General Assembly Substitute Bill No. 6951
January Session, 2015 *_____HB06951INS___031915____*
General Assembly
Substitute Bill No. 6951
January Session, 2015
*_____HB06951INS___031915____*
AN ACT CONCERNING THE INSURERS REHABILITATION AND LIQUIDATION ACT.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. Subsection (a) of section 38a-930 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2015):
(a) (1) A preference is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the insurer within one year before the filing of a successful petition for liquidation under sections 38a-903 to 38a-961, inclusive, the effect of which transfer may be to enable the creditor to obtain a greater percentage of this debt than another creditor of the same class would receive. If a liquidation order is entered while the insurer is already subject to a rehabilitation order, then such transfers shall be deemed preferences if made or suffered within one year before the filing of the successful petition for rehabilitation, or within two years before the filing of the successful petition for liquidation, 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; (B) the transfer was made within four months before the filing of the petition; (C) the creditor receiving it or to be benefited thereby or [his] such creditor's agent acting with reference thereto had, at the time when the transfer was made, reasonable cause to believe that the insurer was insolvent or was about to become insolvent; or (D) the creditor receiving it was an officer, or any employee or attorney or other person who was in fact in a position of comparable influence in the insurer to an officer whether or not [he] such employee, attorney or other person held such position, or any shareholder holding directly or indirectly more than five per [centum] cent of any class of any equity security issued by the insurer, or any other person, firm, corporation, association, or aggregation of persons with whom the insurer did not deal at arm's length.
(3) Where the preference is voidable, the liquidator may recover the property, or if it has been converted, its value from any person who has received or converted the property, except where a bona fide purchaser or lienor has given less than fair equivalent value, [he] such purchaser or lienor shall have a lien upon the property to the extent of the consideration actually given by [him] such purchaser or lienor. Where a preference by way of lien or security title is voidable, the court may on due notice order the lien or title to be preserved for the benefit of the estate, in which event the lien or title shall pass to the liquidator.
(4) Notwithstanding subdivisions (1) to (3), inclusive, of this subsection, a transfer pursuant to a commutation of a reinsurance agreement that is approved by the commissioner or the commissioner's designated appointee under section 38a-962d shall not be voidable as a preference. For the purposes of this subdivision, a commutation of a reinsurance agreement is the elimination of all present and future obligations between the parties, arising from the reinsurance agreement, in exchange for a current consideration.
Sec. 2. Subsection (a) of section 38a-944a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2015):
(a) (1) Notwithstanding any provision of sections 38a-903 to 38a-961, inclusive, including any provision permitting the modification of contracts, or other law of a state, and subject to the provisions of subdivision (2) of this subsection, no person shall be stayed or prohibited from exercising: [(1)] (A) A contractual right to terminate, liquidate, accelerate or close out any netting agreement or qualified financial contract with an insurer because of: [(A)] (i) The insolvency, financial condition or default of the insurer at any time, provided that the right is enforceable under applicable law other than sections 38a-903 to 38a-961, inclusive; [,] or [(B)] (ii) the commencement of a formal delinquency proceeding under sections 38a-903 to 38a-961, inclusive; [. (2) Any] (B) any right under a pledge, security, collateral or guarantee agreement or any other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract; [. (3) Subject] (C) subject to any provision of subsection (b) of section 38a-932, any right to set off or net out any termination value, payment amount [,] or other transfer obligation arising under or in connection with a netting agreement or qualified financial contract where the counterparty or its guarantor is organized under the laws of the United States or a state or foreign jurisdiction approved by the Securities Valuation Office of the National Association of Insurance Commissioners as eligible for netting.
(2) No person who is a party to a netting agreement or qualified financial contract with an insurer that is the subject of an insolvency proceeding may exercise any contractual right to terminate, liquidate, accelerate or close out the obligations with respect to such agreement or contract because of the insolvency, financial condition or default of the insurer, or by the commencement of a formal delinquency proceeding under sections 38a-903 to 38a-961, inclusive, (A) until five o'clock p.m., eastern standard time, on the business day following the date of appointment of a receiver, or (B) after such person has received notice that such agreement or contract has been transferred pursuant to the provisions of this section.
Sec. 3. Subsection (b) of section 38a-140 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2015):
(b) Whenever it appears to the commissioner that any person has committed a violation of sections 38a-129 to 38a-l40, inclusive, that so impairs the financial condition of a domestic insurance company as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders, creditors, securityholders or the public, the commissioner may proceed as provided in [section 38a-18] chapter 704c to take possession of the property of such domestic insurance company and to conduct the business thereof.
Sec. 4. Section 38a-18 of the general statutes is repealed. (Effective October 1, 2015)
This act shall take effect as follows and shall amend the following sections:
Section 1 October 1, 2015 38a-930(a)
Sec. 2 October 1, 2015 38a-944a(a)
Sec. 3 October 1, 2015 38a-140(b)
Sec. 4 October 1, 2015 Repealer section
This act shall take effect as follows and shall amend the following sections:
Section 1
October 1, 2015
38a-930(a)
Sec. 2
October 1, 2015
38a-944a(a)
Sec. 3
October 1, 2015
38a-140(b)
Sec. 4
October 1, 2015
Repealer section
INS Joint Favorable Subst.
INS
Joint Favorable Subst.