2006 Code of Virginia § 38.2-1334.2 - Recovery

38.2-1334.2. Recovery.

A. If an order for liquidation or rehabilitation of a domestic insurer hasbeen entered, the receiver appointed under such order shall have a right torecover on behalf of the insurer (i) from any parent corporation or holdingcompany or person or affiliate who otherwise controlled the insurer, theamount of distributions (other than distributions of shares of the same classof stock) paid by the insurer on its capital stock or (ii) any payment in theform of a bonus, termination settlement or extraordinary lump sum salaryadjustment made by the insurer or its subsidiary or subsidiaries to adirector, officer or employee, where the distribution or payment pursuant to(i) or (ii) is made at any time during the one year preceding the petitionfor liquidation, conservation or rehabilitation, as the case may be, subjectto the limitations of subsections B, C and D of this section.

B. No such distribution shall be recoverable if the parent or affiliate showsthat, when paid, such distribution was lawful and reasonable and that theinsurer did not know and could not reasonably have known that suchdistribution might adversely affect the ability of the insurer to fulfill itscontractual obligations.

C. Any person who was a parent corporation or holding company or a person whootherwise controlled the insurer or affiliate at the time such distributionswere paid shall be liable up to the amount of distributions or payments undersubsection A of this section. Any person who otherwise controlled theinsurer at the time such distributions were declared shall be liable up tothe amount of distributions he would have received if they had been paidimmediately. If two or more persons are liable with respect to the samedistributions, they shall be jointly and severally liable.

D. The maximum amount recoverable under this section shall be the amountneeded in excess of all other available assets of the impaired or insolventinsurer to pay its obligations and to reimburse any guaranty funds.

E. To the extent that any person liable under subsection C of this section isinsolvent or otherwise fails to pay claims due from it pursuant to suchsubsection, its parent corporation, holding company, or person who otherwisecontrolled it at the time the distribution was paid shall be jointly andseverally liable for any resulting deficiency in the amount recovered fromsuch parent corporation, holding company, or person who otherwise controlledit.

(1993, c. 158.)