Preference, voidable when, how recovered--liens, voidable when,procedure--liability of officers for granting preferences.
375.1195. 1. (1) A preference is a transfer of any of theproperty of an insurer to or for the benefit of a creditor, foror on account of an antecedent debt, which transfer is made orsuffered by the insurer within one year before the filing of asuccessful petition for liquidation under sections 375.1150 to375.1246, the effect of which transfer may be to enable thecreditor to obtain a greater percentage of this debt than anothercreditor of the same class would receive. If a liquidation orderis entered while the insurer is already subject to arehabilitation order, then such transfers shall be deemedpreferences if made or suffered within one year before the filingof the successful petition for rehabilitation, or within twoyears before the filing of the successful petition forliquidation, whichever time is shorter.
(2) Any preference may be avoided by the liquidator if:
(a) The insurer was insolvent at the time of the transfer;or
(b) The transfer was made within four months before thefiling of the petition; or
(c) The creditor receiving it or to be benefited thereby orhis agent acting with reference thereto had, at the time when thetransfer was made, reasonable cause to believe that the insurerwas insolvent or was about to become insolvent; or
(d) The creditor receiving it was an officer, or anyemployee or attorney or other person who was in fact in aposition of comparable influence in the insurer, as an officerwhether or not he held such position, or any shareholder holdingdirectly or indirectly more than five percent of any class of anyequity security issued by the insurer, or any other person, firm,corporation, association, or persons with whom the insurer didnot deal at arm's length.
(3) Where the preference is avoidable, the liquidator mayrecover the property or, if it has been converted, its value fromany person who has received or converted the property; exceptwhere a bona fide purchaser or lienor has given less than fairmarket value, he shall have a lien upon the property to theextent of the consideration actually given by him. Where apreference by way of lien or security title is voidable, thecourt may on due notice order the lien or title to be preservedfor the benefit of the estate, in which event the lien or titleshall pass to the liquidator.
2. (1) A transfer of property other than real propertyshall be deemed to be made or suffered when it becomes perfectedto the extent that no subsequent lien obtainable by legal orequitable proceedings on a simple contract could become superiorto the rights of the transferee.
(2) A transfer of real property shall be deemed to be madeor suffered when it becomes perfected to the extent that nosubsequent bona fide purchaser from the insurer could obtainrights superior to the rights of the transferee.
(3) A transfer which creates an equitable lien shall not bedeemed to be perfected if there are available means by which alegal lien could be created.
(4) A transfer not perfected prior to the filing of apetition for liquidation shall be deemed to be made immediatelybefore the filing of the successful petition.
(5) The provisions of this subsection apply whether or notthere are or were creditors who might have obtained liens orpersons who might have become bona fide purchasers.
3. For purposes of this section:
(1) A lien obtainable by legal or equitable proceedingsupon a simple contract is one arising in the ordinary course ofsuch proceedings upon the entry or docketing of a judgment ordecree, or upon attachment, garnishment, execution, or likeprocess, whether before, upon, or after judgment or decree andwhether before or upon levy. It does not include liens whichunder applicable law are given a special priority over otherliens which are prior in time.
(2) A lien obtainable by legal or equitable proceedingscould become superior to the rights of a transferee, or apurchaser could obtain rights superior to the rights of atransferee within the meaning of subsection 2 of this section, ifsuch consequences would follow only from the lien or purchaseitself, or from the lien or purchase followed by any step whollywithin the control of the respective lienholder or purchaser,with or without the aid of ministerial action by publicofficials. Such a lien could not, however, become superior andsuch a purchase could not create superior rights for the purposeof subsection 2 of this section through any acts subsequent tothe obtaining of such a lien or subsequent to such a purchasewhich require the agreement or concurrence of any third party orwhich require any further judicial action or ruling.
4. A transfer of property for or on account of a new andcontemporaneous consideration which is deemed under subsection 2of this section to be made or suffered after the transfer becauseof delay in perfecting does not thereby become a transfer for oron account of an antecedent debt if any acts required by theapplicable law to be performed in order to perfect the transferas against liens or bona fide purchasers' rights are performedwithin twenty-one days or any period expressly allowed by thelaw, whichever is less. A transfer to secure a future loan, ifsuch a loan is actually made, or a transfer which becomessecurity for a future loan, shall have the same effect as atransfer for or on account of a new and contemporaneousconsideration.
5. If any lien deemed voidable under subdivision (2) ofsubsection 1 of this section has been dissolved by the furnishingof a bond or other obligation, the surety on which thereby hasbeen indemnified directly or indirectly by the transfer of or thecreation of a lien upon any property of an insurer before thefiling of a petition under this act* which results in aliquidation order, the indemnifying transfer or lien shall alsobe deemed voidable.
6. The property affected by any lien deemed voidable undersubsections 1 and 5 of this section shall be discharged from suchlien, and that property and any of the indemnifying propertytransferred to or for the benefit of a surety shall pass to theliquidator, except that the court may on due notice order anysuch lien to be preserved for the benefit of the estate and thecourt may direct that such conveyance be executed as may beproper or adequate to evidence the title of the liquidator.
7. The court shall have summary jurisdiction of anyproceeding by the liquidator to hear and determine the rights ofany parties under this section. Reasonable notice of anyhearings in the proceeding shall be given to all parties ininterest, including the obligee of a releasing bond or other likeobligation. Where an order is entered for the recovery ofindemnifying property in kind or for the avoidance of anindemnifying lien, the court, upon application of any party ininterest, shall in the same proceeding ascertain the value of theproperty or lien, and if the value is less than the amount forwhich the property is indemnified or than the amount of the lien,the transferee or lienholder may elect to retain the property orlien upon payment of its value, as ascertained by the court, tothe liquidator, within such reasonable times and upon such termsas the court shall fix.
8. The liability of the surety under a releasing bond orother like obligation shall be discharged to the extent of thevalue of the indemnifying property recovered or the indemnifyinglien nullified and avoided by the liquidator, or where theproperty is retained under subsection 7 of this section to theextent of the amount paid to the liquidator.
9. If an insurer, directly or indirectly, within fourmonths before the filing of a successful petition for liquidationunder this act*, or at any time in contemplation of a proceedingto liquidate it, pays money or transfers property to anattorney-at-law for services rendered or to be rendered, thetransactions may be examined by the court on its own motion orshall be examined by the court on petition of the liquidator andshall be held valid only to the extent that the amount of suchmoney or value of such property is reasonable as relates toactual services rendered as determined by the court, and theexcess may be recovered by the liquidator for the benefit of theestate, provided that where the attorney is in a position ofinfluence in the insurer or an affiliate thereof, payment of anymoney or the transfer of any property to the attorney-at-law forservices rendered or to be rendered shall be governed by theprovision of paragraph (d) of subdivision (2) of subsection 1 ofthis section.
10. (1) Every officer, manager, employee, shareholder,member, subscriber, attorney or any other person acting on behalfof the insurer who knowingly participates in giving anypreference when he has reasonable cause to believe the insurer isor about to become insolvent at the time of the preference shallbe personally liable to the liquidator for the amount of thepreference. A rebuttable presumption may be established thatsuch a person is personally liable if the transfer was madewithin four months before the date of filing of this successfulpetition for liquidation.
(2) Every person receiving any property from the insurer orthe benefit thereof as a preference voidable under subsection 1of this section shall be personally liable therefor and shall bebound to account to the liquidator.
(3) Nothing in this subsection shall prejudice any otherclaim by the liquidator against any person.
(L. 1991 H.B. 385, et al. § 77)
*"This act" (H.B. 385, et al., 1991) contains numerous sections. Consult Disposition of Sections table for definitive listing.
Preference, voidable when, how recovered--liens, voidable when,procedure--liability of officers for granting preferences.
375.1195. 1. (1) A preference is a transfer of any of theproperty of an insurer to or for the benefit of a creditor, foror on account of an antecedent debt, which transfer is made orsuffered by the insurer within one year before the filing of asuccessful petition for liquidation under sections 375.1150 to375.1246, the effect of which transfer may be to enable thecreditor to obtain a greater percentage of this debt than anothercreditor of the same class would receive. If a liquidation orderis entered while the insurer is already subject to arehabilitation order, then such transfers shall be deemedpreferences if made or suffered within one year before the filingof the successful petition for rehabilitation, or within twoyears before the filing of the successful petition forliquidation, whichever time is shorter.
(2) Any preference may be avoided by the liquidator if:
(a) The insurer was insolvent at the time of the transfer;or
(b) The transfer was made within four months before thefiling of the petition; or
(c) The creditor receiving it or to be benefited thereby orhis agent acting with reference thereto had, at the time when thetransfer was made, reasonable cause to believe that the insurerwas insolvent or was about to become insolvent; or
(d) The creditor receiving it was an officer, or anyemployee or attorney or other person who was in fact in aposition of comparable influence in the insurer, as an officerwhether or not he held such position, or any shareholder holdingdirectly or indirectly more than five percent of any class of anyequity security issued by the insurer, or any other person, firm,corporation, association, or persons with whom the insurer didnot deal at arm's length.
(3) Where the preference is avoidable, the liquidator mayrecover the property or, if it has been converted, its value fromany person who has received or converted the property; exceptwhere a bona fide purchaser or lienor has given less than fairmarket value, he shall have a lien upon the property to theextent of the consideration actually given by him. Where apreference by way of lien or security title is voidable, thecourt may on due notice order the lien or title to be preservedfor the benefit of the estate, in which event the lien or titleshall pass to the liquidator.
2. (1) A transfer of property other than real propertyshall be deemed to be made or suffered when it becomes perfectedto the extent that no subsequent lien obtainable by legal orequitable proceedings on a simple contract could become superiorto the rights of the transferee.
(2) A transfer of real property shall be deemed to be madeor suffered when it becomes perfected to the extent that nosubsequent bona fide purchaser from the insurer could obtainrights superior to the rights of the transferee.
(3) A transfer which creates an equitable lien shall not bedeemed to be perfected if there are available means by which alegal lien could be created.
(4) A transfer not perfected prior to the filing of apetition for liquidation shall be deemed to be made immediatelybefore the filing of the successful petition.
(5) The provisions of this subsection apply whether or notthere are or were creditors who might have obtained liens orpersons who might have become bona fide purchasers.
3. For purposes of this section:
(1) A lien obtainable by legal or equitable proceedingsupon a simple contract is one arising in the ordinary course ofsuch proceedings upon the entry or docketing of a judgment ordecree, or upon attachment, garnishment, execution, or likeprocess, whether before, upon, or after judgment or decree andwhether before or upon levy. It does not include liens whichunder applicable law are given a special priority over otherliens which are prior in time.
(2) A lien obtainable by legal or equitable proceedingscould become superior to the rights of a transferee, or apurchaser could obtain rights superior to the rights of atransferee within the meaning of subsection 2 of this section, ifsuch consequences would follow only from the lien or purchaseitself, or from the lien or purchase followed by any step whollywithin the control of the respective lienholder or purchaser,with or without the aid of ministerial action by publicofficials. Such a lien could not, however, become superior andsuch a purchase could not create superior rights for the purposeof subsection 2 of this section through any acts subsequent tothe obtaining of such a lien or subsequent to such a purchasewhich require the agreement or concurrence of any third party orwhich require any further judicial action or ruling.
4. A transfer of property for or on account of a new andcontemporaneous consideration which is deemed under subsection 2of this section to be made or suffered after the transfer becauseof delay in perfecting does not thereby become a transfer for oron account of an antecedent debt if any acts required by theapplicable law to be performed in order to perfect the transferas against liens or bona fide purchasers' rights are performedwithin twenty-one days or any period expressly allowed by thelaw, whichever is less. A transfer to secure a future loan, ifsuch a loan is actually made, or a transfer which becomessecurity for a future loan, shall have the same effect as atransfer for or on account of a new and contemporaneousconsideration.
5. If any lien deemed voidable under subdivision (2) ofsubsection 1 of this section has been dissolved by the furnishingof a bond or other obligation, the surety on which thereby hasbeen indemnified directly or indirectly by the transfer of or thecreation of a lien upon any property of an insurer before thefiling of a petition under this act* which results in aliquidation order, the indemnifying transfer or lien shall alsobe deemed voidable.
6. The property affected by any lien deemed voidable undersubsections 1 and 5 of this section shall be discharged from suchlien, and that property and any of the indemnifying propertytransferred to or for the benefit of a surety shall pass to theliquidator, except that the court may on due notice order anysuch lien to be preserved for the benefit of the estate and thecourt may direct that such conveyance be executed as may beproper or adequate to evidence the title of the liquidator.
7. The court shall have summary jurisdiction of anyproceeding by the liquidator to hear and determine the rights ofany parties under this section. Reasonable notice of anyhearings in the proceeding shall be given to all parties ininterest, including the obligee of a releasing bond or other likeobligation. Where an order is entered for the recovery ofindemnifying property in kind or for the avoidance of anindemnifying lien, the court, upon application of any party ininterest, shall in the same proceeding ascertain the value of theproperty or lien, and if the value is less than the amount forwhich the property is indemnified or than the amount of the lien,the transferee or lienholder may elect to retain the property orlien upon payment of its value, as ascertained by the court, tothe liquidator, within such reasonable times and upon such termsas the court shall fix.
8. The liability of the surety under a releasing bond orother like obligation shall be discharged to the extent of thevalue of the indemnifying property recovered or the indemnifyinglien nullified and avoided by the liquidator, or where theproperty is retained under subsection 7 of this section to theextent of the amount paid to the liquidator.
9. If an insurer, directly or indirectly, within fourmonths before the filing of a successful petition for liquidationunder this act*, or at any time in contemplation of a proceedingto liquidate it, pays money or transfers property to anattorney-at-law for services rendered or to be rendered, thetransactions may be examined by the court on its own motion orshall be examined by the court on petition of the liquidator andshall be held valid only to the extent that the amount of suchmoney or value of such property is reasonable as relates toactual services rendered as determined by the court, and theexcess may be recovered by the liquidator for the benefit of theestate, provided that where the attorney is in a position ofinfluence in the insurer or an affiliate thereof, payment of anymoney or the transfer of any property to the attorney-at-law forservices rendered or to be rendered shall be governed by theprovision of paragraph (d) of subdivision (2) of subsection 1 ofthis section.
10. (1) Every officer, manager, employee, shareholder,member, subscriber, attorney or any other person acting on behalfof the insurer who knowingly participates in giving anypreference when he has reasonable cause to believe the insurer isor about to become insolvent at the time of the preference shallbe personally liable to the liquidator for the amount of thepreference. A rebuttable presumption may be established thatsuch a person is personally liable if the transfer was madewithin four months before the date of filing of this successfulpetition for liquidation.
(2) Every person receiving any property from the insurer orthe benefit thereof as a preference voidable under subsection 1of this section shall be personally liable therefor and shall bebound to account to the liquidator.
(3) Nothing in this subsection shall prejudice any otherclaim by the liquidator against any person.
(L. 1991 H.B. 385, et al. § 77)
*"This act" (H.B. 385, et al., 1991) contains numerous sections. Consult Disposition of Sections table for definitive listing.
Preference, voidable when, how recovered--liens, voidable when,procedure--liability of officers for granting preferences.
375.1195. 1. (1) A preference is a transfer of any of theproperty of an insurer to or for the benefit of a creditor, foror on account of an antecedent debt, which transfer is made orsuffered by the insurer within one year before the filing of asuccessful petition for liquidation under sections 375.1150 to375.1246, the effect of which transfer may be to enable thecreditor to obtain a greater percentage of this debt than anothercreditor of the same class would receive. If a liquidation orderis entered while the insurer is already subject to arehabilitation order, then such transfers shall be deemedpreferences if made or suffered within one year before the filingof the successful petition for rehabilitation, or within twoyears before the filing of the successful petition forliquidation, whichever time is shorter.
(2) Any preference may be avoided by the liquidator if:
(a) The insurer was insolvent at the time of the transfer;or
(b) The transfer was made within four months before thefiling of the petition; or
(c) The creditor receiving it or to be benefited thereby orhis agent acting with reference thereto had, at the time when thetransfer was made, reasonable cause to believe that the insurerwas insolvent or was about to become insolvent; or
(d) The creditor receiving it was an officer, or anyemployee or attorney or other person who was in fact in aposition of comparable influence in the insurer, as an officerwhether or not he held such position, or any shareholder holdingdirectly or indirectly more than five percent of any class of anyequity security issued by the insurer, or any other person, firm,corporation, association, or persons with whom the insurer didnot deal at arm's length.
(3) Where the preference is avoidable, the liquidator mayrecover the property or, if it has been converted, its value fromany person who has received or converted the property; exceptwhere a bona fide purchaser or lienor has given less than fairmarket value, he shall have a lien upon the property to theextent of the consideration actually given by him. Where apreference by way of lien or security title is voidable, thecourt may on due notice order the lien or title to be preservedfor the benefit of the estate, in which event the lien or titleshall pass to the liquidator.
2. (1) A transfer of property other than real propertyshall be deemed to be made or suffered when it becomes perfectedto the extent that no subsequent lien obtainable by legal orequitable proceedings on a simple contract could become superiorto the rights of the transferee.
(2) A transfer of real property shall be deemed to be madeor suffered when it becomes perfected to the extent that nosubsequent bona fide purchaser from the insurer could obtainrights superior to the rights of the transferee.
(3) A transfer which creates an equitable lien shall not bedeemed to be perfected if there are available means by which alegal lien could be created.
(4) A transfer not perfected prior to the filing of apetition for liquidation shall be deemed to be made immediatelybefore the filing of the successful petition.
(5) The provisions of this subsection apply whether or notthere are or were creditors who might have obtained liens orpersons who might have become bona fide purchasers.
3. For purposes of this section:
(1) A lien obtainable by legal or equitable proceedingsupon a simple contract is one arising in the ordinary course ofsuch proceedings upon the entry or docketing of a judgment ordecree, or upon attachment, garnishment, execution, or likeprocess, whether before, upon, or after judgment or decree andwhether before or upon levy. It does not include liens whichunder applicable law are given a special priority over otherliens which are prior in time.
(2) A lien obtainable by legal or equitable proceedingscould become superior to the rights of a transferee, or apurchaser could obtain rights superior to the rights of atransferee within the meaning of subsection 2 of this section, ifsuch consequences would follow only from the lien or purchaseitself, or from the lien or purchase followed by any step whollywithin the control of the respective lienholder or purchaser,with or without the aid of ministerial action by publicofficials. Such a lien could not, however, become superior andsuch a purchase could not create superior rights for the purposeof subsection 2 of this section through any acts subsequent tothe obtaining of such a lien or subsequent to such a purchasewhich require the agreement or concurrence of any third party orwhich require any further judicial action or ruling.
4. A transfer of property for or on account of a new andcontemporaneous consideration which is deemed under subsection 2of this section to be made or suffered after the transfer becauseof delay in perfecting does not thereby become a transfer for oron account of an antecedent debt if any acts required by theapplicable law to be performed in order to perfect the transferas against liens or bona fide purchasers' rights are performedwithin twenty-one days or any period expressly allowed by thelaw, whichever is less. A transfer to secure a future loan, ifsuch a loan is actually made, or a transfer which becomessecurity for a future loan, shall have the same effect as atransfer for or on account of a new and contemporaneousconsideration.
5. If any lien deemed voidable under subdivision (2) ofsubsection 1 of this section has been dissolved by the furnishingof a bond or other obligation, the surety on which thereby hasbeen indemnified directly or indirectly by the transfer of or thecreation of a lien upon any property of an insurer before thefiling of a petition under this act* which results in aliquidation order, the indemnifying transfer or lien shall alsobe deemed voidable.
6. The property affected by any lien deemed voidable undersubsections 1 and 5 of this section shall be discharged from suchlien, and that property and any of the indemnifying propertytransferred to or for the benefit of a surety shall pass to theliquidator, except that the court may on due notice order anysuch lien to be preserved for the benefit of the estate and thecourt may direct that such conveyance be executed as may beproper or adequate to evidence the title of the liquidator.
7. The court shall have summary jurisdiction of anyproceeding by the liquidator to hear and determine the rights ofany parties under this section. Reasonable notice of anyhearings in the proceeding shall be given to all parties ininterest, including the obligee of a releasing bond or other likeobligation. Where an order is entered for the recovery ofindemnifying property in kind or for the avoidance of anindemnifying lien, the court, upon application of any party ininterest, shall in the same proceeding ascertain the value of theproperty or lien, and if the value is less than the amount forwhich the property is indemnified or than the amount of the lien,the transferee or lienholder may elect to retain the property orlien upon payment of its value, as ascertained by the court, tothe liquidator, within such reasonable times and upon such termsas the court shall fix.
8. The liability of the surety under a releasing bond orother like obligation shall be discharged to the extent of thevalue of the indemnifying property recovered or the indemnifyinglien nullified and avoided by the liquidator, or where theproperty is retained under subsection 7 of this section to theextent of the amount paid to the liquidator.
9. If an insurer, directly or indirectly, within fourmonths before the filing of a successful petition for liquidationunder this act*, or at any time in contemplation of a proceedingto liquidate it, pays money or transfers property to anattorney-at-law for services rendered or to be rendered, thetransactions may be examined by the court on its own motion orshall be examined by the court on petition of the liquidator andshall be held valid only to the extent that the amount of suchmoney or value of such property is reasonable as relates toactual services rendered as determined by the court, and theexcess may be recovered by the liquidator for the benefit of theestate, provided that where the attorney is in a position ofinfluence in the insurer or an affiliate thereof, payment of anymoney or the transfer of any property to the attorney-at-law forservices rendered or to be rendered shall be governed by theprovision of paragraph (d) of subdivision (2) of subsection 1 ofthis section.
10. (1) Every officer, manager, employee, shareholder,member, subscriber, attorney or any other person acting on behalfof the insurer who knowingly participates in giving anypreference when he has reasonable cause to believe the insurer isor about to become insolvent at the time of the preference shallbe personally liable to the liquidator for the amount of thepreference. A rebuttable presumption may be established thatsuch a person is personally liable if the transfer was madewithin four months before the date of filing of this successfulpetition for liquidation.
(2) Every person receiving any property from the insurer orthe benefit thereof as a preference voidable under subsection 1of this section shall be personally liable therefor and shall bebound to account to the liquidator.
(3) Nothing in this subsection shall prejudice any otherclaim by the liquidator against any person.
(L. 1991 H.B. 385, et al. § 77)
*"This act" (H.B. 385, et al., 1991) contains numerous sections. Consult Disposition of Sections table for definitive listing.
