an individual who meets the requirements of Subsection (53)(b). See Utah Code 31A-1-301
Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
Filed: means that a filing is:
(i)
submitted to the department as required by and in accordance with applicable statute, rule, or filing order;
(ii)
received by the department within the time period provided in applicable statute, rule, or filing order; and
(iii)
accompanied by the appropriate fee in accordance with:
Good faith: means honesty in fact and intention, and in regard to 5, also requires the absence of:
(a)
information that would lead a reasonable person in the same position to know that the insurer is financially impaired or insolvent; and
(b)
knowledge regarding the imminence or pendency of a delinquency proceeding against the insurer. See Utah Code 31A-27a-102
Indemnity: means the payment of an amount to offset all or part of an insured loss. See Utah Code 31A-1-301
insolvent: means that an insurer:
(a)
is unable to pay its obligations when they are due;
(b)
does not have admitted assets at least equal to all of its liabilities; or
(c)
has a total adjusted capital that is less than its mandatory control level RBC, as defined in Section 31A-17-601. See Utah Code 31A-27a-102
Insurance: includes :
(i)
a risk distributing arrangement providing for compensation or replacement for damages or loss through the provision of a service or a benefit in kind;
(ii)
a contract of guaranty or suretyship entered into by the guarantor or surety as a business and not as merely incidental to a business transaction; and
(iii)
a plan in which the risk does not rest upon the person who makes an arrangement, but with a class of persons who have agreed to share the risk. See Utah Code 31A-1-301
insurer: means a person who:
(a)
is doing, has done, purports to do, or is licensed to do the business of insurance;
(b)
is or has been subject to the authority of, or to rehabilitation, liquidation, reorganization, supervision, or conservation by an insurance commissioner; or
Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
Lien: A claim against real or personal property in satisfaction of a debt.
Member: means a person having membership rights in an insurance corporation. See Utah Code 31A-1-301
New value: means :
(i)
money;
(ii)
money's worth in goods, services, or new credit; or
(iii)
release by a transferee of property previously transferred to the transferee in a transaction that is neither void nor voidable by the insurer or the receiver under applicable law, including proceeds of the property. See Utah Code 31A-27a-102
Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
a nondomiciliary commissioner in whose state the insurer has outstanding claims liabilities;
(c)
an affected guaranty association; and
(d)
the following parties if the party files a request with the receivership court for inclusion as a party in interest and to be on the service list:
(i)
an insurer that ceded to or assumed business from the insurer;
(ii)
a policyholder;
(iii)
a third party claimant;
(iv)
a creditor;
(v)
a 10% or greater equity security holder in the insolvent insurer; and
(vi)
a person, including an indenture trustee, with a financial or regulatory interest in the delinquency proceeding. See Utah Code 31A-27a-102
Person: includes :
(a)
an individual;
(b)
a partnership;
(c)
a corporation;
(d)
an incorporated or unincorporated association;
(e)
a joint stock company;
(f)
a trust;
(g)
a limited liability company;
(h)
a reciprocal;
(i)
a syndicate; or
(j)
another similar entity or combination of entities acting in concert. See Utah Code 31A-1-301
Preference: means a transfer of property of an insurer to or for the benefit of a creditor:
(a)
for or on account of an antecedent debt, made or allowed by the insurer within one year before the day on which a successful petition for rehabilitation or liquidation is filed under this chapter;
(b)
the effect of which transfer may enable the creditor to obtain a greater percentage of the creditor's debt than another creditor of the same class would receive; and
(c)
if a liquidation order is entered while the insurer is already subject to a rehabilitation order and the transfer otherwise qualifies, that is made or allowed within the shorter of:
(i)
one year before the day on which a successful petition for rehabilitation is filed; or
(ii)
two years before the day on which a successful petition for liquidation is filed. See Utah Code 31A-27a-102
Proceeding: includes an action or special statutory proceeding. See Utah Code 31A-1-301
receiver: means the commissioner or the commissioner's designee, including a rehabilitator, liquidator, or ancillary receiver. See Utah Code 31A-27a-102
Security: means a:
(i)
note;
(ii)
stock;
(iii)
bond;
(iv)
debenture;
(v)
evidence of indebtedness;
(vi)
certificate of interest or participation in a profit-sharing agreement;
(vii)
collateral-trust certificate;
(viii)
preorganization certificate or subscription;
(ix)
transferable share;
(x)
investment contract;
(xi)
voting trust certificate;
(xii)
certificate of deposit for a security;
(xiii)
certificate of interest of participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease;
(xiv)
commodity contract or commodity option;
(xv)
certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase any of the items listed in Subsections (171)(a)(i) through (xiv); or
(xvi)
another interest or instrument commonly known as a security. See Utah Code 31A-1-301
Transfer: includes the sale and every other and different mode of disposing of or parting with property or with an interest in property, whether:
A preference may be avoided by the rehabilitator or liquidator, if:
(i)
the insurer is insolvent at the time of the transfer;
(ii)
the transfer is made within four months before the day on which the petition is filed;
(iii)
with reference to the transfer, one of the following at the time the transfer is made has reasonable cause to believe that the insurer is or is about to become insolvent:
(A)
a creditor receiving the transfer;
(B)
a creditor to be benefitted by the transfer; or
(C)
an agent of a creditor described in this Subsection (1)(a)(iii); or
(iv)
the creditor receiving the transfer is an officer, employee, attorney, or other person who is in fact in a position of comparable influence on the insurer to:
(A)
an officer of the insurer;
(B)
a shareholder holding directly or indirectly more than 5% of any class of equity security issued by the insurer; or
(C)
any other person with whom the insurer did not deal at arm’s length.
(b)
(i)
Subject to the other provisions of this Subsection (1)(b), if a preference is voidable, the rehabilitator or liquidator may recover the property or, if the property is converted, the property’s value, from any person who receives or converts the property.
(ii)
Notwithstanding Subsection (1)(b)(i), the rehabilitator or liquidator may not recover from a bona fide purchaser or lienor of the debtor’s transferee for present fair consideration.
(iii)
If a bona fide purchaser or lienor gives less than fair consideration, the bona fide purchaser or lienor has a lien upon the property to the extent of the consideration actually given by the bona fide purchaser or lienor.
(c)
If 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 passes to the liquidator.
(d)
A payment to which Subsection 31A-5-415(2) applies is a preference and is voidable under Subsection (1)(a):
(i)
if it is made within the time period specified in Subsection 31A-27a-102(29); and
(ii)
except that a payment made by an insurer for the purchase of insurance under Section 16-10a-302 is not a preference.
(2)
Section 31A-27a-506 applies to the perfection of a transfer.
(3)
Section 31A-27a-506 applies to a lien by a legal or equitableproceeding.
(4)
The receiver may not avoid a transfer of property under this section for or because of:
(a)
new and contemporaneous consideration;
(b)
the payment, within 45 days after the day on which a debt is incurred, of a debt incurred:
(i)
in the ordinary course of the business of the insurer; and
(ii)
according to normal business terms;
(c)
a transfer of a security interest in property:
(i)
to enable the insurer to acquire the property; and
(ii)
which is perfected within 10 days after the day on which the security interest attaches;
(d)
a transfer to or for the benefit of a creditor:
(i)
to the extent that after the transfer the creditor gives new value not secured by an unavoidable security interest; and
(ii)
on account of which the insurer did not make an unavoidable transfer to or for the benefit of the creditor; or
(e)
a transfer of a perfected security interest in inventory, a receivable, or the proceeds of either, except to the extent that the aggregate of all of those types of transfers to the transferee cause a reduction of the amount by which the debt secured by the security interest exceeds the value of the security interest four months before the date of liquidation or any time subsequent to the liquidation.
(5)
(a)
The receiver may avoid a transfer of property of the insurer transferred to secure reimbursement of a surety that furnishes a bond or other obligation to dissolve a judicial lien that would have been avoidable by the receiver under Subsection (1)(a).
(b)
The liability of the surety under the bond or obligation described in Subsection (5)(a) shall be discharged to the extent of the value of the property recovered by the receiver or the amounts paid to the receiver.
(6)
(a)
Subject to Subsection (6)(b), the property affected by a lien that is considered voidable under Subsections (1)(a) and (5):
(i)
is discharged from the lien; and
(ii)
passes to the rehabilitator or liquidator with any of the indemnifying property transferred to or for the benefit of a surety.
(b)
Notwithstanding Subsection (6)(a), the court may:
(i)
on due notice, order the lien to be preserved for the benefit of the estate; and
(ii)
direct that a conveyance be executed that is adequate to evidence the title of the rehabilitator or liquidator.
(7)
(a)
The court has jurisdiction of any proceeding by the rehabilitator or liquidator, to hear and determine the rights of any parties under this section.
(b)
Reasonable notice of any hearing in a proceeding described in Subsection (7)(a) shall be given to all parties in interest, including the obligee of a releasing bond or other similar obligation.
(c)
If an order is entered for the recovery of indemnifying property in kind or for the avoidance of an indemnifying lien:
(i)
the court, upon application of any party in interest, shall in the same proceeding ascertain the value of the property or lien; and
(ii)
if the value of the property or lien is less than the amount for which the property is an indemnity or than the amount of the lien, the transferee or lienholder may elect to retain the property or lien upon payment of its value, as ascertained by the court:
(A)
to the rehabilitator or liquidator; and
(B)
within a reasonable time fixed by the court.
(8)
The liability of a surety under a releasing bond or other similar obligation is discharged to the extent of the value of:
(a)
the indemnifying property recovered;
(b)
the indemnifying lien nullified and avoided; or
(c)
if the property is retained under Subsection (7), the amount paid to the rehabilitator or liquidator.
(9)
If a creditor is preferred and afterward in good faith gives the insurer further credit, without security of any kind, for property that becomes a part of the insurer’s estate, the amount of the new credit remaining unpaid at the time of the petition shall be set off against the preference which would otherwise be recoverable from the creditor.
(10)
(a)
If an insurer, directly or indirectly, pays money or transfers property within four months before the day on which a successful petition for rehabilitation or liquidation is filed under this chapter or at any time in contemplation of a proceeding to rehabilitate or liquidate the insurer, to an attorney for services rendered or to be rendered, the transaction:
(i)
(A)
may be examined by the court on its own motion; or
(B)
shall be examined by the court on petition of the rehabilitator or liquidator; and
(ii)
shall be held valid only to the extent that the transfer is a reasonable amount as determined by the court.
(b)
The amount in excess of the amount held valid under Subsection (10)(a), may be recovered by the rehabilitator or liquidator for the benefit of the estate.
(c)
If the attorney meets the description in Subsection (1)(a)(iv), Subsection (1)(a)(iv) applies in place of this Subsection (10).
(11)
(a)
Every officer, manager, employee, shareholder, member, subscriber, attorney, or any other person acting on behalf of the insurer who knowingly participates in giving a preference when that person has reasonable cause to believe that the insurer is or is about to become insolvent at the time of the preference, is personally liable to the rehabilitator or liquidator for the amount of the preference.
(b)
It is permissible to infer that there is “reasonable cause to so believe” if the transfer is made within four months before the date on which a successful petition for rehabilitation or liquidation is filed.
(c)
A person receiving any property from the insurer or for the benefit of the insurer as a preference which is voidable under Subsection (1)(a) is:
(i)
personally liable for that transfer and property; and
(ii)
bound to account to the rehabilitator or liquidator.
(d)
This Subsection (11) does not prejudice any other claim by the rehabilitator or liquidator against any person.
