Subchapter I. General Provisions

TITLE 18

Insurance Code

Insurance

CHAPTER 59. REHABILITATION AND LIQUIDATION

Subchapter I. General Provisions

§ 5901. Definitions.

For the purpose of this chapter:

(1) "Impairment" or "insolvency." The capital of a stock insurer or the surplus of a mutual or reciprocal insurer shall be
deemed to be impaired, and the insurer shall be deemed to be insolvent, when such insurer is not possessed of assets at least
equal to all liabilities and required reserves together with its total issued and outstanding capital stock, if a stock insurer,
or the minimum surplus if a mutual or reciprocal insurer, required by this title to be maintained for the kind or kinds of
insurance it is then authorized to transact.

(2) "Insurer" means any person, firm, corporation, association or aggregation of persons doing an insurance business and subject
to the insurance supervisory authority of or to liquidation, rehabilitation, reorganization or conservation by the Commissioner
or the equivalent insurance supervisory official of another state.

(3) "Delinquency proceeding" means any proceeding commenced against an insurer pursuant to this chapter for the purpose of
liquidating, rehabilitating, reorganizing or conserving such insurer.

(4) "State" means any state of the United States and also the District of Columbia and the Commonwealth of Puerto Rico.

(5) "Foreign country" means territory not in any state.

(6) "Domiciliary state" means the state in which an insurer is incorporated or organized or, in the case of an insurer incorporated
or organized in a foreign country, the state in which such insurer, having become authorized to do business in such state,
has at the commencement of delinquency proceedings the largest amount of its assets held in trust and assets held on deposit
for the benefit of its policyholders or policyholders and creditors in the United States, and any such insurer is deemed to
be domiciled in such state.

(7) "Ancillary state" means any state other than a domiciliary state.

(8) "Reciprocal state" means any state other than this State in which in substance and effect the provisions of the Uniform
Insurers Liquidation Act, as defined in § 5920 of this title, are in force, including the provisions requiring that the Commissioner
of Insurance or equivalent insurance supervisory official be the receiver of a delinquent insurer.

(9) "General assets" means all property, real, personal or otherwise, not specifically mortgaged, pledged, deposited or otherwise
encumbered for the security or benefit of specified persons or a limited class or classes of persons, and as to such specifically
encumbered property, the term includes all such property or its proceeds in excess of the amount necessary to discharge the
sum or sums secured thereby. Assets held in trust and assets held on deposit for the security or benefit of all policyholders
or all policyholders and creditors in the United States shall be deemed general assets.

(10) "Preferred claim" means any claim with respect to which the law of the state or of the United States accords priority
of payments from the general assets of the insurer.

(11) "Special deposit claim" means any claim secured by a deposit made pursuant to statute for the security or benefit of
a limited class or classes of persons but not including any general assets.

(12) "Secured claim" means any claim secured by mortgage, trust deed, pledge, deposit as security, escrow or otherwise but
not including special deposit claim or claims against general assets. The term also includes claims which more than 4 months
prior to the commencement of delinquency proceedings in the state of the insurer's domicile have become liens upon specific
assets by reason of judicial process.

(13) "Receiver" means receiver, liquidator, rehabilitator or conservator as the context may require.

18 Del. C. 1953, § 5901; 56 Del. Laws, c. 380, § 1.;

§ 5902. Jurisdiction of delinquency proceedings; venue; change of venue; exclusiveness of remedy; appeal.

(a) The Court of Chancery shall have original jurisdiction of delinquency proceedings under this chapter, and any court with
jurisdiction is authorized to make all necessary or proper orders to carry out the purposes of this chapter.

(b) The venue of delinquency proceedings against a domestic insurer shall be in the county of the insurer's principal place
of business. The venue of such proceedings against foreign and alien insurers shall be in any county in this State selected
by the Commissioner for the purpose.

(c) At any time after the commencement of a proceeding under this chapter the Commissioner may apply to the court for an order
changing the venue of and removing the proceeding to any other county of this State in which the Commissioner deems that such
proceeding may be most economically and efficiently conducted.

(d) Delinquency proceedings pursuant to this chapter shall constitute the sole and exclusive method of liquidating, rehabilitating,
reorganizing or conserving an insurer, and no court shall entertain a petition for the commencement of such proceedings unless
the same has been filed in the name of the State on the relation of the Commissioner.

(e) An appeal shall lie to the Supreme Court from an order granting or refusing rehabilitation, liquidation or conservation
and from every order in delinquency proceedings having the character of a final order as to the particular portion of the
proceedings embraced therein.

18 Del. C. 1953, § 5902; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5903. Commencement of delinquency proceedings.

The Commissioner shall commence any such proceedings by application to the court for an order directing the insurer to show
cause why the Commissioner should not have the relief prayed for. On the return of such order to show cause and after a full
hearing, the court shall either deny the application or grant the application, together with such other relief as the nature
of the case and the interests of the policyholders, creditors, stockholders, members, subscribers or the public may require.

18 Del. C. 1953, § 5903; 56 Del. Laws, c. 380, § 1.;

§ 5904. Injunctions.

(a) Upon application by the Commissioner for such an order to show cause, or at any time thereafter, the court may without
notice issue an injunction restraining the insurer, its officers, directors, stockholders, members, subscribers, agents and
all other persons from the transaction of its business or the waste or disposition of its property until the further order
of the court.

(b) The court may at any time during a proceeding under this chapter issue such other injunctions or orders as may be deemed
necessary to prevent interference with the Commissioner or the proceeding or waste of the assets of the insurer or the commencement
or prosecution of any actions or the obtaining of preferences, judgments, attachments or other liens or the making of any
levy against the insurer or against its assets or any part thereof.

(c) Notwithstanding any other provision of law, no bond shall be required of the Commissioner as a prerequisite for the issuance
of any injunction or restraining order pursuant to this section.

18 Del. C. 1953, § 5904; 56 Del. Laws, c. 380, § 1.;

§ 5904A. Proceedings against bank insurance division.

(a) The Commissioner may in the Commissioner's discretion forthwith take possession of the business and property, including
the books and records, of any division of a bank or trust company acting as an insurer whenever it shall appear that such
division:

(1) Is conducting its business in an unauthorized or unsafe manner;

(2) Is in an unsound or unsafe condition to transact its business; or

(3) Cannot with safety and expediency continue business as a result of any cause whatsoever.

(b) The Commissioner may require an examination of a bank or trust company, which bank or trust company has established and
operates a division pursuant to § 767 of Title 5, by the Bank Commissioner as authorized under § 122 of Title 5, and a report
of such examination shall be furnished to the Commissioner pursuant to § 124 of Title 5.

(c) After taking possession of the division of a bank or trust company acting as an insurer, the Commissioner shall take such
steps to conserve or rehabilitate the business and property of such division as the Commissioner deems practicable or desirable,
or if in the judgment of the Commissioner such conservation or rehabilitation is not practicable or desirable, the Commissioner
may proceed to liquidate such business and property. All proceedings of the Commissioner for the conservation, rehabilitation,
or liquidation of a division of a bank or trust company acting as an insurer shall be in accordance with the provisions of
this title applicable to the conservation, rehabilitation or liquidation of insurers by the Commissioner.

67 Del. Laws, c. 223, § 38; 70 Del. Laws, c. 186, § 1.;

§ 5905. Grounds for rehabilitation; domestic insurers.

The Commissioner may apply to the court for an order appointing the Commissioner as receiver of and directing the Commissioner
to rehabilitate a domestic insurer upon one or more of the following grounds, if the insurer:

(1) Is impaired or insolvent or is in unsound condition or in such condition or using such methods and practices in the conduct
of its business as to render its further transaction of insurance presently or prospectively hazardous to its policyholders;

(2) Has refused to submit any of its books, records, accounts or affairs to reasonable examination by the Commissioner;

(3) Has concealed or removed records or assets;

(4) Has failed to comply with an order of the Commissioner to make good an impairment of capital or surplus or both;

(5) Has transferred or attempted to transfer substantially its entire property or business or has entered into any transaction
the effect of which is to merge substantially its entire property or business in that of any other insurer without having
first obtained the written approval of the Commissioner;

(6) Has wilfully violated its charter or certificate of incorporation or any law of this State;

(7) Has an officer, director or manager who has refused to be examined under oath concerning its affairs, for which purposes
the Commissioner is hereby authorized to conduct and to enforce by all appropriate and available means any such examination
under oath in any other state or territory of the United States in which any such officer, director or manager may then presently
be to the full extent permitted by the laws of such other state or territory, this special authorization considered;

(8) Has been or is the subject of an application for the appointment of a receiver, trustee, custodian or sequestrator of
the insurer or its property otherwise than pursuant to the provisions of this title, but only if such appointment has been
made or is imminent and its effect is or would be to oust the courts of this State of jurisdiction hereunder;

(9) Has consented to such an order through a majority of the directors, stockholders, members or subscribers; and

(10) Has failed to pay a final judgment rendered against it in this State upon any insurance contract issued or assumed by
it within 30 days after the judgment became final or within 30 days after the time for taking an appeal has expired or within
30 days after dismissal of an appeal before final termination, whichever date is the later.

18 Del. C. 1953, § 5905; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5906. Grounds for liquidation.

The Commissioner may apply to the court for an order appointing the Commissioner as receiver (if the Commissioner appointment
as receiver shall not be then in effect) and directing the Commissioner to liquidate the business of a domestic insurer or
of the United States branch of an alien insurer having trusteed assets in this State, regardless of whether or not there has
been a prior order directing the Commissioner to rehabilitate such insurer, upon any of the grounds specified in § 5905 of
this title or if such insurer:

(1) Has ceased transacting business for a period of 1 year, or

(2) Is an insolvent insurer and has commenced voluntary liquidation or dissolution or attempts to commence or prosecute any
action or proceeding to liquidate its business or affairs or to dissolve its corporate charter or to procure the appointment
of a receiver, trustee, custodian or sequestrator under any law except this title.

18 Del. C. 1953, § 5906; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5907. Grounds for conservation; foreign insurers.

The Commissioner may apply to the court for an order appointing the Commissioner as receiver or ancillary receiver and directing
him to conserve the assets within this State, of a foreign insurer upon any of the following grounds:

(1) Upon any of the grounds specified in § 5905 or § 5906 of this title, or

(2) Upon the ground that its property has been sequestrated in its domiciliary sovereignty or in any other sovereignty.

18 Del. C. 1953, § 5907; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5908. Same -- Alien insurers.

The Commissioner may apply to the court for an order appointing the Commissioner as receiver or ancillary receiver and directing
the Commissioner to conserve the assets within this State of any alien insurer upon any of the following grounds:

(1) Upon any of the grounds specified in § 5905 or § 5906 of this title;

(2) Upon the ground that the insurer has failed to comply within the time designated by the Commissioner with an order made
by the Commissioner to make good an impairment of its trusteed funds; or

(3) Upon the ground that the property of the insurer has been sequestrated in its domiciliary sovereignty or elsewhere.

18 Del. C. 1953, § 5908; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5909. Grounds for ancillary liquidation; foreign insurers.

The Commissioner may apply to the court for an order appointing the Commissioner as ancillary receiver of and directing the
Commissioner to liquidate the business of a foreign insurer having assets, business or claims in this State upon the appointment
in the domiciliary state of such insurer of a receiver, liquidator, conservator, rehabilitator or other officer by whatever
name called for the purpose of liquidating the business of such insurer.

18 Del. C. 1953, § 5909; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5910. Order of rehabilitation; termination.

(a) An order to rehabilitate a domestic insurer shall direct the Commissioner forthwith to take possession of the property
of the insurer and to conduct the business thereof and to take such steps toward removal of the causes and conditions which
have made rehabilitation necessary as the court may direct.

(b) If at any time the Commissioner deems that further efforts to rehabilitate the insurer would be useless, the Commissioner
may apply to the court for an order of liquidation.

(c) The Commissioner or any interested person upon due notice to the Commissioner at any time may apply to the court for an
order terminating the rehabilitation proceedings and permitting the insurer to resume possession of its property and the conduct
of its business, but, no such order shall be made or entered except when, after a hearing, the Court has determined that the
purposes of the proceeding have been fully accomplished.

18 Del. C. 1953, § 5910; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5911. Order of liquidation; domestic insurers; insolvent insurer's assets.

(a) An order to liquidate the business of a domestic insurer shall direct the Commissioner forthwith to take possession of
the property of the insurer, to liquidate its business, to deal with the insurer's property and business in the Commissioner's
own name as Insurance Commissioner or in the name of the insurer, as the court may direct, and to give notice to all creditors
who may have claims against the insurer to present such claims.

(b) The Commissioner may apply for and secure an order dissolving the corporate existence of a domestic insurer or the United
States branch of an alien insurer domiciled in this State upon the Commissioner's application for an order of liquidation
of such insurer or at any time after such order has been granted. The court may order dissolution of the corporation upon
petition by the Commissioner upon or after the granting of a liquidation order. If the dissolution has not previously been
ordered, it shall be effected by operation of law upon the discharge of the liquidator if the insurer is insolvent. However,
dissolution may be ordered by the court upon the discharge of the liquidator if the insurer is under a liquidation order for
some other reason. Notwithstanding the above, upon application by the Commissioner and following notice as prescribed by the
court and a hearing, the court may sell the corporation as an entity, together with any of its licenses to do business, despite
the entry of an order of liquidation. The sale may be made on terms and conditions the court deems appropriate. The court
may permit the sale of such corporate existence upon or after the granting of a liquidation order. The proceeds from the sale
of the corporation shall become a part of the general assets of the estate in liquidation, and the corporate entity and its
licenses shall thereafter be free and clear from the claims or interest of all claimants, creditors, policyholders and stockholders
of the corporation under liquidation. If permission to sell the corporation is not granted prior to discharge of the liquidator,
the court shall order dissolution of the corporation if the insurer is insolvent, and the court may order dissolution of the
corporation if the insurer is under a liquidation order for some other reason.

(c)(1) Within 120 days of a final determination of insolvency of a company, the Commissioner shall apply for a proposed order
to disburse assets out of such company's marshalled assets, from time to time as such assets become available to the Delaware
Insurance Guaranty Association and to any entity or person performing a similar function in another jurisdiction having substantially
the same provisions of law.

(2) Such proposed order shall at least include provision for:

a. Reserving amounts for the payment of expenses to administration and the payment of claims of secured creditors (to the
extent the value of the security held) and claims falling within the priorities established in §§ 5915-5919, 5924-5927 and
5929 of this title;

b. Disbursement of the assets marshalled to date and subsequent disbursements of assets as they become available;

c. Equitable allocation disbursements to the Delaware Insurance Guaranty Association and similar entities entitled thereto;

d. The securing by the Commissioner as receiver in each of the associations entitled to disbursement pursuant to this section
of an agreement to return to the receiver such assets previously disbursed as may be required to pay claims of secured creditors
and claims falling within the priorities established in §§ 5915-5919, 5924-5927 and 5929 of this title in accordance with
such priorities. No bond shall be required of any such association;

e. A full report to be made by the association to the receiver accounting for all assets so disbursed to the association,
all disbursements made therefrom, any interest earned by the association on such assets and any matter as the court may direct.

(3) The Commissioner's proposed order shall provide for disbursements to the Delaware Insurance Guaranty Association and any
entity or person performing a similar function in another jurisdiction in amounts estimated at least equal to the claim payments
made or to be made thereby for which such associations could assert a claim against the Commissioner as receiver, and shall
further provide that if the assets available for disbursement from time to time do not equal nor exceed the amount of such
claim payments made or to be made by the Delaware Insurance Guaranty Association in a similar entity in another jurisdiction,
then disbursements shall be in the amount of available assets.

(4) Notice of such proposed order shall be given to the Delaware Insurance Guaranty Association and the commissioners of insurance
of each state and the District of Columbia. Any such notice shall be deemed to have been given when deposited in the United
States certified mails, first-class postage prepaid, at least 30 days prior to the submission of such application to the court.
Action on the proposed order may be taken by the court provided the above required notice has been given and provided further
that the Commissioner's proposed order complies with subparagraphs a. and d. of paragraph (2) of this subsection.

18 Del. C. 1953, § 5911; 56 Del. Laws, c. 380, § 1; 61 Del. Laws, c. 129, § 1; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 195, § 1.;

§ 5912. Order of conservation or ancillary liquidation of foreign or alien insurers.

(a) An order to conserve the assets of a foreign or alien insurer shall require the Commissioner forthwith to take possession
of the property of the insurer within this State and to conserve it, subject to the further direction of the court.

(b) An order to liquidate the assets in this State of a foreign insurer shall require the Commissioner forthwith to take possession
of the property of the insurer within this State and to liquidate it subject to the orders of the court and with due regard
to the rights and powers of the domiciliary receiver, as provided in this chapter.

18 Del. C. 1953, § 5912; 56 Del. Laws, c. 380, § 1.;

§ 5913. Conduct of delinquent proceedings against domestic and alien insurers.

(a) Whenever under this chapter a receiver is to be appointed in delinquency proceedings for an insurer, the court shall appoint
the Commissioner as such receiver. The court shall order the Commissioner forthwith to take possession of the assets of the
insurer and to administer the same under the orders of the court.

(b) As a domiciliary receiver, the Commissioner shall be vested by operation of law with the title to all of the property,
contracts and rights of action and all of the books and records of the insurer, wherever located, as of the date of entry
of the order directing the Commissioner to rehabilitate or liquidate a domestic insurer or to liquidate the United States
branch of an alien insurer domiciled in this State, and the Commissioner shall have the right to recover the same and reduce
the same to possession, except that ancillary receivers in reciprocal states shall have, as to assets located in their respective
states, the rights and powers which are herein prescribed for ancillary receivers appointed in this State as to assets located
in this State.

(c) The filing or recording of the order directing possession to be taken, or a certified copy thereof, in any office where
instruments affecting title to property are required to be filed or recorded shall impart the same notice as would be imparted
by a deed, bill of sale or other evidence of title duly filed or recorded.

(d) The Commissioner as domiciliary receiver shall be responsible for the proper administration of all assets coming into
the Commissioner's possession or control. The court may at any time require a bond from the Commissioner or the Commissioner's
deputies if deemed desirable for the protection of such assets.

(e) Upon taking possession of the assets of an insurer, the domiciliary receiver shall, subject to the direction of the court,
immediately proceed to conduct the business of the insurer or to take such steps as are authorized by this chapter for the
purpose of rehabilitating, liquidating or conserving the affairs or assets of the insurer.

(f) In connection with delinquency proceedings, the Commissioner may appoint 1 or more special deputy commissioners to act
for the Commissioner, and the Commissioner may employ such counsel, clerks and assistants as necessary. The compensation of
the special deputies, counsel, clerks or assistants and all expenses of taking possession of the insurer and of conducting
the proceedings shall be fixed by the receiver, subject to the approval of the court, and shall be paid out of the funds or
assets of the insurer. Within the limits of duties imposed upon them, special deputies shall possess all the powers given
to and, in the exercise of those powers, shall be subject to all of the duties imposed upon the receiver with respect to such
proceedings.

18 Del. C. 1953, § 5913; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5914. Conduct of delinquency proceedings against foreign insurers.

(a) Whenever under this chapter an ancillary receiver is to be appointed in delinquency proceedings for an insurer not domiciled
in this State, the court shall appoint the Commissioner as ancillary receiver. The Commissioner shall file a petition requesting
the appointment on the grounds set forth in § 5909 of this title:

(1) If the Commissioner finds that there are sufficient assets of the insurer located in this State to justify the appointment
of an ancillary receiver, or

(2) If 10 or more persons resident in this State having claims against such insurer file a petition with the Commissioner
requesting the appointment of such ancillary receiver.

(b) The domiciliary receiver for the purpose of liquidating an insurer domiciled in a reciprocal state shall be vested by
operation of law with the title to all of the property, contracts and rights of action and all of the books and records of
the insurer located in this State, and such receiver shall have the immediate right to recover balances due from local agents
and to obtain possession of any books and records of the insurer found in this State. The domiciliary receiver shall also
be entitled to recover the other assets of the insurer located in this State, except that upon the appointment of an ancillary
receiver in this State, the ancillary receiver shall during the ancillary receivership proceedings have the sole right to
recover such other assets. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities
those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this State and
shall pay the necessary expenses of the proceedings. All remaining assets shall promptly transfer to the domiciliary receiver.
Subject to the foregoing provisions, the ancillary receiver and the ancillary receiver's deputies shall have the same powers
and be subject to the same duties with respect to the administration of such assets as a receiver of an insurer domiciled
in this State.

(c) The domiciliary receiver of an insurer domiciled in a reciprocal state may sue in this State to recover any assets of
such insurer to which the domiciliary receiver may be entitled under the laws of this State.

18 Del. C. 1953, § 5914; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5915. Claims of nonresidents against domestic insurers.

(a) In a delinquency proceeding begun in this State against a domestic insurer, claimants residing in reciprocal states may
file claims either with the ancillary receivers, if any, in their respective states, or with the domiciliary receiver. All
such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings.

(b)(1) Controverted claims belonging to claimants residing in reciprocal states may either:

a. Be proved in this State; or

b. If ancillary proceedings have been commenced in such reciprocal states may be proved in those proceedings.

(2) In the event a claimant elects to prove a claim in ancillary proceedings, if notice of the claim and opportunity to appear
and be heard is afforded the domiciliary receiver of this State, as provided in § 5916 of this title with respect to ancillary
proceedings in this State, the final allowance of such claim by the courts in the ancillary state shall be accepted in this
State as conclusive as to its amount and shall also be accepted as conclusive as to its priority, if any, against special
deposits or other security located within the ancillary state.

18 Del. C. 1953, § 5915; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5916. Claims against foreign insurers.

(a) In a delinquency proceeding in a reciprocal state against an insurer domiciled in that state, claimants against such insurer
who reside within this State may file claims either with the ancillary receiver, if any, appointed in this State or with the
domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary
delinquency proceedings.

(b)(1) Controverted claims belonging to claimants residing in this State may either:

a. Be proved in the domiciliary state as provided by the law of that state; or

b. If ancillary proceedings have been commenced in this State, be proved in those proceedings.

(2) In the event that any such claimant elects to prove a claim in this State, such claimant shall file a claim with the ancillary
receiver and shall give notice in writing to the receiver in the domiciliary state, either by registered or certified mail
or by personal service at least 40 days prior to the date set for hearing. The notice shall contain a concise statement of
the amount of the claim, the facts on which the claim is based and the priorities asserted, if any. If the domiciliary receiver
within 30 days after the giving of such notice shall give notice in writing to the ancillary receiver and to the claimant,
either by registered or certified mail or by personal service, of the domiciliary receiver's intention to contest such claim,
the domiciliary receiver shall be entitled to appear or to be represented in any proceeding in this State involving adjudication
of the claim. The final allowance of the claim by the courts of this State shall be accepted as conclusive as to its amount
and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within
this State.

18 Del. C. 1953, § 5916; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5917. Form of claim; notice; hearing.

(a) All claims against an insurer against which delinquency proceedings have been begun shall set forth in reasonable detail
the amount of the claim or the basis upon which such amount can be ascertained, the facts upon which the claim is based and
the priorities asserted, if any. All such claims shall be verified by the affidavit of the claimant or someone authorized
to act on the claimant's behalf and having knowledge of the facts and shall be supported by such documents as may be material
thereto.

(b) All claims filed in this State shall be filed with the receiver, whether domiciliary or ancillary, in this State on or
before the last date for filing as specified in this chapter.

(c) Within 10 days of the receipt of any claim or within such further period as the court may fix for good cause shown, the
receiver shall report the claim to the court, specifying in such report the receiver's recommendation with respect to the
action to be taken thereon. Upon receipt of such report, the court shall fix a time for hearing the claim and shall direct
that the claimant or the receiver, as the court shall specify, shall give such notice as the court shall determine to such
persons as shall appear to the court to be interested therein. All such notices shall specify the time and place of the hearing
and shall concisely state the amount and nature of the claim, the priorities asserted, if any, and the recommendation of the
receiver with reference thereto.

(d) At the hearing, all persons interested shall be entitled to appear and the court shall enter an order allowing, allowing
in part, or disallowing the claim. Any such order shall be deemed to be an appealable order.

18 Del. C. 1953, § 5917; 56 Del. Laws, c. 380, § 1; 70 Del. LAws, c. 186, § 1.;

§ 5918. Priority of certain claims.

(a) In a delinquency proceeding against an insurer domiciled in this State, claims owing to residents of ancillary states
shall be preferred claims if like claims are preferred under the laws of this State. All such claims owing to residents or
nonresidents shall be given equal priority of payment from general assets regardless of where such assets are located.

(b) In a delinquency proceeding against an insurer domiciled in a reciprocal state, claims owing to residents of this State
shall be preferred if like claims are preferred by the laws of that state.

(c) The owners of special deposit claims against an insurer for which a receiver is appointed in this or any other state shall
be given priority against their several special deposits in accordance with the provisions of the statutes governing the creation
and maintenance of such deposits. If there is a deficiency in any such deposit so that the claims secured thereby are not
fully discharged therefrom, the claimants may share in the general assets, but such sharing shall be deferred until general
creditors and also claimants against other special deposits who have received smaller percentages from their respective special
deposits have been paid percentages of their claims equal to the percentage paid from the special deposit.

(d) The owner of a secured claim against an insurer for which a receiver has been appointed in this or any other state may
surrender his/her security and file a claim as a general creditor, or the claim may be discharged by resort to the security,
in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis
as claims of unsecured creditors. If the amount of the deficiency has been adjudicated in ancillary proceedings as provided
in this chapter or if it has been adjudicated by a court of competent jurisdiction in proceedings in which the domiciliary
receiver has had notice and opportunity to be heard, such amounts shall be conclusive, otherwise, the amount shall be determined
in the delinquency proceeding in the domiciliary state.

(e) The priority of distribution of claims from the insurer's general assets shall be in accordance with the order in which
each class of claims is herein set forth. Every claim in each class shall be paid in full or adequate funds retained for such
payment before the members of the next class shall receive any payment. No subclasses shall be established within any class.
No claim by a shareholder, policyholder or other creditor shall be permitted to circumvent the priority classes through the
use of equitable remedies. The order of distribution shall be:

(1) Class I. -- The costs and expenses of administration expressly approved by the receiver, including but not limited to
the following:

a. The receiver's actual and necessary costs of taking possession of the insurer, preserving or recovering the assets of the
insurer, and otherwise complying with this chapter;

b. Reasonable compensation for all services rendered at the request of and on behalf of the receiver, or that receiver's appointed
deputy receiver or receivers, in the liquidation by the receivership's employees and its retained attorneys, accountants,
actuaries, claims adjusters, expert witnesses and other consultants; and

c. All expenses incurred by the Department in supervising the receivership proceedings of the insurer;

(2) Class II. -- The reasonable and necessary administrative expenses of the Delaware Insurance Guaranty Association or the
Delaware Life and Health Insurance Guaranty Association or as the case may be, and any similar organization in another state.
If the receiver determines that the assets of the estate will be sufficient to pay all Class I claims in full, Class II claims
shall be paid currently, provided that the receiver shall secure from each of the associations receiving disbursements pursuant
to this section an agreement to return to the receiver such disbursement, together with investment income actually earned
on such disbursement, as may be required to pay Class I claims.

(3) Class III. -- Claims by policyholders, beneficiaries and insureds, including the federal or any state or local government
if such government is a named policyholder, beneficiary or insured under the policy, arising from and within the coverage
of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the company; liability
claims, including liability claims of the federal or any state or local government, against insureds which claims are within
the coverage of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the company,
including claims for reasonable attorneys' fees incurred by the policyholder to defend against the liability claim if such
attorneys' fees are covered under the policy, but only to the extent covered; policyholder's claims for refunds of unearned
premium; and claims of the Delaware Insurance Guaranty Association or the Delaware Life and Health Insurance Guaranty Association,
as the case may be, and any similar organization in another state for coverage of policy benefits as required by statute;
provided, however, that this paragraph shall not apply to the following claims:

a. Claims arising under reinsurance contracts, including any claims for reinsurance premium due;

b. Claims of insurers, insurance pools or underwriting associations for contribution, indemnity or subrogation, equitable
or otherwise.

Interest shall not be allowed or paid on Class III claims, except that the value assigned to Class III claims arising from
valid preliquidation judgments, other than judgments by default or collusion, may include prejudgment and postjudgment interest
up to the date of liquidation if such interest is required by law or contract.

(4) Class IV. -- Taxes owed to the United States and other debts owed to the United States which by the laws of the United
States are entitled to priority over the claims in Classes V through IX below and which claims of the United States are not
already included in Class III above.

(5) Class V. -- Claims of employees, other than officers or directors, of the insurer for compensation actually owing to such
employees for services rendered to the insurer within 3 months prior to the commencement of a proceeding against the insurer
under this chapter but not exceeding $1,000 for each employee. Such priority shall be in lieu of any other similar priority
which may be authorized by law as to wages or compensation of such employees.

(6) Class VI. -- Claims of general creditors including, but not limited to, claims of ceding and assuming insurers in their
capacity as such, and claims of insurers, insurance pools or underwriting associations for contribution, indemnity or subrogation,
equitable or otherwise. This class shall include any claims of the guaranty associations, federal or any state or local government
to the extent such claims are not otherwise included in Class II, Class III, Class IV or Class V in paragraphs (e)(2) through
(5) of this section.

(7) Class VII. -- Claims which would otherwise qualify for classification under the classes enumerated above, but which are
not filed with the receiver on or before the bar date and which are not excused from such bar date by the liquidation court.

(8) Class VIII. -- Surplus or contribution notes, or similar obligations.

(9) Class IX. -- The claims of shareholders or other owners arising out of such capacity.

18 Del. C. 1953, § 5918; 56 Del. Laws, c. 380, § 1; 64 Del. Laws, c. 193, § 1; 70 Del. Laws, c. 186, § 1; 72 Del. Laws, c. 400, § 1.;

§ 5919. Attachment and garnishment of assets.

During the pendency of delinquency proceedings in this or any reciprocal state, no action or proceeding in the nature of an
attachment, garnishment or execution shall be commenced or maintained in the courts of this State against the delinquent insurer
or its assets. Any lien obtained by any such action or proceeding within 4 months prior to the commencement of any such delinquency
proceeding or at any time thereafter shall be void as against any rights arising in such delinquency proceeding.

18 Del. C. 1953, § 5919; 56 Del. Laws, c. 380, § 1.;

§ 5920. Uniform Insurers Liquidation Act.

(a) Paragraphs (2)-(13) inclusive of § 5901, together with §§ 5902, 5903 and 5913-5920 of this title constitute and may be
referred to as the Uniform Insurers Liquidation Act.

(b) The Uniform Insurers Liquidation Act shall be so interpreted and construed as to effectuate its general purpose to make
uniform the law of those states that enact it. To the extent that its provisions when applicable conflict with other provisions
of this chapter, the provisions of such act shall control.

18 Del. C. 1953, § 5920; 56 Del. Laws, c. 380, § 1.;

§ 5921. Deposit of moneys collected.

The moneys collected by the Commissioner in a proceeding under this chapter shall be from time to time deposited in 1 or more
state or national banks, savings banks or trust companies, and in the case of the insolvency or voluntary or involuntary liquidation
of any such depositary which is an institution organized and supervised under the laws of this State, such deposits shall
be entitled to priority of payment on an equality with any other priority given by the banking laws of this State. The Commissioner
may in his or her discretion deposit such moneys or any part thereof in a national bank or trust company as a trust fund.

18 Del. C. 1953, § 5921; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5922. Exemption from fees.

The Commissioner shall not be required to pay any fee to any public officer in this State for filing, recording, issuing a
transcript or certificate authenticating any paper or instrument pertaining to the exercise by the Commissioner of any of
the powers or duties conferred upon the Commissioner under this chapter, whether or not such paper or instrument is executed
by the Commissioner or the Commissioner's deputies, employees or attorneys of record and whether or not it is connected with
the commencement of any action or proceeding by or against the Commissioner or with the subsequent conduct of such action
or proceeding.

18 Del. C. 1953, § 5922; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5923. Borrowing on pledge of assets.

For the purpose of facilitating the rehabilitation, liquidation, conservation or dissolution of an insurer pursuant to this
chapter, the Commissioner may, subject to the approval of the court, borrow money and execute, acknowledge and deliver notes
or other evidences of indebtedness therefor and secure the repayment of the same by the mortgage, pledge, assignment, transfer
in trust or hypothecation of any or all of the property, whether real, personal or mixed, of such insurer; and the Commissioner,
subject to the approval of the court, shall have power to take any and all other action necessary and proper to consummate
any such loan and to provide for the repayment thereof. The Commissioner shall be under no obligation personally or in an
official capacity to repay any loan made pursuant to this section.

18 Del. C. 1953, § 5923; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5924. Date rights fixed on liquidation.

The rights and liabilities of the insurer and of its creditors, policyholders, stockholders, members, subscribers and all
other persons interested in its estate shall, unless otherwise directed by the court, be fixed as of the date on which the
order directing the liquidation of the insurer is filed in the office of the clerk of the court which made the order, subject
to the provisions of this chapter with respect to the rights of claimants holding contingent claims.

18 Del. C. 1953, § 5924; 56 Del. Laws, c. 380, § 1.;

§ 5925. Voidable transfers.

(a) Any transfer of or lien upon the property of an insurer which is made or created within 4 months prior to the granting
of an order to show cause, under this chapter, with the intent of giving to any creditor a preference or of enabling the creditor
to obtain a greater percentage of such creditor's debt than any other creditor of the same class and which is accepted by
such creditor having reasonable cause to believe that such preference will occur, shall be voidable.

(b) Every director, officer, employee, stockholder, member, subscriber and any other person acting on behalf of such insurer
who shall be concerned in any such act or deed and every person receiving thereby any property of such insurer of the benefit
thereof shall be personally liable therefor and shall be bound to account to the Commissioner.

(c) The Commissioner, as receiver in any proceeding under this chapter, may avoid any transfer of or lien upon the property
of an insurer which any creditor, stockholder, subscriber or member of such insurer might have avoided and may recover the
property so transferred unless such person was a bona fide holder for value prior to the date of the entering of an order
to show cause under this chapter. Such property or its value may be recovered from anyone who has received it except a bona
fide holder for value as herein specified.

18 Del. C. 1953, § 5925; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5926. Priority of claims for compensation.

Repealed by 72 Del. Laws, c. 400, § 2, effective July 6, 2000. For present law, see §§ 4211(b) and 5918(e) of this title.

§ 5927. Offsets.

(a) In all cases of mutual debts or mutual credits between the insurer and another person in connection with any action or
proceeding under this chapter, such credits and debts shall be set off and the balance only shall be allowed or paid, except
as provided in subsection (b) below.

(b) No offset shall be allowed in favor of any such person where:

(1) The obligation of the insurer to such person would not at the date of the entry of any liquidation order or otherwise,
as provided in § 5924 of this title, entitle such person to share as a claimant in the assets of the insurer; or

(2) The obligation of the insurer to such person was purchased by or transferred to such person with a view of its being used
as an offset; or

(3) The obligation of such person is to pay an assessment levied against the members of a mutual insurer or against the subscribers
of a reciprocal insurer or is to pay a balance upon the subscription to the capital stock of a stock insurer.

18 Del. C. 1953, § 5927; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5928. Allowance of certain claims.

(a) No contingent and unliquidated claim shall share in a distribution of the assets of an insurer which has been adjudicated
to be insolvent by an order made pursuant to this chapter, except that such claim shall be considered, if properly presented,
and may be allowed to share where:

(1) Such claim becomes absolute against the insurer on or before the last day for filing claims against the assets of such
insurer; or

(2) There is a surplus and the liquidation is thereafter conducted upon the basis that such insurer is solvent.

(b) Where an insurer has been so adjudicated to be insolvent, any person who has a cause of action against an insured of such
insurer under a liability insurance policy issued by such insurer shall have the right to file a claim in the liquidation
proceeding, regardless of the fact that such claim may be contingent, and such claim may be allowed:

(1) If it may be reasonably inferred from the proof presented upon such claim that such person would be able to obtain a judgment
upon such cause of action against such insured;

(2) If such person shall furnish suitable proof, unless the court for good cause shown shall otherwise direct, that no further
valid claim against such insurer arising out of his cause of action other than those already presented can be made; and

(3) If the total liability of such insurer to all claimants arising out of the same act of its insured shall be no greater
than its maximum liability would be were it not in liquidation.

(c) No judgment against such an insured taken after the date of entry of the liquidation order shall be considered in the
liquidation proceedings as evidence of liability or of the amount of damages, and no judgment against an insured taken by
default or by collusion prior to the entry of the liquidation order shall be considered as conclusive evidence in the liquidation
proceedings, either of the liability of such insured to such person upon such cause of action or of the amount of damages
to which such person is therein entitled.

(d) No claim of any secured claimant shall be allowed at a sum greater than the difference between the value of the claim
without security and the value of the security itself as of the date of the entry of the order of liquidation or such other
date set by the court for determining rights and liabilities as provided in § 5924 of this title unless the claimant surrenders
the security to the Commissioner, in which event the claim shall be allowed in the full amount for which it is valued.

18 Del. C. 1953, § 5928; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5929. Order of insolvency; time to file claims.

(a) If, upon the entry of an order of liquidation under this chapter or at any time thereafter during liquidation proceedings
the insurer is not clearly solvent, the court shall, upon hearing after such notice it deems proper, make and enter an order
adjudging the insurer to be insolvent.

(b) After the entry of the order of insolvency, regardless of any prior notice that may have been given to creditors, the
Commissioner shall notify all persons who may have claims against the insurer to file such claims with the Commissioner, at
a place and within the time specified in the notice, or such claims shall be forever barred. The time specified in the notice
shall be as fixed by the court for filing of claims and which shall be not less than 6 months after the entry of the order
of insolvency. The notice shall be given in such manner and for such reasonable period of time as may be ordered by the court.

18 Del. C. 1953, § 5929; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5930. Report and petition for assessment.

Within 3 years after the date of the entry of an order of rehabilitation or liquidation of a domestic mutual insurer or a
domestic reciprocal insurer, the Commissioner may make and file a report and petition to the court setting forth:

(1) The reasonable value of the assets of the insurer;

(2) The liabilities of the insurer to the extent thus far ascertained by the Commissioner;

(3) The aggregate amount of the assessment, if any, which the Commissioner deems reasonably necessary to pay all claims, the
costs and expenses of the collection of the assessments and the costs and expenses of the delinquency proceedings in full;

(4) Any other information relative to the affairs or property of the insurer that the Commissioner deems material.

18 Del. C. 1953, § 5930; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5931. Order and levy of assessments.

(a) Upon the filing and reading of the report and petition provided for in § 5930 of this title, the court, ex parte, may
order the Commissioner to assess all members or subscribers of the insurer who may be subject to such an assessment, in such
an aggregate amount as the court finds reasonably necessary to pay all valid claims as may be timely filed and proved in the
delinquency proceedings, together with the costs and expenses of levying and collecting assessments and the costs and expenses
of the delinquency proceedings in full. Any such order shall require the Commissioner to assess each such member or subscriber
for such member or subscriber's proportion of the aggregate assessment, according to such reasonable classification of such
members or subscribers and formula as may be made by the Commissioner and approved by the court.

(b) The court may order additional assessments upon the filing and reading of any amendment or supplement to the report and
petition referred to in (a) above, if such amendment or supplement is filed within 3 years after the date of the entry of
the order of rehabilitation or liquidation.

(c) After the entry of the order to levy and assess members or subscribers of an insurer referred to in (a) or (b) above,
the Commissioner shall levy and assess members or subscribers in accordance with the order.

(d) The total of all assessments against any member or subscriber with respect to any policy, whether levied pursuant to this
chapter or pursuant to any other provision of this title, shall be for no greater amount than that specified in the policy
or policies of the member or subscriber and as limited under this title, except as to any policy which was issued at a rate
of premium below the minimum rate lawfully permitted for the risk insured, in which event the assessment against any such
policyholder shall be upon the basis of the minimum rate for such risk.

(e) No assessment shall be levied against any member or subscriber with respect to any nonassessable policy issued in accordance
with this title.

18 Del. C. 1953, § 5931; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;

§ 5932. Assessment prima facie correct; notice; payment; proceedings to collect.

(a) Any assessment of a subscriber or member of an insurer made by the Commissioner, pursuant to the order of court fixing
the aggregate amount of the assessment against all members or subscribers and approving the classification and formula made
by the Commissioner under § 5931(a) of this title, shall be prima facie correct.

(b) Each member or subscriber shall be notified of the amount of assessment to be paid by written notice mailed to the address
of the member or subscriber last of record with the insurer. Failure of the member or subscriber to receive the notice so
mailed, within the time specified therein or at all, shall be no defense in any proceeding to collect the assessment.

(c) If any such member or subscriber fails to pay the assessment within the period specified in the notice, which period shall
not be less than 20 days after mailing, the Commissioner may obtain an order in the delinquency proceedings requiring the
member or subscriber to show cause at a time and place fixed by the court why judgment should not be entered against such
member or subscriber for the amount of the assessment together with all costs, and a copy of the order and a copy of the petition
therefor shall be served upon the member or subscriber within the time and in the manner designated in the order.

(d) If the subscriber or member after due service of a copy of the order and petition referred to in subsection (c) above
is made:

(1) Fails to appear at the time and place specified in the order, judgment shall be entered against such subscriber or member
as prayed for in the petition; or

(2) Appears in the manner and form required by law in response to the order, the court shall hear and determine the matter
and enter a judgment in accordance with its decision.

(e) The Commissioner may collect any such assessment through any other lawful means.

18 Del. C. 1953, § 5932; 56 Del. Laws, c. 380, § 1; 70 Del. Laws, c. 186, § 1.;