hearing and has not been served, the receivership
court may order that notice be given to the person.  An order that
notice be given does not stay the effect of any seizure order
previously issued by the receivership court.
	(h)  Whenever the commissioner makes any seizure as provided
by Subsection (b), on the demand of the commissioner, the sheriff of
any county and the police department of any municipality shall
furnish the commissioner with the deputies, patrolmen, or officers
as may be necessary to assist the commissioner in making and
enforcing the seizure order.
	(i)  In all proceedings and judicial reviews under this
section, all records of the insurer, department files, court
records and papers, and other documents, so far as they pertain to
or are a part of the record of the proceedings, are confidential,
and all papers filed with the clerk of the court shall be held by the
clerk in a confidential file as permitted by law, except to the
extent necessary to obtain compliance with any order entered in
connection with the proceedings, unless and until:
	(1)  the court, after hearing argument in chambers, orders
otherwise;
	(2)  the insurer requests that the matter be made public;  or
	(3)  the commissioner applies for an order under Section
21A.057.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.052. COMMENCEMENT OF FORMAL DELINQUENCY
PROCEEDING.  (a) Any formal delinquency proceeding against a
person shall be commenced by filing a petition in the name of the
commissioner or department.
	(b)  The petition must state the grounds upon which the
proceeding is based and the relief requested and may include a
prayer for restraining orders and injunctive relief as described in
Section 21A.008.  On the filing of the petition or order, a copy
shall be forwarded by first class mail or electronic communication
as permitted by the receivership court to the insurance regulatory
officials and guaranty associations in states in which the insurer
did business.
	(c)  Any petition that prays for injunctive relief must be
verified by the commissioner or the commissioner's designee, but
need not plead or prove irreparable harm or inadequate remedy at
law.  The commissioner shall provide only the notice as the
receivership court may require.
	(d)  If any temporary restraining order is prayed for:
	(1)  the receivership court may issue an initial order
containing the relief requested;
	(2)  the receivership court shall set a time and date for the
return of summons, not later than 10 days after the time and date of
the issuance of the initial order, at which time the person
proceeded against may appear before the receivership court for a
summary hearing;
	(3)  the order must state the time and date of its issuance;
and
	(4)  the order may not continue in effect beyond the time and
date set for the return of summons, unless the receivership court
expressly enters one or more orders extending the restraining
order.
	(e)  If a temporary restraining order is not requested, the
receivership court shall cause summons to be issued.  The summons
must specify a return date not later than the 30th day after the
date of issuance and that an answer must be filed at or before the
return date.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.053. RETURN OF SUMMONS AND SUMMARY HEARING.  (a)
The receivership court shall hold a summary hearing at the time and
date for the return of summons on a petition to commence a formal
delinquency proceeding.
	(b)  If a person is not served with summons on a petition to
commence a formal delinquency proceeding and fails to appear for
the summary hearing, the receivership court shall:
	(1)  continue the summary hearing not more than 10 days;
	(2)  provide for alternative service of summons upon the
person;  and
	(3)  extend any restraining order.
	(c)  Upon a showing of good faith efforts to effect personal
service upon a person who has failed to appear for a continued
summary hearing, the receivership court shall order notice of the
petition to commence a formal delinquency proceeding to be
published.  The order and notice shall specify a return date not
less than 10 or later than 20 days after the date of publication and
that the restraining order has been extended to the continued
hearing date.
	(d)  If a person fails to appear for a summary hearing on a
petition to commence a formal delinquency proceeding after service
of summons, the receivership court shall enter judgment in favor of
the commissioner against that person.
	(e)  A person who appears for the summary hearing on a
petition to commence a formal delinquency proceeding shall file the
person's answer at the hearing, and the receivership court shall:
	(1)  determine whether to extend any temporary restraining
orders pending final judgment;  and
	(2)  set the case for trial on a date not later than 10 days
after the date of the summary hearing.
	(f)  The receivership court may not grant a continuance for
filing an answer.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.054. PROCEEDINGS FOR EXPEDITED TRIAL:
CONTINUANCES, DISCOVERY, EVIDENCE.  (a) The receivership court
shall proceed to hear the case on the petition to commence a formal
delinquency proceeding at the time and date set forth for trial.  To
the extent practicable, the receivership court shall give
precedence to the matter over all other matters.  To the extent
authorized by law, the receivership court may assign the matter to
other judges if necessary to comply with the need for expedited
proceedings under this chapter.
	(b)  Continuances for trial may be granted only in extreme
circumstances.
	(c)  The receivership court shall admit into evidence, as
self-authenticated, certified copies of any of the following when
offered by the commissioner:
	(1)  the financial statements made by the insurer or an
affiliate;
	(2)  examination reports of the insurer or an affiliate made
by or on behalf of the commissioner;  and
	(3)  any other document filed with any insurance department
by the insurer or an affiliate.
	(d)  The facts contained in any examination report of the
insurer or an affiliate made by or on behalf of the commissioner are
presumed to be true as of the date of the hearing if the examination
was made as of a date not more than 270 days before the date the
petition was filed.  The presumption is rebuttable, and shifts the
burden of production and persuasion to the insurer.
	(e)  Discovery is limited to grounds alleged in the petition
and shall be concluded on an expedited basis.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.055. DECISION AND APPEALS.  (a) The receivership
court shall enter judgment on the petition to commence formal
delinquency proceedings not later than the 15th day after the date
of conclusion of the evidence.
	(b)  The judgment is final when entered.  Any appeal must be
prosecuted on an expedited basis and must be taken not later than
the fifth day after the date of entry of the judgment.  A request for
reconsideration, review, or appeal, or posting of a bond does not
dissolve or stay the judgment.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.056. CONFIDENTIALITY.  (a) The commissioner,
rehabilitator, or liquidator may share documents, materials, or
other information in the possession, custody, or control of the
department without regard to the confidentiality of those
documents, materials, or information, pertaining to an insurer that
is the subject of a proceeding under this chapter with other state,
federal, and international regulatory agencies, with the National
Association of Insurance Commissioners and its affiliates and
subsidiaries, with state, federal, and international law
enforcement authorities, with an auditor appointed by the
receivership court in accordance with Section 21A.355, and,
pursuant to Section 21A.105, with representatives of guaranty
associations that may have statutory obligations as a result of the
insolvency of the insurer, provided that the recipient agrees to
maintain the confidentiality, if any, of the documents, material,
or other information.  Nothing in this section limits the power of
the commissioner to disclose information under other applicable
law.
	(b)  A domiciliary receiver shall permit a commissioner of
another state or a guaranty association to obtain a listing of
policyholders and certificate holders residing in the requestor's
state, including current addresses and summary policy information,
provided that the commissioner of the other state or the guaranty
association agrees to maintain the confidentiality of the records
and agrees that the records will be used only for regulatory or
guaranty association purposes.  Access to records may be limited to
normal business hours.  In the event that the domiciliary receiver
believes that certain information is sensitive and that disclosure
may cause a diminution in recovery, the receiver may apply for a
protective order imposing additional restrictions on access.
	(c)  The Texas Workers' Compensation Commission shall report
to the department any information that a workers' compensation
insurer has committed acts that indicate that the insurer is
impaired or insolvent.  A report made under this subsection is
confidential under this section.
	(d)  The confidentiality obligations imposed by this section
end upon the entry of an order of liquidation against the insurer,
unless otherwise agreed to by the parties or pursuant to an order of
the receivership court.
	(e)  A waiver of any applicable privilege or claim of
confidentiality does not occur as a result of any disclosure, or any
sharing of documents, materials, or other information, made
pursuant to this section.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.057. GROUNDS FOR CONSERVATION, REHABILITATION, OR
LIQUIDATION.  The commissioner may file with a court in this state
a petition with respect to an insurer domiciled in this state or an
unauthorized insurer for an order of rehabilitation or liquidation
on any one or more of the following grounds:
	(1)  the insurer is impaired;
	(2)  the insurer is insolvent;
	(3)  the insurer is about to become insolvent, with "about to
become insolvent" being defined as reasonably anticipated that the
insurer will not have liquid assets to meet its next 90 days'
current obligations;
	(4)  the insurer has neglected or refused to comply with an
order of the commissioner to make good within the time prescribed by
law any deficiency, whenever its capital and minimum required
surplus, if a stock company, or its surplus, if a company other than
stock, has become impaired;
	(5)  the insurer, its parent company, its subsidiaries, or
its affiliates have converted, wasted, or concealed property of the
insurer or have otherwise improperly disposed of, dissipated, used,
released, transferred, sold, assigned, hypothecated, or removed
the property of the insurer;
	(6)  the insurer is in a condition such that it could not meet
the requirements for organization and authorization as required by
law, except as to the amount of the original surplus required of a
stock company under Title 6, and except as to the amount of the
surplus required of a company other than a stock company in excess
of the minimum surplus required to be maintained;
	(7)  the insurer, its parent company, its subsidiaries, or
its affiliates have concealed, removed, altered, destroyed, or
failed to establish and maintain books, records, documents,
accounts, vouchers, and other pertinent material adequate for the
determination of the financial condition of the insurer by
examination under Article 1.15, 1.15A, or 1.16 or has failed to
properly administer claims or maintain claims records that are
adequate for the determination of its outstanding claims liability;
	(8)  at any time after the issuance of an order under Article
1.32 or 21.28-A, or at the time of instituting any proceeding under
this chapter, it appears to the commissioner that, upon good cause
shown, it would not be in the best interest of the policyholders,
creditors, or the public to proceed with the conduct of the business
of the insurer;
	(9)  the insurer is in a condition such that the further
transaction of business would be hazardous financially, according
to Article 1.32 or otherwise, to its policyholders, creditors, or
the public;
	(10)  there is reasonable cause to believe that there has
been embezzlement from the insurer, wrongful sequestration or
diversion of the insurer's property, forgery or fraud affecting the
insurer, or other illegal conduct in, by, or with respect to the
insurer that, if established, would endanger assets in an amount
threatening the solvency of the insurer;
	(11)  control of the insurer is in a person who is:
	(A)  dishonest or untrustworthy;  or
	(B)  so lacking in insurance company managerial experience
or capability as to be hazardous to policyholders, creditors, or
the public;
	(12)  any person who in fact has executive authority in the
insurer, whether an officer, manager, general agent, director,
trustee, employee, shareholder, or other person, has refused to be
examined under oath by the commissioner concerning the insurer's
affairs, whether in this state or elsewhere or if examined under
oath, refuses to divulge pertinent information reasonably known to
the person;  and after reasonable notice of the fact, the insurer
has failed promptly and effectively to terminate the employment and
status of the person and all the person's influence on management;
	(13)  after demand by the commissioner under Article 1.15,
1.15A, or 1.16 or under this chapter, the insurer has failed
promptly to make available for examination any of its own property,
books, accounts, documents, or other records, or those of any
subsidiary or related company within the control of the insurer or
of any person having executive authority in the insurer, so far as
they pertain to the insurer;
	(14)  without first obtaining the written consent of the
commissioner, the insurer has transferred, or attempted to
transfer, in a manner contrary to Chapter 823 or any law relating to
bulk reinsurance, substantially its entire property or business, or
has entered into any transaction the effect of which is to merge,
consolidate, or reinsure substantially its entire property or
business in or with the property or business of any other person;
	(15)  the insurer or its property has been or is the subject
of an application for the appointment of a receiver, trustee,
custodian, conservator, sequestrator, or similar fiduciary of the
insurer or its property otherwise than as authorized under the
insurance laws of this state;
	(16)  within the previous five years, the insurer has
wilfully and continuously violated its charter, articles of
incorporation or bylaws, any insurance law of this state, or any
valid order of the commissioner;
	(17)  the insurer has failed to pay within 60 days after the
due date any obligation to any state or political subdivision of a
state or any judgment entered in any state, if the court in which
the judgment was entered had jurisdiction over the subject matter,
except that nonpayment is not a ground until 60 days after any good
faith effort by the insurer to contest the obligation has been
terminated, whether it is before the commissioner or in the courts;
	(18)  the insurer has systematically engaged in the practice
of reaching settlements with and obtaining releases from claimants,
and then unreasonably delayed payment, failed to pay the
agreed-upon settlements, or systematically attempted to compromise
with claimants or other creditors on the ground that it is
financially unable to pay its claims or obligations in full;
	(19)  the insurer has failed to file its annual report or
other financial report required by statute within the time allowed
by law;
	(20)  the board of directors or the holders of a majority of
the shares entitled to vote, or a majority of those individuals
entitled to the control of those entities specified by Section
21A.003, request or consent to rehabilitation or liquidation under
this chapter;
	(21)  the insurer does not comply with its domiciliary
state's requirements for issuance to it of a certificate of
authority, or its certificate of authority has been revoked by its
state of domicile;  or
	(22)  when authorized by department rules.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.058. ENTRY OF ORDER.  If the commissioner
establishes any of the grounds provided in Section 21A.057, the
receivership court shall grant the petition and issue the order of
rehabilitation or liquidation requested in the petition.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.059. EFFECT OF PETITION OR ORDER ON CONTRACT OR
LEASE.  Neither the filing of a petition under this chapter nor the
entry of any order of seizure, rehabilitation, or liquidation
constitutes a breach or an anticipatory breach of any contract or
lease of the insurer.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.

SUBCHAPTER C. REHABILITATION


	Sec. 21A.101. REHABILITATION ORDERS.  (a) An order to
rehabilitate the business of an insurer must appoint the
commissioner and the commissioner's successors in office as the
rehabilitator and must direct the rehabilitator to take possession
of the property of the insurer wherever located and to administer it
subject to this chapter.  The rehabilitator is entitled to request
the receivership court to appoint a single judge to supervise the
rehabilitation and hear any cases or controversies arising out of
or related to the rehabilitation.  Rehabilitation proceedings are
exempt from any dormancy or similar program maintained by the
receivership court for the early closure of civil actions.  The
filing or recording of the order with the clerk of the court or
recorder of deeds of the county in which the principal business of
the company is conducted, or, in the case of real estate, the county
in which its principal office or place of business is located,
imparts the same notice as a deed, bill of sale, or other evidence
of title filed or recorded with the recorder of deeds would impart.
The order to rehabilitate the insurer must, by operation of law,
vest title to all property of the insurer in the rehabilitator.
	(b)  Any order issued under this section must require
accountings to the receivership court by the rehabilitator.
Accountings must be at the intervals specified by the receivership
court in its order, but not less frequently than semi-annually.
Each accounting must include a report concerning the
rehabilitator's opinion as to the likelihood that a plan under
Section 21A.103 will be prepared by the rehabilitator and the
timetable for doing so.
	(c)  In recognition of the need for a prompt and final
resolution for all persons affected by a plan of rehabilitation,
any appeal from an order of rehabilitation or an order approving a
plan of rehabilitation must be heard on an expedited basis.  A stay
of an order of rehabilitation or an order approving a plan of
rehabilitation may not be granted unless the appellant demonstrates
that extraordinary circumstances warrant delaying the recovery
under the plan of rehabilitation of all other persons, including
policyholders.  If the plan provides an appropriate mechanism for
adjustment in the event of any adverse ruling from an appeal, a stay
may not be granted.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.102. POWERS AND DUTIES OF REHABILITATOR.  (a) The
rehabilitator may appoint one or more special deputies.  A special
deputy serves at the pleasure of the rehabilitator and has all the
powers and responsibilities of the rehabilitator granted under this
section, unless specifically limited by the rehabilitator.  The
rehabilitator may employ or contract with legal counsel, actuaries,
accountants, appraisers, consultants, clerks, assistants, and
other personnel as may be deemed necessary.  Any special deputy or
any other person with whom the rehabilitator contracts under this
subsection may act on behalf of the commissioner only in the
commissioner's capacity as rehabilitator.  Any person with whom the
rehabilitator contracts under this subsection is not considered an
agent of the state, and any contract entered into under this
subsection does not constitute a contract with the state.  The
provisions of any law governing the procurement of goods and
services by the state does not apply to any contract entered into by
the commissioner as rehabilitator.  The compensation of any special
deputies, employees, and contractors and all expenses of taking
possession of the insurer and of conducting the rehabilitation
shall be fixed by the rehabilitator, with the approval of the
receivership court in accordance with Section 21A.015, and shall be
paid out of the property of the insurer.  The persons appointed
under this subsection serve at the pleasure of the rehabilitator.
If the rehabilitator deems it necessary to the proper performance
of the rehabilitator's duties under this chapter, the rehabilitator
may appoint an advisory committee of policyholders, claimants, or
other creditors, including guaranty associations.  The advisory
committee serves at the pleasure of the rehabilitator and without
compensation or reimbursement for expenses.  The rehabilitator or
the receivership court in rehabilitation proceedings conducted
under this chapter may not appoint another committee of any nature.
	(b)  The rehabilitator may take action as the rehabilitator
deems necessary or appropriate to reform and revitalize the
insurer, including canceling policies, insurance and reinsurance
contracts other than life or health insurance or annuities, or
surety bonds or surety undertakings or transferring policies,
insurance and reinsurance contracts, or surety bonds or surety
undertakings to a solvent assuming insurer, with court approval.
The rehabilitator has all the powers of the directors, officers,
and managers of the insurer, whose authority is suspended, except
as redelegated by the rehabilitator.  The rehabilitator has full
power to direct and manage, hire and discharge employees, and deal
with the property and business of the insurer.
	(c)  If it appears to the rehabilitator that there has been
criminal or tortious conduct or breach of any contractual or
fiduciary obligation detrimental to the insurer by any officer,
manager, agent, broker, employee, affiliate or other person, the
rehabilitator may pursue all appropriate legal remedies on behalf
of the insurer.
	(d)  The rehabilitator may assert all defenses available to
the insurer as against third persons, including statutes of
limitations, statutes of frauds, and the defense of usury.  A waiver
of any defense by the insurer after a petition under this chapter
has been filed does not bind the rehabilitator.
	(e)  The enumeration, in this section, of the powers and
authority of the rehabilitator may not be construed as a limitation
upon the rehabilitator, nor shall it exclude in any manner the right
to do other acts not specifically enumerated or otherwise provided
for, as may be necessary or appropriate for the accomplishment of or
in aid of the purpose of rehabilitation.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.103. REHABILITATION PLANS.  (a) The rehabilitator
shall prepare and file a plan to effect rehabilitation with the
receivership court not later than the first anniversary of the
entry of the rehabilitation order or another further time as the
receivership court may allow.  Upon application of the
rehabilitator for approval of the plan, and after the notice and
hearings the receivership court may prescribe, the receivership
court may approve or disapprove the proposed plan or may modify it
and approve it as modified.  Any plan approved under this section
must be, in the judgment of the receivership court, fair and
equitable to all parties concerned.  If the plan is approved, the
rehabilitator shall carry out the plan.  A plan for a life insurer
may propose imposition of a moratorium upon loan and cash surrender
rights under policies, for a period not to exceed one year from the
entry of the rehabilitation order approving the rehabilitation
plan, unless the receivership court, for good cause shown, extends
the moratorium.
	(b)  Once a plan has been filed, any party in interest may
object to the plan.
	(c)  A plan must:
	(1)  except as provided by Subsection (e), provide no less
favorable treatment of a claim or class of claims than would occur
in liquidation, unless the holder of a particular claim or interest
agrees to a less favorable treatment of that particular claim or
interest;
	(2)  provide adequate means for the plan's implementation;
	(3)  contain information concerning the financial condition
of the insurer and the operation and effect of the plan, as far as is
reasonably practicable in light of the nature and history of the
insurer, the condition of the insurer's books and records, and the
nature of the plan;  and
	(4)  provide for the disposition of the books, records,
documents, and other information relevant to the duties and
obligations covered by the plan.
	(d)  A plan may include any other provision not inconsistent
with the provisions of this chapter, including:
	(1)  payment of distributions;
	(2)  assumption or reinsurance of all or a portion of the
insurer's remaining liabilities by, and transfer of assets and
related books and records to, an authorized insurer or other
entity;
	(3)  to the extent appropriate, application of insurance
company regulatory market conduct standards to any entity
administering claims on behalf of the receiver or assuming direct
liabilities of the insurer;
	(4)  contracting with a state guaranty association or any
other qualified entity to perform the administration of claims;
	(5)  annual independent financial and performance audits of
any entity administering claims on behalf of the receiver that is
not otherwise subject to examination pursuant to state insurance
law;  and
	(6)  termination of the insurer's liabilities other than
those under policies of insurance as of a date certain.
	(e)  A plan may designate and separately treat one or more
separate subclasses of claims consisting only of claims within the
subclasses that are for or reduced to de minimis amounts.  For
purposes of this subsection, a "de minimis amount" means any amount
equal to or less than a maximum de minimis amount approved by the
receivership court as being reasonable and necessary for
administrative convenience.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.104. TERMINATION OF REHABILITATION.  (a) When the
rehabilitator believes further attempts to rehabilitate an insurer
would substantially increase the risk of loss to creditors,
policyholders, or the public or would be futile, the rehabilitator
may move for an order of liquidation.  In accordance with Section
21A.105, the rehabilitator or the rehabilitator's designated
representative shall coordinate with the guaranty associations
that may become liable as a result of the liquidation and any
national association of guaranty associations to plan for
transition to liquidation.
	(b)  Because the protection of the interests of insureds,
claimants, and the public requires the timely performance of all
insurance policy obligations, if the payment of policy obligations
is suspended in substantial part for a period of six months at any
time after the appointment of the rehabilitator and the
rehabilitator has not filed an application for approval of a plan
under Section 21A.103, the rehabilitator shall petition the
receivership court for an order of liquidation.
	(c)  The rehabilitator or the directors of the insurer may at
any time petition the receivership court for, or the receivership
court on its own motion may enter, an order terminating
rehabilitation of an insurer.  Subject to the provisions of Section
21A.351, if the receivership court finds that rehabilitation has
been accomplished and that grounds for rehabilitation under Section
21A.057 no longer exist, it shall order that the insurer be restored
to title and possession of its property and the control of the
business.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.105. COORDINATION WITH GUARANTY ASSOCIATIONS.  (a)
The receiver shall notify any potentially obligated guaranty
association or the guaranty association's representative
concerning the entry of a rehabilitation order and shall update the
guaranty association or its representative regarding significant
developments that impact efforts to rehabilitate the insurer.  On a
determination by the rehabilitator that rehabilitation efforts may
not be successful, the rehabilitator shall participate in
cooperative efforts with the potentially obligated guaranty
associations.  To facilitate an orderly transition to liquidation,
the rehabilitator shall make available to the guaranty associations
the information necessary to discharge their responsibilities upon
becoming statutorily obligated.  To the extent that information is
available, or as it becomes available, the rehabilitator shall
provide appropriate information to guaranty associations in the
states in which the insurer transacted business.
	(b)  For the purposes of Subsection (a), "appropriate
information" may include the following for lines of business
written by the insurer, whether covered or not covered by guaranty
associations:
	(1)  a general description of the different types of business
written or assumed by the insurer;
	(2)  claim counts and policy counts by state and by line of
business;
	(3)  claim and policy reserves;
	(4)  account values and cash surrender values;
	(5)  policy loans;
	(6)  interest crediting history;
	(7)  premiums and mode of payment;
	(8)  unpaid claims and amounts;
	(9)  sample policies and endorsements;
	(10)  a listing of different locations of claim files;
	(11)  if third-party administrators were used, copies of
executed contracts and a description of the contractual
arrangements;  and
	(12)  information concerning claims in litigation or
dispute, including a listing of claims with assigned defense
counsel for those claims going to trial in the near future after a
possible liquidation date.
	(c)  For the purposes of Subsection (a), "appropriate
information" also includes information concerning states in which
the insurer is or was licensed and periods for which the insurer is
or was licensed and other information reasonably requested by a
guaranty association necessary for the guaranty association to
fulfill its statutory duties.
	(d)  In the case of a property and casualty insurer, the
rehabilitator, in cooperation with the guaranty associations,
shall make all reasonable efforts to prepare the insurer's
electronic policy and claims data so that, upon the entry of an
order of liquidation, the data will be ready for transmission using
the Uniform Data Standards as promulgated by the National
Association of Insurance Commissioners.
	(e)  The list of what appropriate information includes under
Subsections (b) and (c) is not necessarily an exclusive list.  Other
information may be necessary to ensure that an orderly transition
to liquidation occurs, and that information may be appropriately
provided by the receiver.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.

SUBCHAPTER D. LIQUIDATION


	Sec. 21A.151. LIQUIDATION ORDERS.  (a) An order to liquidate
the business of an insurer shall appoint the commissioner and any
successor in office as the liquidator and shall direct the
liquidator to take possession of the property of the insurer and to
administer it subject to this chapter.  The liquidator is entitled
to request the receivership court to appoint a single judge to
supervise the liquidation and to hear any cases or controversies
arising out of or related to the liquidation.  Liquidation
proceedings are exempt from any dormancy or similar program
maintained by the receivership court for the early closure of civil
actions.  As of the entry of the final order of liquidation, the
liquidator is vested by operation of law with the title to all of
the property, contracts, rights of action, and books and records of
the insurer ordered liquidated, wherever located.  The filing or
recording of the order with the clerk of the court and the recorder
of deeds of the county in which the insurer's principal office or
place of business is located or, in the case of real estate, the
county where the property is located, imparts the same notice as a
deed, bill of sale, or other evidence of title filed or recorded
with that recorder of deeds would impart.
	(b)  Upon issuance of the order of liquidation, the rights
and liabilities of the insurer and of its creditors, policyholders,
shareholders, members, and all other persons interested in its
estate become fixed as of the date of entry of the order of
liquidation, except as provided by Sections 21A.152 and 21A.255,
unless otherwise fixed by the court.
	(c)  An order to liquidate the business of an alien insurer
in this state must be in the same terms and has the same legal effect
as an order to liquidate a domestic insurer.
	(d)  At the time of petitioning for an order of liquidation,
or at any time after petitioning, the commissioner may petition the
receivership court for a judicial declaration of insolvency.  After
providing the notice and hearing as it deems proper, the
receivership court may make the declaration of insolvency.
	(e)  In the event an order of liquidation is set aside on
appeal, the company may not be released from delinquency
proceedings except in accordance with Section 21A.351.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.152. CONTINUANCE OF COVERAGE.  (a) Notwithstanding
any policy or contract language or any other statute, all
reinsurance contracts by which the insurer has assumed the
insurance obligations of another insurer are canceled upon entry of
an order of liquidation.
	(b)  Notwithstanding any policy or contract language or any
other statute, all policies, insurance contracts other than
reinsurance by which the insurer has ceded insurance obligations to
another person, and surety bonds or surety undertakings, other than
life or health insurance or annuities, in effect at the time of
issuance of an order of liquidation, unless further extended by the
receiver with the approval of the receivership court, continue in
force only until the earlier of:
	(1)  the 30th day after the date of entry of the liquidation
order;
	(2)  the date of expiration of the policy coverage;
	(3)  the date the insured has replaced the insurance coverage
with equivalent insurance with another insurer or otherwise
terminated the policy;
	(4)  the date the liquidator has effected a transfer of the
policy obligation pursuant to Section 21A.154(h);  or
	(5)  the date proposed by the liquidator and approved by the
receivership court to cancel coverage.
	(c)  An order of liquidation under Section 21A.151 must
terminate coverages at the time specified by Subsections (a) and
(b) for purposes of any other statute.
	(d)  Policies of life or health insurance or annuities
covered by a guaranty association and any portion of policies of
life or health insurance or annuities covered by a guaranty
association continue in force for the period and under the terms
provided for by any applicable guaranty association law.  Policies
of life or health insurance or annuities not covered by a guaranty
association and any portion of policies of life or health insurance
or annuities not covered by a guaranty association terminate under
Subsection (b), except to the extent the liquidator proposes and
the receivership court approves the use of property of the estate,
consistent with Section 21A.301, for the purpose of continuing the
contracts or coverage by transferring them to an assuming
reinsurer.
	(e)  The cancellation of any bond or surety undertaking does
not release any cosurety or guarantor.
	(f)  The obligations of the insolvent insurer's reinsurers
are not released or discharged by a cancellation under this
section.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.153. SALE OR DISSOLUTION OF INSURER'S CORPORATE
ENTITY.  (a)  Notwithstanding the entry of a liquidation order, the
liquidator may apply for an order to sell or dissolve the corporate
entity or charter of a domestic insurer or the United States branch
of an alien insurer domiciled in this state at any time after an
order of liquidation of the insurer has been granted, consistent
with the provisions of this section.
	(b)  Upon an application to sell the corporate entity or
charter, with notice as prescribed in this chapter, the
receivership court may enter an order:
	(1)  separating the corporate entity or charter, together
with any of its licenses to do business and the assets the
liquidator deems appropriate to the transaction, from the remaining
estate in liquidation and all of the remaining estate's assets and
the claims or interests of all claimants, creditors, policyholders,
and stockholders;
	(2)  canceling all outstanding stock and other securities of
and other equity interests in the corporate entity or charter,
provided that the cancellation may not affect any claim against the
estate by a holder of an equity interest;
	(3)  authorizing the issuance and sale of new stock or other
securities for the purpose of transferring to one or more buyers
control and ownership of the corporate entity or charter;  and
	(4)  authorizing the sale of the corporate entity or charter,
together with any of its authorizations or licenses to do business
and the general assets of the estate the liquidator deems to be
appropriate to the transaction, free and clear from the claims or
interest of all claimants, creditors, policyholders, and
stockholders.
	(c)  The sale of the corporate entity or charter may be made
in the manner and on the terms and conditions applied for by the
liquidator and ordered by the receivership court.  Any sale is
subject to the domiciliary state's laws regarding acquisition of an
insurer, Chapter 823, and any other law regarding the transfer of
control of insurers.  The proceeds from the sale of the corporate
entity or charter become a part of the property of the estate in
liquidation.  The separate corporate entity or charter, together
with any of its authorizations or licenses to do business and such
assets as the liquidator deems appropriate to the transaction, are,
following the sale of the corporate entity or charter, free and
clear from the claims or interest of all claimants, creditors,
policyholders, and stockholders of the corporation in liquidation.
	(d)  This section shall be liberally construed to accomplish
its purposes to:
	(1)  provide an expeditious and effective procedure to
realize the maximum proceeds possible from the sale of a corporate
entity or charter separated from an estate in liquidation;  and
	(2)  ensure that the purchasers receive clear and marketable
titles.
	(e)  If permission to sell the corporate entity or charter is
not granted prior to discharge of the liquidator, in accordance
with this section or otherwise with receivership court approval:
	(1)  the receivership court may order dissolution of the
corporate entity or charter;
	(2)  dissolution shall be deemed complete by operation of law
upon the discharge of the liquidator if the insurer is insolvent;
or
	(3)  dissolution may be ordered by the receivership court
upon the discharge of the liquidator if the insurer is under a
liquidation order for some other reason.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.154. POWERS OF LIQUIDATOR.  (a) The liquidator may
appoint a special deputy or deputies to act for the liquidator under
this chapter and employ or contract with legal counsel, actuaries,
accountants, appraisers, consultants, clerks, assistants, and
other personnel the liquidator may deem necessary to assist in the
liquidation.  A special deputy has all powers of the liquidator
granted by this section, unless specifically limited by the
liquidator, and serves at the pleasure of the liquidator.  A special
deputy or any other person with whom the liquidator contracts under
this subsection may act on behalf of the commissioner only in the
commissioner's capacity as liquidator.  Any person with whom the
liquidator contracts is not considered to be an agent of the state
and any contract under this subsection is not a contract with the
state.  The provisions of any law governing the procurement of goods
and services by the state do not apply to any contract entered into
by the commissioner as liquidator.  This subsection does not waive
any immunity granted by Section 21A.014 or create any cause of
action against the state.
	(b)  The liquidator may determine the reasonable
compensation for any special deputies, employees, or contractors
retained by the liquidator as provided in Subsection (a) and pay
compensation in accordance with Section 21A.015.
	(c)  The liquidator may appoint, with the approval of the
receivership court, an advisory committee of policyholders,
claimants, or other creditors, including guaranty associations, if
the committee be deemed necessary.  The advisory committee serves
at the pleasure of the liquidator, and the decision to appoint an
advisory committee is at the sole discretion of the liquidator.  The
advisory committee serves without compensation or reimbursement
for expenses.  The liquidator or the receivership court in
liquidation proceedings conducted under this chapter may not
appoint another committee of any nature.
	(d)  The liquidator may hold hearings, subpoena witnesses to
compel their attendance, administer oaths, examine any person under
oath, compel any persons to subscribe to their testimony after it
has been correctly reduced to writing, and, in connection with a
power under this subsection, require the production of any books,
papers, records, or other documents that the liquidator deems
relevant to the inquiry.
	(e)  The liquidator may audit the books and records of all
agents of the insurer to the extent that those books and records
relate to the business activities of the insurer.
	(f)  The liquidator may collect all debts and moneys due and
claims belonging to the insurer, wherever located, and may:
	(1)  institute action in other jurisdictions, in order to
forestall garnishment and attachment proceedings against the
debts;
	(2)  do other acts as necessary or expedient to collect,
conserve, or protect the insurer's property, including the power to
sell, compromise, or assign debts for purposes of collection upon
such terms and conditions as the liquidator deems consistent with
this chapter;  and
	(3)  pursue any creditor's remedies available to enforce the
insurer's claims.
	(g)  The liquidator may conduct public and private sales of
the property of the insurer.
	(h)  The liquidator may use property of the estate of an
insurer under a liquidation order to transfer to a solvent assuming
insurer policy obligations or the insurer's obligations under
surety bonds and surety undertakings as well as collateral held by
the insurer with respect to the reimbursement obligations of the
principals under those surety bonds and surety undertakings, if the
transfer can be arranged without prejudice to applicable priorities
under Section 21A.301.  If all insureds, principals, third-party
claimants, and obligees under the policies, surety bonds, and
surety undertakings consent or if the receivership court so orders,
the estate has no further liability under the transferred policies,
surety bonds, or surety undertakings after the transfer is made.
	(i)  The liquidator may, subject to Subsection (x), acquire,
hypothecate, encumber, lease, improve, sell, transfer, abandon, or
otherwise dispose of or deal with any property of the estate at its
market value or upon terms and conditions that are fair and
reasonable.  The liquidator also has the power to execute,
acknowledge, and deliver any and all deeds, assignments, releases,
and other instruments necessary or proper to effectuate any sale of
property or other transaction in connection with the liquidation.
	(j)  The liquidator may borrow money on the security of the
property of the estate or without security and execute and deliver
all documents necessary to that transaction for the purpose of
facilitating the liquidation.  Any funds borrowed under this
subsection may be repaid as an administrative expense and have
priority over any other claims in Class 1 under the priority of
distribution.
	(k)  The liquidator may enter into contracts as necessary to
carry out the order to liquidate and, subject to the provisions of
Section 21A.013, may assume or reject any executory contract or
unexpired lease to which the insurer is a party.
	(l)  The liquidator may continue to prosecute and institute
in the name of the insurer or in the liquidator's own name any and
all suits and other legal proceedings, in this state or elsewhere,
and abandon the prosecution of claims the liquidator deems
unprofitable to pursue further.  If the insurer is dissolved under
Section 21A.153, the liquidator has the power to apply to any court
in this state or elsewhere for leave to substitute the liquidator
for the insurer as a party.
	(m)  The liquidator may prosecute any action that may exist
on behalf of the creditors, members, policyholders, shareholders of
the insurer, or the public against any person, except to the extent
that a claim is personal to a specific creditor, member,
policyholder, or shareholder and recovery on such claim would not
inure to the benefit of the estate.  This subsection does not
infringe or impair any of the rights provided to a guaranty
association pursuant to its enabling statute or otherwise.
	(n)  The liquidator may take possession of the records and
property of the insurer as may be convenient for the purposes of
efficient and orderly execution of the liquidation.  Guaranty
associations must be allowed reasonable access to the records of
the insurer as is necessary for the guaranty associations to carry
out their statutory obligations.
	(o)  The liquidator may deposit in one or more banks in this
state the amounts that are required for meeting current
administration expenses and dividend distributions.
	(p)  The liquidator may invest all amounts not currently
needed, unless the receivership court orders otherwise.
	(q)  The liquidator may file any necessary documents for
record in the office of any recorder of deeds or record office in
this state or elsewhere where property of the insurer is located.
	(r)  The liquidator may assert all defenses available to the
insurer as against third persons, including statutes of limitation,
statutes of frauds, and the defense of usury.  A waiver of any
defense by the insurer after a petition is filed under this chapter
does not bind the liquidator.  When a guaranty association has an
obligation to defend any suit, the liquidator shall defer to the
association's obligation.
	(s)  The liquidator may exercise and enforce all the rights,
remedies, and powers of any creditor, shareholder, policyholder, or
member, including any power to avoid any transfer or lien that may
be avoidable under this chapter or otherwise.
	(t)  The liquidator may intervene in any proceeding wherever
instituted that might lead to the appointment of a receiver or
trustee and act as the receiver or trustee whenever the appointment
is offered.
	(u)  The liquidator may enter into agreements with any
receivers or commissioners of any other states.
	(v)  The liquidator may exercise all powers held by receivers
on August 31, 2005, or conferred on receivers after that date by the
laws of this state not inconsistent with this chapter.
	(w)  The liquidator is vested with all the rights of the
entity or entities in receivership.
	(x)  The enumeration, in this section, of the powers and
authority of the liquidator may not be construed as a limitation
upon the liquidator, nor may it exclude in any manner the right to
do other acts not specifically enumerated or otherwise provided
for, to the extent necessary or appropriate for the accomplishment
of or in aid of the purpose of liquidation.
	(y)  The liquidator may hypothecate, encumber, lease, sell,
transfer, abandon, or otherwise dispose of or deal with any
property of the insurer, settle or resolve any claim brought by the
liquidator on behalf of the insurer, or commute or settle any claim
of reinsurance under any contract of reinsurance, as follows:
	(1)  if the property or claim has a market or settlement
value that does not exceed the lesser of $1 million or 10 percent of
the general assets of the estate as shown on the receivership's
financial statements, the liquidator may take action at the
liquidator's discretion, provided that the receivership court may,
upon petition of the liquidator, increase the threshold upon a
showing that compliance with this requirement is burdensome to the
liquidator in administering the estate and is unnecessary to
protect the material interests of creditors;
	(2)  in all instances other than those described in
Subdivision (1), the liquidator may take the action only after
obtaining approval of the receivership court as provided by Section
21A.007;
	(3)  the liquidator may, at the liquidator's discretion,
request the receivership court to approve a proposed action as
provided by Section 21A.007 if the value of the property or claim
appears to be less than the threshold provided by Subdivision (1)
but cannot be ascertained with certainty, or for any other reason as
determined by the liquidator;  and
	(4)  after obtaining approval of the receivership court as
provided in Section 21A.007, the liquidator may, subject to
Subsection (z), transfer rights to payment under ceding reinsurance
agreements covering policies to a third-party transferee.
	(z)  The transferee of a right to payment under Subsection
(y)(4) has the rights to collect and enforce collection of the
reinsurance for the amount payable to the ceding insurer or to its
receiver, without diminution because of the insolvency or because
the receiver has failed to pay all or a portion of the claim, based
on the amounts paid or allowed pursuant to Section 21A.211.  The
transfer of the rights does not give rise to any defense regarding
the reinsurer's obligations under the reinsurance agreement
regardless of whether an agreement or other applicable law
prohibits the transfer of rights under the reinsurance agreement.
Except as provided in this subsection, any transfer of rights
pursuant to Subsection (y)(4) does not impair any rights or
defenses of the reinsurer that existed prior to the transfer or that
would have existed in the absence of the transfer.  Except as
otherwise provided in this subsection, any transfer of rights
pursuant to Subsection (y)(4) does not relieve the transferee or
the liquidator from obligations owed to the reinsurer pursuant to
the reinsurance or other agreement.
	(aa)  The liquidator is not obligated to defend any action
against the insurer or insured.  Any insureds not defended by a
guaranty association may provide their own defense, and include the
cost of the defense as part of their claims, if the defense was an
obligation of the insurer.  The right of the liquidator to contest
coverage on a particular claim is preserved without the necessity
for an express reservation of rights.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.155. NOTICE TO CREDITORS AND OTHERS.  (a) Unless
the receivership court otherwise directs, the liquidator shall give
or cause to be given notice of the liquidation order as soon as
possible:
	(1)  by first class mail or electronic communication as
permitted by the receivership court to:
	(A)  any guaranty association that is or may become obligated
as a result of the liquidation and any national association of
guaranty associations;
	(B)  all the insurer's agents, brokers, or producers of
record with current appointments or current licenses to represent
the insurer and all other agents, brokers, or producers as the
liquidator deems appropriate at their last known address;  and
	(C)  all persons or entities known or reasonably expected to
have claims against the insurer, at their last known address as
indicated by the records of the insurer, and all state and federal
agencies with an interest in the proceeding;  and
	(2)  by publication in a newspaper of general circulation in
the county in which the insurer has its principal place of business
and in any other locations as the liquidator deems appropriate.
	(b)  The notice of the entry of an order of liquidation must
contain or provide directions for obtaining the following
information:
	(1)  a statement that the insurer has been placed in
liquidation;
	(2)  a statement that certain acts are stayed under Section
21A.008 and describe any additional injunctive relief ordered by
the receivership court;
	(3)  a statement whether, and to what extent, the insurer's
policies continue in effect;
	(4)  to the extent applicable, a statement that coverage by
state guaranty associations may be available for all or part of
policy benefits in accordance with applicable state guaranty laws;
	(5)  a statement of the deadline for filing claims, if
established, and the requirements for filing a proof of claim
pursuant to Section 21A.251 on or before that date;
	(6)  a statement of the date, time, and location of any
initial status hearing scheduled at the time the notice is sent;
	(7)  a description of the process for obtaining notice of
matters before the receivership court;  and
	(8)  any other information the liquidator or the
receivership court deems appropriate.
	(c)  If notice is given in accordance with this section, the
distribution of property of the insurer under this chapter is
conclusive with respect to all claimants, whether or not they
received notice.
	(d)  Notwithstanding the other provisions of this section,
the liquidator has no duty to locate any persons or entities if no
address is found in the records of the insurer or if mailings are
returned to the liquidator because of inability to deliver at the
address shown in the insurer's books and records.  In these
circumstances the notice by publication as required by this chapter
or actual notice received is sufficient notice.  Written
certification by the liquidator or other knowledgeable person
acting for the liquidator that the notices were deposited in the
United States mail, postage prepaid, or that the notices have been
electronically transmitted is prima facie evidence of mailing and
receipt.  All claimants shall keep the liquidator informed of any
changes of address.
	(e)  Notwithstanding Subsection (a)(1)(C), upon application
of the liquidator, the receivership court may:
	(1)  find that notice by publication as required in this
section is sufficient notice to those persons holding an occurrence
policy that expired more than four years prior to the entry of the
order of liquidation and under which there are no pending claims;
or
	(2)  order other notice to persons described by Subdivision
(1) as it deems appropriate.
	(f)  The liquidator shall notify the Texas Workers'
Compensation Commission upon the entry of the liquidation order if
the insurer has issued workers' compensation coverage in effect in
this state.  Upon request of the liquidator, the Texas Workers'
Compensation Commission shall submit a list of active cases pending
before the commission that relate to workers' compensation coverage
issued by the insurer.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.


	Sec. 21A.156. DUTIES OF AGENTS.  (a) Every person who
represented the insurer as an agent and receives notice in the form
prescribed in Section 21A.155 that the insurer is the subject of a
liquidation order, not later than the 30th day after the date of the
notice, shall provide to the liquidator, in addition to the
information the agent may be required to provide pursuant to
Section 21A.010, the information in the agent's records related to
any policy issued by the insurer through the agent and any policy
issued by the insurer through an agent under contract to the agent,
including the name and address of any subagent.  For purposes of
this subsection, a policy is issued through an agent if the agent
has a property interest in the expiration of the policy or if the
agent has had in the agent's possession a copy of the declarations
of the policy at any time during the life of the policy, except
where the ownership of the expiration of the policy has been
transferred to another.
	(b)  Any agent failing to provide information to the
liquidator as required in Subsection (a) may be subject to payment
of an administrative penalty under Chapter 84 of not more than
$1,000.  In addition, the agent's license may be suspended under
Chapter 4005.

Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.

SUBCHAPTER E. ASSET RECOVERY


	Sec. 21A.201. TURNOVER OF ASSETS.  (a) If the receiver
determines that funds or property in the possession of another
person are rightfully the property of the estate, the receiver
shall deliver to the person a written demand for immediate delivery
of the funds or property, referencing this section by number and the
court and docket number of the receivership action, and notifying
the person that any claim of right to the funds or property by the
person must be presented to the receivership court not later than
the 20th day after the date of the written demand.  Any person who
holds funds or other property belonging to an entity subject to an
order of receivership under this chapter shall deliver the funds or
other property to the receiver on demand.  Should the person allege
any right to retain the funds or other property, the person, not
later than the 20th day after the date of receipt of the demand that
the funds or property be delivered to the receiver, shall file with
the receivership court a pleading setting out that right.  The
person shall serve a copy of the pleading on the receiver.  The
pleading must inform the receivership court as to the nature of the
claim to the funds or property, the alleged value of the property or
amount of funds held, and what action, pending determination of the
dispute, has been taken by the person to preserve and protect the
property or to preserve any funds.  The relinquishment of
possession of funds or property by any person who has received a
demand pursuant to this section does not constitute a waiver of a
right to make a claim in the receivership.
	(b)  If requested by the receiver, the receivership court
shall hold a hearing to determine where and under what conditions
the person shall hold the property or funds pending determination
of the dispute.  The receivership court may impose conditions as it
may deem necessary or appropriate for the preservation of the
property or funds until the receivership court can determine the
validity of the person's claim to the property or funds.  If any
property or funds are allowed to remain in the possession of the
person after demand made by the receiver, that person is strictly
liable to the estate for any waste, loss, or damage to or diminution
of value of the property or funds retained.
	(c)  If a person has filed a pleading alleging any right to
retain funds or property as provided by Subsection (a), the
receivership court shall hold a subsequent hearing to determine the
entitlement of the person to the fun