(a) In a liquidation proceeding in this state involving one (1) or more reciprocal states, the order of distribution of the domiciliary state shall control as to all claims of residents of this and reciprocal states. All claims of residents of reciprocal states shall be given equal priority of payment from general assets regardless of where the assets are located.

Terms Used In Tennessee Code 56-9-409

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Creditor: is a person having any claim, whether matured or unmatured, liquidated or unliquidated, secured or unsecured, absolute, fixed or contingent. See Tennessee Code 56-9-103
  • Domiciliary state: means the state in which an insurer is incorporated or organized, or, in the case of an alien insurer, its state of entry. See Tennessee Code 56-9-103
  • general assets: includes all the property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. See Tennessee Code 56-9-103
  • Insurer: means any person who has done, purports to do, is doing or is licensed to do an insurance business, and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization, supervision, or conservation by, any insurance commissioner. See Tennessee Code 56-9-103
  • Reciprocal: means the aggregation of subscribers under a common name. See Tennessee Code 56-16-102
  • State: means any state, district or territory of the United States and the Panama Canal Zone. See Tennessee Code 56-9-103
(b)

(1) The owners of special deposit claims against an insurer for which a liquidator is appointed in this or any other state shall be given priority against the special deposits in accordance with the statutes governing the creation and maintenance of the deposits.
(2) If there is a deficiency in any deposit, so that the claims secured by it are not fully discharged from it, the claimants may share in the general assets, but the 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.
(c) The owner of a secure claim against an insurer for which a liquidator has been appointed in this or any other state may surrender the owner’s security and file the owner’s claim as a general creditor, or the claim may be discharged by resort to the security in accordance with § 56-9-328, 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.
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