40-3616.Rehabilitation of insurer; application by commissioner for orderof court; grounds.The commissioner may apply by petition to the district court ofShawnee county for an order authorizing the commissioner to rehabilitate adomestic insurer on any one or more of the following grounds:
(a) The insurer is in such condition that the further transaction ofbusiness would be hazardous financially to its policyholders, creditors or thepublic;
(b) there is reasonable cause to believe that there has been embezzlementfrom the insurer, wrongful sequestration or diversion of the insurer's assets,forgery or fraud affecting the insurer, or other illegal conduct in, by, orwith respect to the insurer that if established would endanger assets in anamount threatening the solvency of the insurer;
(c) after demand by the commissioner under K.S.A. 40-222 and amendmentsthereto or under this act, the insurer has failed to promptly make availablefor examination any of such insurer's own property, books, accounts, documents,or otherrecords, or those of any subsidiary or related company within the control ofthe insurer, or those of any person having executive authority in the insurerso far as they pertain to the insurer;
(d) control of the insurer, whether by stock ownership or otherwise, andwhether direct or indirect, is in a person or persons found after notice andhearing to be untrustworthy;
(e) any person who in fact has executive authority in the insurer, whetheran officer, manager, general agent, director or trustee, employee or otherperson, has refused to be examined under oath by the commissioner concerningits affairs, whether in this state or elsewhere; and after reasonable notice ofthe fact, the insurer has failed promptly and effectively to terminate theemployment and status of the person and all such person's influence onmanagement;
(f) without first obtaining the written consent of the commissioner, theinsurer has transferred or attempted to transfer, in a manner contrary toK.S.A. 40-3301, 40-221a or 40-309 and amendments thereto, substantially itsentire property or business, or has entered into any transaction the effect ofwhich is to merge, consolidate, or reinsure substantially its entire propertyor business in or with the property or business of any other person;
(g) the insurer or its property has been or is the subject of an applicationfor the appointment of a receiver, trustee, custodian, conservator orsequestrator or similar fiduciary of the insurer or its property otherwise thanas authorized under the insurance laws of this state, and such appointment hasbeen made or is imminent, and such appointment might oust the courts of thisstate of jurisdiction or might prejudice orderly delinquency proceedings underthis act;
(h) the insurer has failed to pay within 60 days after due date anyobligation to any state or any subdivision thereof or any judgment entered inany state, if the court in which such judgment was entered had jurisdictionover such subject matter except that such nonpayment shall not be a grounduntil 60 days after any good faith effort by the insurer to contest theobligation has been terminated, whether it is before the commissioner or in thecourts, or the insurer has systematically attempted to compromise orrenegotiate previously agreed settlements with its creditors on the ground thatit is financially unable to pay its obligations in full; or
(i) the board of directors of the insurer requests or consents torehabilitation under this act.
40-3616.Rehabilitation of insurer; application by commissioner for orderof court; grounds.The commissioner may apply by petition to the district court ofShawnee county for an order authorizing the commissioner to rehabilitate adomestic insurer on any one or more of the following grounds:
(a) The insurer is in such condition that the further transaction ofbusiness would be hazardous financially to its policyholders, creditors or thepublic;
(b) there is reasonable cause to believe that there has been embezzlementfrom the insurer, wrongful sequestration or diversion of the insurer's assets,forgery or fraud affecting the insurer, or other illegal conduct in, by, orwith respect to the insurer that if established would endanger assets in anamount threatening the solvency of the insurer;
(c) after demand by the commissioner under K.S.A. 40-222 and amendmentsthereto or under this act, the insurer has failed to promptly make availablefor examination any of such insurer's own property, books, accounts, documents,or otherrecords, or those of any subsidiary or related company within the control ofthe insurer, or those of any person having executive authority in the insurerso far as they pertain to the insurer;
(d) control of the insurer, whether by stock ownership or otherwise, andwhether direct or indirect, is in a person or persons found after notice andhearing to be untrustworthy;
(e) any person who in fact has executive authority in the insurer, whetheran officer, manager, general agent, director or trustee, employee or otherperson, has refused to be examined under oath by the commissioner concerningits affairs, whether in this state or elsewhere; and after reasonable notice ofthe fact, the insurer has failed promptly and effectively to terminate theemployment and status of the person and all such person's influence onmanagement;
(f) without first obtaining the written consent of the commissioner, theinsurer has transferred or attempted to transfer, in a manner contrary toK.S.A. 40-3301, 40-221a or 40-309 and amendments thereto, substantially itsentire property or business, or has entered into any transaction the effect ofwhich is to merge, consolidate, or reinsure substantially its entire propertyor business in or with the property or business of any other person;
(g) the insurer or its property has been or is the subject of an applicationfor the appointment of a receiver, trustee, custodian, conservator orsequestrator or similar fiduciary of the insurer or its property otherwise thanas authorized under the insurance laws of this state, and such appointment hasbeen made or is imminent, and such appointment might oust the courts of thisstate of jurisdiction or might prejudice orderly delinquency proceedings underthis act;
(h) the insurer has failed to pay within 60 days after due date anyobligation to any state or any subdivision thereof or any judgment entered inany state, if the court in which such judgment was entered had jurisdictionover such subject matter except that such nonpayment shall not be a grounduntil 60 days after any good faith effort by the insurer to contest theobligation has been terminated, whether it is before the commissioner or in thecourts, or the insurer has systematically attempted to compromise orrenegotiate previously agreed settlements with its creditors on the ground thatit is financially unable to pay its obligations in full; or
(i) the board of directors of the insurer requests or consents torehabilitation under this act.
40-3616.Rehabilitation of insurer; application by commissioner for orderof court; grounds.The commissioner may apply by petition to the district court ofShawnee county for an order authorizing the commissioner to rehabilitate adomestic insurer on any one or more of the following grounds:
(a) The insurer is in such condition that the further transaction ofbusiness would be hazardous financially to its policyholders, creditors or thepublic;
(b) there is reasonable cause to believe that there has been embezzlementfrom the insurer, wrongful sequestration or diversion of the insurer's assets,forgery or fraud affecting the insurer, or other illegal conduct in, by, orwith respect to the insurer that if established would endanger assets in anamount threatening the solvency of the insurer;
(c) after demand by the commissioner under K.S.A. 40-222 and amendmentsthereto or under this act, the insurer has failed to promptly make availablefor examination any of such insurer's own property, books, accounts, documents,or otherrecords, or those of any subsidiary or related company within the control ofthe insurer, or those of any person having executive authority in the insurerso far as they pertain to the insurer;
(d) control of the insurer, whether by stock ownership or otherwise, andwhether direct or indirect, is in a person or persons found after notice andhearing to be untrustworthy;
(e) any person who in fact has executive authority in the insurer, whetheran officer, manager, general agent, director or trustee, employee or otherperson, has refused to be examined under oath by the commissioner concerningits affairs, whether in this state or elsewhere; and after reasonable notice ofthe fact, the insurer has failed promptly and effectively to terminate theemployment and status of the person and all such person's influence onmanagement;
(f) without first obtaining the written consent of the commissioner, theinsurer has transferred or attempted to transfer, in a manner contrary toK.S.A. 40-3301, 40-221a or 40-309 and amendments thereto, substantially itsentire property or business, or has entered into any transaction the effect ofwhich is to merge, consolidate, or reinsure substantially its entire propertyor business in or with the property or business of any other person;
(g) the insurer or its property has been or is the subject of an applicationfor the appointment of a receiver, trustee, custodian, conservator orsequestrator or similar fiduciary of the insurer or its property otherwise thanas authorized under the insurance laws of this state, and such appointment hasbeen made or is imminent, and such appointment might oust the courts of thisstate of jurisdiction or might prejudice orderly delinquency proceedings underthis act;
(h) the insurer has failed to pay within 60 days after due date anyobligation to any state or any subdivision thereof or any judgment entered inany state, if the court in which such judgment was entered had jurisdictionover such subject matter except that such nonpayment shall not be a grounduntil 60 days after any good faith effort by the insurer to contest theobligation has been terminated, whether it is before the commissioner or in thecourts, or the insurer has systematically attempted to compromise orrenegotiate previously agreed settlements with its creditors on the ground thatit is financially unable to pay its obligations in full; or
(i) the board of directors of the insurer requests or consents torehabilitation under this act.
