2006 Utah Code - 31A-27-320 — Fraudulent transfers prior to petition.

     31A-27-320.   Fraudulent transfers prior to petition.
     (1) Every transfer made or suffered and every obligation incurred by an insurer within one year prior to the filing of a successful petition for rehabilitation or liquidation under this chapter is fraudulent as to then existing and future creditors if it is made or incurred without fair consideration, or with actual intent to hinder, delay, or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under this chapter, which is fraudulent under this section, may be avoided by the rehabilitator or liquidator, except for a person who in good faith is a purchaser, lienor, or obligee for a present fair consideration, and except that any purchaser, lienor, or obligee, who in good faith has given a consideration which is less than fair for such transfer, lien, or obligation, may retain the property, lien, or obligation as security for repayment. The court may, on due notice, order that any such transfer or obligation be preserved for the benefit of the estate, in which event the rehabilitator or liquidator on repayment succeeds to and may enforce the rights of the purchaser, lienor, or obligee.
     (2) (a) A transfer of property other than real property is considered to be made or allowed when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee under Subsection 31A-27-321 (3).
     (b) A transfer of real property is considered to be made or allowed when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee.
     (c) A transfer which creates an equitable lien is not considered to be perfected if there are available means by which a legal lien could be created.
     (d) For the purposes of this section, any transfer which is not perfected prior to the filing of a petition for rehabilitation or liquidation is considered to be made immediately before the filing of the successful petition.
     (e) Subsection (2) applies whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers.
     (f) For the purposes of Subsection (2), a transfer is not made until the insurer has acquired rights in the property transferred.
     (3) (a) A lien obtainable by legal or equitable proceedings upon a simple contract is one arising in the ordinary course of these proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution, or similar process, whether before, upon, or after the judgment or decree and whether before or upon levy. It does not include liens which, under applicable law, are given a special priority over other liens which are prior in time.
     (b) For purposes of Subsection (2), a lien obtainable by legal or equitable proceedings may become "superior to the rights of a transferee," or a purchaser may obtain "rights superior to the rights of a transferee," if the superior rights follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. A lien or purchase is not considered superior for purposes of Subsection (2) if the lien or purchase superiority can be obtained only through acts subsequent to the obtaining of the lien or subsequent to the purchase which require the agreement or concurrence of any third party or which require any further judicial action or ruling.
     (4) Any transaction of the insurer with a reinsurer is considered fraudulent and may be

avoided by the rehabilitator or liquidator under Subsection (1) if:
     (a) the transaction consists of the termination, adjustment, or settlement of a reinsurance contract in which the reinsurer is released from any part of its duty to pay the originally specified share of losses that had occurred prior to the time of the transaction, unless the reinsurer gives a present fair consideration for the release; and
     (b) any part of the transaction took place within one year prior to the date of filing of the petition pursuant to which the rehabilitation or liquidation was commenced.
     (5) An action or proceeding under this section may not be commenced after the earlier of:
     (a) two years after the appointment of a rehabilitator under Section 31A-27-303 or a liquidator under Section 31A-27-310; or
     (b) the date the rehabilitation is terminated under Subsection 31A-27-306 (2) or the liquidation is terminated under Section 31A-27-339.

Amended by Chapter 204, 1986 General Session