215 ILCS 5/ Illinois Insurance Code.

(215 ILCS 5/179E-80)

Sec. 179E-80. SPRV not subject to guaranty funds, residual market, or similar arrangements.

(a) An SPRV or the activities, assets, and obligations relating to the SPRV are not subject to the provisions of Articles XXXIII 1/2 and XXXIV of this Code, and an SPRV may not be assessed by or otherwise be required to contribute to any guaranty fund or guaranty association in this State with respect to the activities, assets, or obligations of an SPRV or the ceding insurer.

(b) An SPRV may not be required to participate in residual market, FAIR plan, or other similar plans to provide insurance coverage, take out policies, assume risks, make capital contributions, pay or be otherwise obligated for assessments, surcharges, or fees, or otherwise support or participate in such plans or arrangements.

(Source: P.A. 92-124, eff. 7-20-01.)

(215 ILCS 5/179E-85)

Sec. 179E-85. Asset and investment limitations.

(a) Assets of the SPRV held in trust to secure obligations under the SPRV contract must at all times be held in:

(1) cash and cash equivalents;

(2) securities listed by the Securities Valuation Office of the NAIC and qualifying as admitted assets under statutory accounting convention in its state of domicile; and

(3) any other form of security acceptable to the Director.

(b) An SPRV may enter into swap agreements or other transactions that have the objective of leveling timing differences in funding of up-front or ongoing transaction expenses or managing credit or interest rate risk of the investments in the trust to ensure that the investments are sufficient to assure payment or repayment of:

(1) the securities (and related interest or principal payments) issued pursuant to an SPRV insurance securitization transaction; or

(2) the SPRV's obligations under the SPRV contract.

(Source: P.A. 92-124, eff. 7-20-01.)

(215 ILCS 5/179E-90)

Sec. 179E-90. Credit for reinsurance for the SPRV contract. An SPRV contract meeting the requirements under this Article shall be granted credit for reinsurance treatment or shall otherwise qualify as an asset or a reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer under Section 173.1 of this Code for the benefit of the ceding insurer, provided and only to the extent that (i) the fair value of the assets held in trust for the benefit of the ceding insurer equal or exceed the obligations due and payable to the ceding insurer by the SPRV under the SPRV contract, (ii) the assets are held in trust in accordance with the requirements set forth in this Article, (iii) the assets are administered in the manner and pursuant to arrangements as set forth in this Article, and (iv) the assets are held or invested in one or more of the forms allowed in Section 179E-85.

(Source: P.A. 92-124, eff. 7-20-01.)

(215 ILCS 5/179E-95)

Sec. 179E-95. Insurance securitization deemed not to be transaction of insurance business. The securities issued by the SPRV under an SPRV insurance securitization shall not be deemed to be insurance or reinsurance contracts. An investor in securities issued pursuant to an SPRV insurance securitization or any holder of those securities shall not, by sole means of the investment or holding, be deemed to be transacting an insurance business in this State. The underwriters or selling agents (and their partners, directors, officers, members, managers, employees, agents, representatives, and advisors) involved in an SPRV insurance securitization shall not be deemed to be conducting an insurance or reinsurance agency, brokerage, intermediary, advisory, or consulting business by virtue of their activities in connection therewith.

(Source: P.A. 92-124, eff. 7-20-01.)

(215 ILCS 5/179E-100)

Sec. 179E-100. Authority to adopt rules. The Director may promulgate rules necessary to effectuate the purposes of this Article. Any rules so promulgated will not affect any existing SPRV insurance securitization in effect at the time of the promulgation.

(Source: P.A. 92-124, eff. 7-20-01.)

(215 ILCS 5/Art. XII heading) ARTICLE XII. DOMESTICATION OF FOREIGN AND ALIEN COMPANIES

(215 ILCS 5/180) (from Ch. 73, par. 792)

Sec. 180. Companies that may domesticate.

(1) Any domestic, foreign, or alien stock company, mutual company, assessment legal reserve company, reciprocal, or fraternal benefit society, authorized or which may be authorized to do business in this State, may reorganize under the laws of this State (including a reorganization as a captive insurance company under the laws of this State), by complying with the provisions of this Article.

(2) As used in this Article: "reorganize" means reorganize, reincorporate, or domesticate as an Illinois insurer; "reorganization" means reorganization, reincorporation, or domestication as an Illinois insurer; "reorganized company" means any company that has availed itself of the provisions of this Article, and the reorganization of which has been effected as in this Article provided; and "similar domestic company" means, in the case of an application for reorganization as a domestic captive insurance company, a domestic captive insurance company organized under Article VIIC.

(Source: P.A. 87-1216.)

(215 ILCS 5/181) (from Ch. 73, par. 793)

Sec. 181. Articles of reorganization. (1) The board of directors, trustees or other governing body of any such company desiring to reorganize under this Article shall comply with all laws and requirements of its domiciliary state or country with reference to reorganization under the laws of another state or country.

(2) Such board of directors, trustees or other governing body shall adopt a resolution approving articles of reorganization setting forth:

(a) the name of the company; and if the name of the company upon reorganization is to be changed, the proposed name of the reorganized company;

(b) the title of the act under which it was organized or incorporated;

(c) the matters required to be set forth in original articles of incorporation of a similar domestic company;

(d) that it shall be bound by all the terms and provisions of this Code, applicable to similar domestic companies organized or incorporated thereunder; and

(e) such other particulars as are deemed necessary or advisable.

(Source: P.A. 86-632; 86-634; 86-1028.)

(215 ILCS 5/182) (from Ch. 73, par. 794)

Sec. 182. Execution of articles.

The articles of reorganization shall be executed in duplicate by the president or vice-president, and secretary or assistant secretary of the company, or the executive officers corresponding thereto, and shall be acknowledged and sworn to.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/183) (from Ch. 73, par. 795)

Sec. 183. Certificate of Reorganization - Date Reorganization Effected. (1) Upon the execution of the articles of reorganization there shall be delivered to the Director

(a) two duplicate originals of the articles;

(b) a copy of the resolution of the board of directors, trustees or other governing body, adopting said articles, duly certified by the secretary of the company or officer corresponding thereto;

(c) information satisfactory to the Director that the company has complied with all the laws and requirements of the domiciliary state or country with reference to the proposed reorganization and the protection of policyholders; and

(d) securities of the kind and amount, if any, required as a deposit of a similar domestic company doing the same kind or kinds of business proposed to be done by the reorganized company.

(2) If the Director finds that the articles of reorganization are in accordance with the provisions of this Article, and that the company has complied with all provisions of this Code applicable to similar domestic companies, he shall approve the articles of reorganization and shall forthwith file one of the duplicate originals of the articles, together with the resolution and certificate of reorganization and certificate of authority, in his office, endorse upon the other duplicate original, his approval thereof, and deliver it together with a certificate of reorganization and a certificate of authority to the reorganized company. Upon such filing, the reorganization of the company shall be effected.

(Source: P.A. 85-131.)

(215 ILCS 5/184) (from Ch. 73, par. 796)

Sec. 184. Recording Articles of Reorganization. The articles of reorganization, approved by the Director and returned to the reorganized company, shall be recorded in the office of the recorder in the county where the principal office of the reorganized company is to be located.

(Source: P.A. 85-131.)

(215 ILCS 5/185) (from Ch. 73, par. 797)

Sec. 185. Board of directors, trustees, etc. to continue.

The directors, trustees, or members of any other governing body of the company so reorganized, shall become the directors, trustees or members of the governing body of the reorganized company and shall hold office until their successors are elected or chosen in the manner provided therefor by the articles of reorganization.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/185.1) (from Ch. 73, par. 797.1)

Sec. 185.1. Effect of Reorganization.

When the reorganization has been effected:

(a) The articles of reorganization shall be the articles of incorporation of the reorganized company and said company shall continue in existence as, and thereafter be, a company of this State.

(b) The reorganized company shall make its reports in accordance with the laws of this State and shall be subject to the exclusive regulation and supervision by the Department of Insurance of this State and shall be subject to regulation and supervision by the Insurance Departments of other states and countries as a foreign or alien company.

(c) The reorganized company shall have all of the rights, privileges, immunities and powers and shall be subject to all of the duties and liabilities granted or imposed by this Code (except in the case of a domestic captive insurance company, which shall have all of the rights, privileges, immunities and powers and shall be subject to all of the duties and liabilities granted or imposed by Article VIIC of this Code).

(d) The reorganized company shall thereupon and thereafter possess all the rights, privileges, immunities, powers and franchises of a public as well as a private nature, theretofore possessed by the company so reorganized. Without limiting the generality of the foregoing, (i) the agency appointments, licenses, certificates of authority and rates which are in existence at the time of the reorganization of such reorganized company takes effect shall continue in full force and effect; (ii) all property, real, personal and mixed, and all debts due on whatever account, including subscriptions to shares, assessments payable from members or policyholders, and all other choses in action, and all and every other interest of, or belonging to or due to the company so reorganized, shall be deemed to be transferred to and vested in the reorganized company without further act or deed; and (iii) the title to any real estate or any interest therein theretofore vested in the company so reorganized, shall not revert or be in any way impaired by reason of such reorganization.

(e) The reorganized company shall thenceforth be responsible and liable for all the liabilities and obligations of the company so reorganized. Any claim existing, or action or proceeding pending by or against the company so reorganized, may be prosecuted to judgment as if such reorganization had not taken place, or such reorganized company may be substituted in its place. Neither the rights of creditors nor any liens upon the property of the company so reorganized, shall be impaired by such reorganization, but such liens shall be limited to the property upon which they were liens immediately prior to the reorganization, unless otherwise provided in the articles of reorganization.

(Source: P.A. 85-131.)

(215 ILCS 5/185.2) (from Ch. 73, par. 797.2)

Sec. 185.2. Conversion to Foreign Insurer. Any domestic insurer may, upon the approval of the Director, transfer its domicile to any other state in which it is admitted to transact the business of insurance, and upon such a transfer shall cease to be a domestic insurer. The Director shall approve any such proposed transfer unless he shall determine such transfer is not in the interest of the policyholders of this State.

(Source: P.A. 85-131.)

(215 ILCS 5/Art. XII.5 heading) ARTICLE XII 1/2. CORRECTIVE ORDERS

(215 ILCS 5/186.1) (from Ch. 73, par. 798.1)

Sec. 186.1. Supervision by the Director. (1)If the Director determines that any domestic insurance company is operating in a manner, that could lead to, or is in, a financial condition, which if continued would make it hazardous to the public, and its policyholders, the Director may issue an order:

(a) notifying the company and its Board of Directors of his determination and setting forth the specific deficiencies leading to the determination;

(b) setting forth the specific action required or prohibited to correct the cited deficiencies; and

(c) ordering the company to comply with the Director's order within such reasonable time as the Director shall prescribe.

(2) Operation or financial condition deficiencies supporting the Director's determination under subsection (1) may include, but are not limited to, the following:

(a) The company has failed to maintain a relationship of policyholder surplus to premium writings or policyholder surplus to claim and unearned premium reserves which provides a reasonable margin of safety for the policyholders considering the classes of insurance the company is writing.

(b) The company's asset liquidity is not adequate to provide orderly payment of its obligations.

(c) The company's current or projected net income is inadequate to meet its present or projected obligations.

(d) The company has a history of claim reserve inadequacy which affects the reliability of its financial statements.

(e) The company has failed to maintain adequate books and records or has otherwise conducted its insurance operation in a manner which impairs the Director's ability to determine its true financial condition.

(3) If a company fails to comply with the Director's order issued pursuant to subsection (1) within the time prescribed for such compliance the Director may institute proceedings for the conservation, rehabilitation or liquidation of the company under Article XIII of this Code.

(4)(a) The Director may require that the company prepare and file a plan to correct the deficiencies cited by the Director in his order within such time as the Director may prescribe. A corrective order may require, prohibit or permit certain acts subject to conditions including the Director's prior approval. The scope of a corrective order may relate to but shall not be limited to:

(i) the disposition, recovery or mix of assets;

(ii) the assumption or cession of reinsurance, including reinsurance of outstanding risks;

(iii) lending and borrowing;

(iv) investments;

(v) restricting underwriting and marketing activities.

(b) The Director may require that any company under such corrective order direct any certified public accountants, consulting actuary or financial consultant retained by the company to prepare for the Director such reports, accounting data and such other reports as the Director may reasonably require to assist in carrying out the responsibilities of the Director under this Section.

(5)(a) Any company subject to an order under subsections (1) or (4) may request a hearing before the Director to review that order. Such request shall be made in writing within 10 days of the receipt of such order, shall state the company's objections to the order, and shall be addressed to the Director. Such hearing shall be convened not less than 10 days nor more than 20 days after receipt of the written request for hearing unless otherwise agreed to by the company. The Director shall make a final determination within 10 days after the conclusion of the hearing. The Director shall hold all hearings under this subsection privately in accordance with subsection (6) of this Section. The pendency of a hearing or pendency of the Director's final determination shall not stay the effect of the Director's order.

(b) After the Director's final determination pursuant to any hearing under this subsection, any party to the proceedings whose interests are affected by the Director's final determination shall be entitled to judicial review of such final determination pursuant to the provisions of the "Administrative Review Law".

Notwithstanding the availability of administrative remedies or judicial review under the "Administrative Review Law", a company which is subject to an order of the Director under this Section shall be entitled to immediate judicial review and injunctive relief in the Circuit Court of Cook County or the Circuit Court of Sangamon County upon satisfying the court:

(i) that accepting the facts set forth in the order as true, the order is arbitrary or capricious;

(ii) that the company's interests are substantially impaired by the order; and

(iii) that the company will suffer permanent injury in the absence of immediate injunctive relief.

(6) All administrative and judicial proceedings arising under this Article shall be held privately unless a public hearing is requested by the company, and all records of the company, and all records of the Department concerning the company, so far as they pertain to or are a part of the record of the proceedings, shall be and remain confidential, unless the company requests otherwise. Such records shall not be subject to public disclosure under "The Illinois Freedom of Information Act", certified December 27, 1983, as amended, or otherwise, nor shall such records be subject to subpoena by third parties, unless the company and Director consent to such disclosure or release under subpoena.

(7) The powers vested in the Director by this Section are additional to any and all other powers and remedies vested in the Director by law, and nothing herein contained shall prohibit the Director from proceeding under any other applicable law or under this Section in conjunction with any other law.

(Source: P.A. 84-715.)

(215 ILCS 5/186.2) (from Ch. 73, par. 798.2)

Sec. 186.2. (1) Any officer, manager, director, trustee, owner, employee, or agent of any insurer, or any other person with authority over or in charge of any segment of the company's affairs, shall cooperate with the Director in any proceeding under this Article or any investigation preliminary to the proceeding. The term "person" as used in this Section shall include any person who exercises control directly or indirectly over activities of the company through any holding company or other affiliate of the company. To "cooperate" shall include, but shall not be limited to, the following:

(a) to reply promptly in writing to any inquiry from the Director of Insurance requesting such a reply; and

(b) to make available to the Director any books, accounts, documents, or other records or information or property of or pertaining to the company and in such person's possession, custody or control.

(2) No person shall obstruct or interfere with the Director in the conduct of any proceeding under Sections 186.1 and 186.2 or any investigation preliminary or incidental thereto.

(3) This Section shall not be construed to abridge otherwise existing legal rights, including the right to contest any order issued under this Code.

(4) Any person who obstructs or interferes with the Director in the conduct of any proceeding or investigation under this Article, or who violates any valid order issued under this Article shall be subject to civil forfeitures, fines or penalties pursuant to Sections 134, 149, 403A and 505.1 of this Code.

(Source: P.A. 84-715.)

(215 ILCS 5/Art. XIII heading) ARTICLE XIII. REHABILITATION, LIQUIDATION, CONSERVATION AND DISSOLUTION OF COMPANIES

(215 ILCS 5/187) (from Ch. 73, par. 799)

Sec. 187. Scope of Article.

(1) This Article shall apply to every corporation, association, society, order, firm, company, partnership, individual, and aggregation of individuals to which any Article of this Code is applicable, or which is subject to examination, visitation or supervision by the Director under any provision of this Code or under any law of this State, or which is engaging in or proposing or attempting to engage in or is representing that it is doing an insurance or surety business, or is undertaking or proposing or attempting to undertake to provide or arrange for health care services as a health care plan as defined in subsection (7) of Section 1-2 of the Health Maintenance Organization Act, including the exchanging of reciprocal or inter-insurance contracts between individuals, partnerships and corporations in this State, or which is in the process of organization for the purpose of doing or attempting or intending to do such business, anything as to any such corporation, association, society, order, firm, company, partnership, individual or aggregation of individuals provided in this Code or elsewhere in the laws of this State to the contrary notwithstanding.

(2) The word "company" as used in this Article includes all of the corporations, associations, societies, orders, firms, companies, partnerships, and individuals specified in subsections (1), (4), and (5) of this Section and agents, managing general agents, brokers, premium finance companies, insurance holding companies, and all other non-risk bearing entities or persons engaged in any aspect of the business of insurance on behalf of an insurer against which a receivership proceeding has been or is being filed under this Article, including, but not limited to, entities or persons that provide management, administrative, accounting, data processing, marketing, underwriting, claims handling, or any other similar services to that insurer, whether or not those entities are licensed to engage in the business of insurance in Illinois, if the entity or person is an affiliate of that insurer.

(3) The word "court" shall mean the court before which the conservation, rehabilitation, or liquidation proceeding of the company is pending, or the judge presiding in such proceedings.

(4) The word "affiliate" as used in this Article means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified.

(5) The word "person" as used in this Article means an individual, an aggregation of individuals, a partnership, or a corporation.

(6) The word "assets" as used in this Article includes all deposits and funds of a special or trust nature.

(7) The words "receivership proceedings" mean any conservation, rehabilitation, liquidation, or ancillary receivership.

(8) "Netting agreement", as used in this Article, means (a) a contract or agreement (including terms and conditions incorporated by reference therein), including a master agreement (which master agreement, together with all schedules, confirmations, definitions, and addenda thereto and transactions under any thereof, shall be treated as one netting agreement), that documents one or more transactions between the parties to the agreement for or involving one or more qualified financial contracts and that provides for the netting, liquidation, setoff, termination, acceleration, or close out under or in connection with one or more qualified financial contracts or present or future payment or delivery obligations or payment or delivery entitlements thereunder (including liquidation or close-out values relating to such obligations or entitlements) among the parties to the netting agreement; (b) any master agreement or bridge agreement for one or more master agreements described in paragraph (a) of this subsection (8); or (c) any security agreement or arrangement or other credit enhancement or guarantee or reimbursement obligation related to any contract or agreement described in paragraph (a) or (b) of this subsection (8); provided that any contract or agreement described in paragraphs (a) or (b) of this subsection (8) relating to agreements or transactions that are not qualified financial contracts shall be deemed to be a netting agreement only with respect to those agreements or transactions that are qualified financial contracts.

(9) "Qualified financial contract" means any commodity contract, forward contract, repurchase agreement, securities contract, swap agreement, or any similar agreement that the Director determines by regulation, resolution, or order to be a qualified financial contract for the purposes of this Act.

(a) "Commodity contract" means:

(1) a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a board of trade or contract market under the federal Commodity Exchange Act or a board of trade outside the United States;

(2) an agreement that is subject to regulation under Section 19 of the federal Commodity Exchange Act and that is commonly known to the commodities trade as a margin account, margin contract, leverage account, or leverage contract;

(3) an agreement or transaction that is subject to regulation under Section 4c(b) of the federal Commodity Exchange Act and that is commonly known to the commodities trade as a commodity option;

(4) any combination of the agreements or transactions referred to in this paragraph (a); or

(5) any option to enter into an agreement or transaction referred to in this paragraph (a).

(b) "Forward contract", "repurchase agreement", "securities contract", and "swap agreement" shall have the meanings set forth in the Federal Deposit Insurance Act, 12 U.S.C. § 1821(e)(8)(D), as amended from time to time.

(Source: P.A. 96-1450, eff. 8-20-10.)

(215 ILCS 5/188) (from Ch. 73, par. 800)

Sec. 188. Grounds for rehabilitation and liquidation of a domestic company or an unauthorized foreign or alien company. Whenever any domestic company or any unauthorized foreign or alien company:

1. is insolvent;

2. has failed or refused to submit its books, papers, accounts, records or affairs to the reasonable inspection or examination of the Director or his actuaries, supervisors, deputies, or examiners;

3. has concealed, removed, altered, destroyed or failed to establish and maintain books, records, documents, accounts, vouchers and other pertinent material adequate for the determination of its financial condition by examination under Sections 132 through 132.7 or has failed to properly administer claims and to maintain claims records which are adequate for the determination of its outstanding claims liability;

4. has failed or refused to observe an order of the Director to make good within the time prescribed by law any deficiency, whenever its capital and minimum required surplus, if a stock company, or its required surplus, if a company other than stock, has become impaired;

5. has, by articles of consolidation, contract of reinsurance or otherwise, transferred or attempted to transfer its entire property or business not in conformity with this Code, or entered into any transaction the effect of which is to merge substantially its entire property or business in any other company without having first obtained the written approval of the Director under this Code;

6. is found to be in such condition that its further transaction of business would be hazardous to its policyholders, or to its creditors, or to the public;

7. has violated its charter or any law of this State or has exceeded or is exceeding its corporate powers;

8. has an officer who has refused upon reasonable demand to be examined under oath touching its affairs;

9. is found to be in such condition that it could not meet the requirements for organization and authorization as required by law, except as to the amount of the original surplus required of a stock company in Section 13, and except as to the amount of the surplus required of a mutual company in excess of the minimum surplus required by this Code to be maintained, or either an authorized control level event or a mandatory control level event as set forth in Article IIA exists;

10. has ceased for the period of one year to transact insurance business;

11. has commenced, or has attempted to commence, any voluntary liquidation or dissolution proceeding, or any proceeding to procure the appointment of a receiver, liquidator, rehabilitator, sequestrator, or a similar officer for itself;

12. is a party, whether plaintiff or defendant in any proceeding in which an application is made for the appointment of a receiver, custodian, liquidator, rehabilitator, sequestrator, or similar officer for such company or its property, or a receiver, custodian, liquidator, rehabilitator, sequestrator or similar officer, for such company or its property is appointed by any court, or such appointment is imminent;

13. consents by a majority of its directors, stockholders or members;

14. has not organized and obtained a certificate authorizing it to commence the transaction of its business within the period of time prescribed by the sections of this Code under which it is or proposes to be organized; or

15. has failed or refused to pay any valid final judgment within 30 days after the rendition thereof, or whenever it appears to the Director that any person has committed a violation of Article VIII 1/2 with the result described in Section 131.26,

sufficient grounds shall be deemed to exist for the commencement of rehabilitation or liquidation proceedings.

With respect to a domestic company, the Director must report, and with respect to an unauthorized foreign or alien company, the Director may report any such case to the Attorney General of this State whose duty it shall be to apply forthwith by complaint on relation of the Director in the name of the People of the State of Illinois, as plaintiff, to the Circuit Court of Cook County, the Circuit Court of Sangamon County, or the circuit court of the county in which such company has, or last had its principal office, for an order to rehabilitate or liquidate the defendant company as provided in this Article, and for such other relief as the nature of the case and the interests of its policyholders, creditors, members, stockholders or the public may require.

When, upon investigation, the Director finds that a company is engaged in any aspect of the business of insurance on behalf of or in association with any domestic insurance company, against which a receivership proceeding has been or is being filed under this Article, in a manner that appears to be detrimental to policyholders, creditors, members, shareholders, or the public, the Director may report such case to the Attorney General of this State, whose duty it is to apply forthwith by complaint on relation of the Director in the name of the People of the State of Illinois, as plaintiff, to the court in which the receivership proceeding is pending for an order to appoint the Director as receiver to assume control of the assets and operation of the company pending a complete investigation and determination of the rights of the policyholders, creditors, members, shareholders, and the general public.

(Source: P.A. 92-140, eff. 7-24-01.)

(215 ILCS 5/188.1) (from Ch. 73, par. 800.1)

Sec. 188.1. Provisions for conservation of assets of a domestic, foreign, or alien company.

(1) Upon the filing by the Director of a verified complaint alleging (a) that with respect to a domestic, foreign, or alien company, whether authorized or unauthorized, a condition exists that would justify a court order for proceedings under Section 188, and (b) that the interests of creditors, policyholders or the public will probably be endangered by delay, then the circuit court of Sangamon or Cook County or the circuit court of the county in which such company has or last had its principal office shall enter forthwith without a hearing or prior notice an order directing the director to take possession and control of the property, business, books, records, and accounts of the company, and of the premises occupied by it for the transaction of its business, or such part of each as the complaint shall specify, and enjoining the company and its officers, directors, agents, servants, and employees from disposition of its property and from transaction of its business except with the concurrence of the Director until the further order of the court. Copies of the verified complaint and the seizure order shall be served upon the company.

(2) The order shall continue in force and effect for such time as the court deems necessary for the Director to ascertain the condition and situation of the company. On motion of either party or on its own motion, the court may from time to time hold such hearings as it deems desirable, and may extend, shorten, or modify the terms of, the seizure order. So far as the court deems it possible, the parties shall be given adequate notice of such hearings. As soon as practicable, the court shall vacate the seizure order or terminate the conservation proceedings of the company, either when the Director has failed to institute proceedings under Section 188 having a reasonable opportunity to do so, or upon an order of the court pursuant to such proceedings.

(3) Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the company.

(4) The court may hold all hearings in conservation proceedings privately in chambers, and shall do so on request of any officer of the company proceeded against.

(5) In conservation proceedings and judicial reviews thereof, all records of the company, other documents, and all insurance department files and court records and papers, so far as they pertain to and are a part of the record of the conservation proceedings, shall be and remain confidential except as is necessary to obtain compliance therewith, unless and until the court, after hearing arguments in chambers from the Director and the company, shall decide otherwise, or unless the company requests that the matter be made public.

(6) Any person having possession of and refusing to deliver any of the property, business, books, records or accounts of a company against which a seizure order has been issued shall be guilty of a Class A misdemeanor.

(Source: P.A. 89-206, eff. 7-21-95.)

(215 ILCS 5/188.2)

Sec. 188.2. Grounds for and provisions applicable to rehabilitation or liquidation of a domestic company that is a covered financial company under the federal Dodd-Frank Wall Street Reform and Consumer Protection Act.

(a) The provisions of this Section apply in accordance with Title II of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-203, with respect to an insurance company that is a covered financial company, as that term is defined under 12 U.S.C. 5381.

(b) The Director may file a complaint for an order of rehabilitation or liquidation pursuant to Section 188 of this Code on any of the following grounds:

(1) upon a determination and notification given by the Secretary of the Treasury of the United States (in consultation with the President of the United States) that the insurance company is a financial company satisfying the requirements of 12 U.S.C. 5383(b), and the board of directors (or body performing similar functions) of the insurance company acquiesces or consents to the appointment of a receiver pursuant to 12 U.S.C. 5382(a)(1)(A)(i), with such consent to be considered as consent to an order of rehabilitation or liquidation;

(2) upon an order of the United States District Court for the District of Columbia under 12 U.S.C. 5382(a)(1)(A)(iv)(I) granting the petition of the Secretary of the Treasury of the United States concerning the insurance company under 12 U.S.C. 5382(a)(1)(A)(i); or

(3) a petition by the Secretary of the Treasury of the United States concerning the insurance company is granted by operation of law under 12 U.S.C. 5382(a)(1)(A)(v).

(c) Notwithstanding any other provision in this Article, this Code, or any other law, after notice to the insurance company, the receivership court may grant an order on the complaint for rehabilitation or liquidation within 24 hours after the filing of a complaint pursuant to this Section.

(d) If the receivership court does not make a determination on a complaint for rehabilitation or liquidation filed by the Director pursuant to this Section within 24 hours after its filing, then it shall be deemed granted by operation of law upon the expiration of the 24-hour period. At the time that an order is deemed granted under this Section, the provisions of Article XIII of this Code shall be deemed to be in effect, and the Director shall be deemed to be affirmed as receiver and have all of the applicable powers provided by this Code, regardless of whether an order has been entered. The receivership court shall expeditiously enter an order of rehabilitation or liquidation that:

(1) is effective as of the date that it is deemed granted by operation of law; and

(2) conforms to the provisions for rehabilitation or liquidation contained in Article XIII of this Code, as applicable.

(e) Any order of rehabilitation or liquidation made pursuant to this Section shall not be subject to any stay or injunction pending appeal.

(f) Nothing in this Section shall be construed to supersede or impair any other power or authority of the Director or the court under this Article or Code.

(Source: P.A. 98-136, eff. 8-2-13.)

(215 ILCS 5/189) (from Ch. 73, par. 801)

Sec. 189. Injunction. The court shall have jurisdiction, upon, or at any time after the filing of the complaint to issue an injunction restraining such company and its officers, agents, directors, employees and all other persons from transacting any company business or disposing of its property until the further order of the court. The court may also restrain all persons, companies, and entities from bringing or further prosecuting all actions and proceedings at law or in equity or otherwise, whether in this State or elsewhere, against the company or its assets or property or the Director except insofar as those actions or proceedings arise in or are brought in the conservation, rehabilitation, or liquidation proceeding. The court may issue such other injunctions or enter such other orders as may be deemed necessary to prevent interference with the proceedings, or with the Director's possession and control or title, rights or interests as herein provided or to prevent interference with the conduct of the business by the Director, and may issue such other injunctions or enter such other orders as may be deemed necessary to prevent waste of assets or the obtaining, asserting, or enforcing of preferences, judgments, attachments, or other like liens, including common law retaining liens, or the making of any levy against such company or its property and assets while in the possession and control of the Director. The court may issue any other injunctions or enter any other orders that are necessary to protect enrollees in accordance with subsection (c) of Section 5-6 of the Health Maintenance Organization Act. Any injunction issued under this article may be served and enforced as in other civil proceedings, but no bond or other security shall be required of the plaintiff, either for costs or for any injunction. The provisions of this Section are subject to the exclusion set forth in subsection (o) of Section 204 of this Article.

(Source: P.A. 100-89, eff. 8-11-17.)

(215 ILCS 5/190) (from Ch. 73, par. 802)

Sec. 190. Practice, hearing, order and appeal.

(1) The defendant company shall appear within 10 days after the service of the summons as in this Article provided, exclusive of the day of service. If, on the return day of the summons the defendant shall enter its appearance in the action and apply for further time in which to answer, the court shall, upon request of the defendant, extend the time for answering for a period not to exceed 10 days from said return day. If the defendant fails to answer on the return day or within the time granted, or fails to appear, the court shall proceed to hear and determine the cause as herein provided.

(2) The court, on the return day of the summons as originally fixed or extended hereunder, shall set the cause for hearing on some day not exceeding 20 days from the return day, or the extended return day as herein provided.

(3) No motions or other pleadings, whether to dissolve, modify or continue any injunction or otherwise, shall be filed by, or permitted on behalf of the defendant prior to the filing of an answer to the complaint. All pleadings shall be filed within the time herein provided.

(4) The pleadings and proceedings insofar as not otherwise regulated by this Article, shall be as in other civil proceedings.

(5) Upon the hearing, at which the complaint and any exhibits filed therewith shall be received as prima facie evidence of the facts therein recited, the court shall enter an order either dismissing the complaint or finding that sufficient cause exists for rehabilitation or liquidation and directing the Director to take possession of the property, business and affairs of such company and to rehabilitate or liquidate the same as the case may be. The Director shall be responsible on his official bond for all assets coming into his possession.

(6) An appeal, if taken from such order, shall be prosecuted on an expedited basis as provided for in such cases by Illinois Supreme Court Rule 307.

(7) A claim for attorneys' fees incurred by the company in contesting its conservation, rehabilitation, or liquidation may be filed in the proceedings, and the claim may be allowed upon a showing that (i) the attorneys' fees incurred are reasonable; (ii) the board of directors of the company incurred such attorneys' fees based upon their best knowledge, information, and belief formed after reasonable inquiry indicating such contention is well grounded in fact and is warranted by existing law or a good faith argument of the extension, modification, or reversal of existing law; and (iii) the contention is not pursued for any improper purpose, including harassment, unnecessary delay in the proceedings, or waste of estate assets. Such claims, if allowed, shall be accorded a priority of distribution under paragraph (g) of subsection (1) of Section 205. This subsection (7) applies to all liquidation, rehabilitation, or conservation proceedings that are pending on the effective date of this amendatory Act of 1993 and to all future liquidation, rehabilitation, or conservation proceedings.

(Source: P.A. 88-297; 88-670, eff. 12-2-94; 89-206, eff. 7-21-95.)

(215 ILCS 5/190.1) (from Ch. 73, par. 802.1)

Sec. 190.1. Appeal of order directing liquidation - special claims procedure.

(1) Within 5 days of the effective date of this amendatory Act of 1982, or, if later, within 5 days after the filing of a notice of appeal of an order of liquidation, which order has not been stayed, the Director shall present for the circuit court's approval a plan for the continued performance of the defendant company's policy claims obligations, including the duty to defend insureds under liability insurance policies, during the pendency of an appeal. Such plan shall provide for the continued performance and payment of policy claims obligations in the normal course of events, notwithstanding the grounds alleged in support of the order of liquidation including the ground of insolvency. In the event the defendant company's financial condition will not, in the judgment of the Director, support the full performance of all policy claims obligations during the appeal pendency period, the plan may prefer the claims of certain policyholders and claimants over creditors and interested parties as well as other policyholders and claimants, as the Director finds to be fair and equitable considering the relative circumstances of such policyholders and claimants. The circuit court shall examine the plan submitted by the Director and if it finds the plan to be in the best interests of the parties, the circuit court shall approve the plan. No action shall lie against the Director or any of his deputies, agents, clerks, assistants or attorneys by any party based on preference in an appeal pendency plan approved by the circuit court.

(2) The appeal pendency plan shall not supersede or affect the obligations of any insurance guaranty fund which under its own state law is required to pay covered claims obligations during the appeal pendency period.

(Source: P.A. 96-1000, eff. 7-2-10.)

(215 ILCS 5/191) (from Ch. 73, par. 803)

Sec. 191. Title to property of company. The Director and his successor and successors in office shall be vested by operation of law with the title to all property, contracts, and rights of action of the company as of the date of the order directing rehabilitation or liquidation. The Director is entitled to immediate possession and control of all property, contracts, and rights of action of the company, and is further authorized and directed to remove any and all records and property of the company to the Director's possession and control or to such other place as may be convenient for the purposes of efficient and orderly administration of the rehabilitation or liquidation. All persons, companies, and entities shall immediately release their possession and control of any and all property, contracts, and rights of action of the company to the Director including, but not limited to, bank accounts and bank records, premium and related records, and claim, underwriting, accounting, and litigation files. The entry of an order of rehabilitation or liquidation creates an estate that comprises all of the liabilities and assets of the company. The filing or recording of such order in the office of the recorder or the Registrar of Titles in any county of this State shall impart the same notice that a deed, bill of sale or other evidence of title duly filed for record by such company would have imparted.

(Source: P.A. 89-206, eff. 7-21-95.)

(215 ILCS 5/192) (from Ch. 73, par. 804)

Sec. 192. Duties of Director as rehabilitator; termination.

(1) Upon the entry of an order directing rehabilitation, the Director shall immediately proceed to conduct the business of the company and take such steps towards removal of the causes and conditions which have made such proceedings necessary as may be expedient.

(2) The Director is authorized to deal with the property and business of the company in his name as Director, or, if the Court shall so order, in the name of the company. The Director may, subject to the approval of the Court, sell or otherwise dispose of the real and personal property, or any part thereof, and sell or compromise all doubtful or uncollectible debts or claims owing to the company in any rehabilitation proceeding now pending or hereafter instituted, except that whenever the value of any real or personal property or the amount of any such debt owing to the company does not exceed $25,000, the Director may sell, dispose of, compromise, or compound the same upon such terms as the Director deems to be in the best interest of the company without obtaining approval of the court unless otherwise directed by the court. The Director may solicit contracts whereby a solvent company agrees to assume, in whole or in part, or upon a modified basis, the liabilities of a company in rehabilitation in a manner consistent with subsection (4) of Section 193 of this Code.

(3) The Director may bring any action, claim, suit, or proceeding against any director or officer of the company or against any other person with respect to that person's dealings with the company including, but not limited to, prosecuting any action, claim, suit, or proceeding on behalf of the creditors, members, policyholders, or shareholders of the company. Nothing in this subsection shall be construed to affect the standing of the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, or the Illinois Health Maintenance Organization Guaranty Association to sue or be sued under applicable law.

(4) If at any time the Director finds that it is in the best interests of policyholders, creditors and the company to effect a plan of mutualization or rehabilitation, the Director may submit such plan to the court for its approval. Such plan, in addition to any other terms and provisions as may by the Director be deemed necessary or advisable, may include a provision imposing liens upon the net equities of policyholders of the company, and in the case of life companies, a provision imposing a moratorium upon the loan or cash surrender values of the policies, for such period and to such an extent as may be necessary. Notice of the hearing upon any such plan shall be given in the manner as may be fixed by the court and upon such hearing the court may either approve or disapprove the plan or modify it in such manner and to such extent as to the court shall seem appropriate.

(5) Where in such proceedings the Court has entered an order for the filing of claims and it subsequently appears that the total amount of all allowable claims exceed the assets in the possession of the Rehabilitator, the Court may upon the application of the Director authorize a distribution of assets in accordance with the applicable provisions of Section 210. The Director may at such time apply under this Section for an order dissolving the company in accordance with the applicable provisions of Section 196.

(6) If at any time the Director finds that the causes and conditions which made such proceeding necessary have been removed he may petition the court for an order terminating the conduct of the business by the Director and permitting such company to resume possession of its property and the conduct of its business and for a full discharge of all liability and responsibility of the Director. No order for the return to such company of its property and business shall be granted unless the court after a full hearing determines that the purposes of the proceeding have been fully accomplished.

(Source: P.A. 89-206, eff. 7-21-95; 90-381, eff. 8-14-97.)

(215 ILCS 5/193) (from Ch. 73, par. 805)

Sec. 193. Duties of Director as liquidator; sales; reinsurance.

(1) Upon the entry of an order directing liquidation, the Director shall immediately proceed to liquidate the property, business, and affairs of the company. The Director is hereby authorized to deal with the property, business, and affairs of the company in his name as Director, or, if the court shall so order, in the name of the company.

(2) The Director may, subject to the approval of the court, sell or otherwise dispose of the real and personal property, or any part thereof, and sell or compromise all debts or claims owing to the company, except that whenever the value of any real or personal property or the amount of any debt owing to the company does not exceed $25,000, the Director may sell, dispose of, compromise, or compound the same upon such terms as the Director deems to be in the best interest of the company without obtaining approval of the court.

(3) The Director may bring any action, claim, suit, or proceeding against any director or officer of the company or against any other person with respect to that person's dealings with the company including, but not limited to, prosecuting any action, claim, suit, or proceeding on behalf of the creditors, members, policyholders, or shareholders of the company. Nothing in this subsection shall be construed to affect the standing of the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, or the Illinois Health Maintenance Organization Guaranty Association to sue or be sued under applicable law.

(4) In order to preserve so far as possible the rights and interests of the policyholders of the company whose contracts were cancelled by the liquidation order and of such other creditors as may be possible, the Director may solicit a contract or contracts whereby a solvent company or companies will agree to assume in whole, or in part, or upon a modified basis, the liabilities owing to said former policyholders or creditors. The Director may, subject to Section 531.08(h) of this Code or Section 6-8 of the Health Maintenance Organization Act, cede or reinsure all or so much as may be necessary of the in-force business to another company using assets of the liquidated company to pay therefor in preference to satisfying other obligations or creditors. The Director may assign any rights or interests of the company to receive reinsurance proceeds for losses to the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association or any similar organization in any other state. If, after a full hearing upon a petition filed by the Director, the court shall find that the Director endeavored to obtain the best contract for the benefit of said parties in interest, and if the said Director shall report to the court that he is ready and willing to enter into a contract and submit a copy thereof to the court, the court shall examine the procedure and acts of the Director, and if the court shall find that the best possible contract in the interests of said parties has been obtained and that it is best for the interests of said parties that said contract be entered into, the court shall by written order approve the acts of the Director and authorize him to execute said contract.

(5) In recognition of the rights of policyholders whose "claims made" contracts were cancelled by the liquidation order, he may, in his discretion, permit such policyholders to purchase an extended discovery period which is subject to the limitations in this Article. The policyholder shall pay to the liquidator a premium which is appropriate for the rights purchased as determined by the liquidator and approved by the court. No extended discovery period purchased before or after the entry of the liquidation order shall extend the time to file claims as set by the court pursuant to Section 208 of this Code. Claims accruing by virtue of such extended discovery period shall be treated as any other claim under Article XXXIV of this Code, and shall be subject to the limitations, exclusions and conditions in the Illinois Insurance Guaranty Fund Act and in the laws governing similar organizations in other states.

(6) The Director is authorized to cancel policies, bonds, and contracts of insurance subject to court approval.

(7) All persons, companies, and entities shall immediately turn over to the Director all unearned premium that has been collected by or on behalf of the company and all earned premium owing the company unless otherwise directed in writing by the Director or by court order. Within 30 days of the date of a written request of the Director, those persons, companies, and entities shall submit affidavits verifying amounts collected by, on behalf of, or due and owing the company and further shall provide copies of all premium fund trust account information and such other applicable documentation as requested by the Director. Nothing in this subsection shall be construed to affect the rights of (i) the Illinois Life and Health Insurance Guaranty Association to collect premium under item (6) of Section 531.08 of this Code or (ii) the Illinois Health Maintenance Organization Guaranty Association to collect premium under item (11) of Section 6-8 of the Health Maintenance Organization Act.

(8) The amount recoverable by the Director from a reinsurer shall not be reduced or diminished as a result of the entry of an order of liquidation notwithstanding any provision in the reinsurance contract or other such agreement. Payment made by a reinsurer to or on behalf of an insured of the company shall not diminish the reinsurer's obligation to the company except when the reinsurance agreement lawfully provides for payment to or on behalf of the company's insured by the reinsurer. All reinsurance contracts to which the company is a party, which do not contain the provisions required with respect to the obligation of a reinsurer in the event of insolvency of the reinsured to obtain credit for reinsurance or pursuant to other applicable statutes, shall contain or be construed to contain all of the following provisions:

(a) Upon the entry of an order of liquidation and notwithstanding the Director's failure to pay all or a portion of a claim, the reinsurance obligation shall be due and owing to the Director on the basis of claims allowed in the liquidation proceeding. The reinsurer shall submit the amounts due and owing directly to the company as ceding insurer or to the Director.

(b) The Director shall give written notice or arrange for the giving of written notice to reinsurers or their agents of the pendency of a claim against the company indicating the policy or bond reinsured within a reasonable time after the claim is filed. The reinsurer may interpose, at its own expense, in the proceeding where the claim is to be adjudicated, any defenses that it may deem available to the company or the Director.

(Source: P.A. 88-297; 89-206, eff. 7-21-95.)

(215 ILCS 5/194) (from Ch. 73, par. 806)

Sec. 194. Rights and liabilities of creditors fixed upon liquidation.

(a) The rights and liabilities of the company and of its creditors, policyholders, stockholders or members and all other persons interested in its assets, except persons entitled to file contingent claims, shall be fixed as of the date of the entry of the Order directing liquidation or rehabilitation unless otherwise provided by Order of the Court. The rights of claimants entitled to file contingent claims or to have their claims estimated shall be determined as provided in Section 209.

(b) The Director may, within 2 years after the entry of an order for rehabilitation or liquidation or within such further time as applicable law permits, institute an action, claim, suit, or proceeding upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of filing of the complaint upon which the order is entered.

(c) The time between the filing of a complaint for conservation, rehabilitation, or liquidation against the company and the denial of the complaint shall not be considered to be a part of the time within which any action may be commenced against the company. Any action against the company that might have been commenced when the complaint was filed may be commenced for at least 180 days after the complaint is denied.

(Source: P.A. 88-297; 89-206, eff. 7-21-95.)

(215 ILCS 5/195) (from Ch. 73, par. 807)

Sec. 195. Borrowing on the pledge of assets.

For the purpose of facilitating the rehabilitation, liquidation, conservation or dissolution provided for by this article, the Director may, subject to the approval of the court, borrow money and execute, acknowledge and deliver certificates of indebtedness upon such terms and entitled to such liens and priorities as may be fixed by the court, or notes or other evidence of indebtedness therefor and secure the repayment of the same by the mortgage, pledge, assignment, transfer in trust or hypothecation or any or all of the property whether real, personal or mixed of the company against which a proceeding has been brought under this article. Subject to the approval of the court, he shall also have power to take any and all other action necessary and proper to consummate any such loans and to provide for the repayment thereof. The Director shall incur no personal liability by virtue of any loan made pursuant to this section.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/196) (from Ch. 73, par. 808)

Sec. 196. Order of dissolution. If the company against whom the complaint for liquidation is filed is a corporation and the complaint prays for dissolution of such company, the court shall have jurisdiction either before or after final liquidation of the property, business and affairs of such company, after service of summons and complaint as above stated and a full hearing, to enter a judgment dissolving such company, and if an order of liquidation has been entered against a company, the court shall have jurisdiction, upon the petition of the Director, to enter an order dissolving the company. The court may likewise, regardless of whether an order of liquidation is sought or has been obtained, upon proper complaint or petition by the Director, order dissolution of a company where it has failed to qualify for a certificate of authority authorizing it to commence the transaction of its business, or where a company has no assets and no means for payment of liabilities.

(Source: P.A. 89-206, eff. 7-21-95.)

(215 ILCS 5/197) (from Ch. 73, par. 809)

Sec. 197. Rights, powers, and duties ancillary to domiciliary proceeding.

The rights, powers, and duties of the Director as conservator, rehabilitator, or liquidator, with reference to the assets of a foreign or alien company, whether authorized or unauthorized, shall be ancillary to the rights, powers and duties imposed upon any receiver or other person, if any, in charge of the property, business and affairs of such company in its domiciliary state or country.

(Source: P.A. 86-1154; 86-1156.)

(215 ILCS 5/198) (from Ch. 73, par. 810)

Sec. 198. Service of summons and return.

(1) Upon the filing of a complaint, summons shall forthwith issue, returnable in 3 days after its date, and a copy of the summons together with the complaint in any proceeding under this article shall be served upon the company named in such complaint by delivering the same to its president, vice president, secretary, treasurer, director, or to its managing agent, or if the company lack any of the aforesaid officers, or they cannot be found within the State, to the officer performing corresponding functions under another name; if it be a Lloyds, reciprocal or inter-insurance exchange, by delivering such summons and copy of the complaint to the duly designated attorney-in-fact.

(2) When it is satisfactorily proved by the report of an examiner of the department made in accordance with the provisions of this Code, or by affidavit if anyone familiar with the facts, that the officers, directors, trustees or managing agents or members of any company named in said complaint upon whom service is required to be made as above provided, have, or if a Lloyds, reciprocal or inter-insurance exchange be named in the complaint, that the duly designated attorney-in-fact, has, departed from the State or keep themselves or himself concealed therein, or if such of the persons residing in this State and upon whom service is required to be made as above provided have resigned from their offices, or that service cannot be made immediately by the exercise of reasonable diligence, such service may be had by the mailing of a copy of the complaint and summons to the last known address of the company, or by publication in such form and in such manner as the court shall order.

(Source: Laws 1959, p. 1422.)

(215 ILCS 5/199) (from Ch. 73, par. 811)

Sec. 199. Removal of proceedings to Sangamon or Cook county.

In the event an order is entered directing liquidation, rehabilitation or conservation, the Director may remove the property and assets of the company to the county of Sangamon or to the county of Cook. In the event of such removal or contemplated removal the court shall upon proper petition showing the necessity therefor, filed by the Director, order the clerk of the court wherein such proceeding was commenced to make a full transcript of the petition for removal and the order thereon and to transmit the same together with all papers theretofore filed in the cause, to the Clerk of the Circuit Court of the county of Sangamon or to the Clerk of the Circuit Court of the county of Cook, as the case may be, and the proceeding shall thereafter be conducted in the same manner as if it had been commenced in the county to which the cause is transferred.

(Source: Laws 1965, p. 3563.)

(215 ILCS 5/200) (from Ch. 73, par. 812)

Sec. 200. Examinations. The pendency of any proceeding under this Article shall in no way affect the power and authority of the Director to conduct any examination provided for in Sections 132 through 132.7, in connection with the business, conduct or affairs of the company sought to be liquidated, rehabilitated or conserved.

An annual audit of any business having assets of more than $500,000 which is under liquidation or rehabilitation pursuant to this Act shall be performed by an independent outside certified public accountant, who is currently engaged in the conduct of audits under the Illinois State Auditing Act. The cost of this audit shall be paid by the Director out of the assets of the business being liquidated or rehabilitated.

An annual audit of any special deputy appointed under Section 202 shall be conducted by an independent, outside certified public accountant performing the audits provided for in the preceding paragraph. The cost of this audit shall be allocated among the estates of the companies in conservation, rehabilitation, or liquidation on the basis of allocation methods established by the Director. The Illinois Auditor General may, at his option, participate in the audit of any special deputy.

Copies of all audits prepared under this Section shall be promptly provided after completion to the Governor, to the Illinois Auditor General, and to the majority and minority leaders of the Senate and the House of Representatives.

(Source: P.A. 89-97, eff. 7-7-95.)

(215 ILCS 5/201) (from Ch. 73, par. 813)

Sec. 201. Who may apply for appointment of receiver or liquidator.) No order or judgment enjoining, restraining or interfering with the prosecution of the business of any company, or for the appointment of a temporary or permanent receiver, rehabilitator or liquidator of a domestic company, or receiver or conservator of a foreign or alien company, shall be made or granted otherwise than upon the complaint of the Director represented by the Attorney General as provided in this article, except in an action by a judgment creditor or in proceedings supplementary thereto after notice that a final judgment has been entered and that the judgment creditor intends to file a complaint praying for any of the relief in this section mentioned, has been served upon the Director at least 30 days prior to the filing of such complaint by such judgment creditor.

(Source: P.A. 84-546.)

(215 ILCS 5/202) (from Ch. 73, par. 814)

Sec. 202. Appointment of special deputies; employees and professional advisors; contracts; qualified immunity.

(a) For the purpose of assisting the Director in the performance of the Director's duties under Articles VII, XIII, and XIII 1/2 of this Code, the Director has authority to appoint one or more special deputies as the Director's agent or agents, and clerks, assistants, attorneys, and other personnel as the Director may deem necessary and to delegate to each such person authority to assist the Director as the Director may consider appropriate. The compensation of each special deputy, clerk, assistant, attorney, and other designated personnel shall be fixed and paid by the Director. The Director shall also have the authority to retain and pay attorneys, actuaries, accountants, consultants, and such other persons as the Director may deem necessary and appropriate. The Director shall fix the rate of compensation of these attorneys, actuaries, accountants, consultants, and other persons subject to the approval of the court. The Director, however, has the authority to fix, without the approval of the court, the rate of compensation of attorneys, actuaries, accountants, consultants, and other persons that he considers necessary and appropriate if the Director determines that the projected expenditure for professional fees to each such person will not exceed $20,000 per company in any calendar year.

(b) The special deputies may enter into leases or contracts for the procurement of real or personal property, and on such terms and conditions as the Director may deem necessary or advisable for the purpose of performing the Director's duties under Articles VII, XIII, and XIII 1/2 of this Code. Any such lease or contract that requires an aggregate expenditure in excess of $150,000 shall be subject to the approval of the court before which is pending the delinquency proceeding of the estate of the company on whose behalf the lease or contract is entered into. In the event that the lease or contract is entered into on behalf of 2 or more companies, the delinquency proceedings of the 2 or more companies shall be consolidated for the sole purpose of obtaining approval of the lease or contract from the court before which is pending the delinquency proceeding of the estate of the company that, in the judgment of the Director at the time of application for approval, is to bear the largest portion of the amounts to be expended under the lease or contract under the allocation methods established by the Director under subsection (c)(1) of this Section.

(c) (1) The compensation of the persons appointed by the Director and the attorneys, actuaries, accountants, consultants, and other persons retained by the Director, the payments under the leases or contracts described in subsection (b) of this Section, and all other expenses of taking possession of the property and the administration of the company and its property shall be paid (i) out of the funds or assets of the company on whose behalf the compensation, payments, or expenses were incurred or (ii) in the event that the compensation, payments, or expenses were, in the judgment of the Director, incurred in behalf of 2 or more companies, out of the assets of those companies on the basis of allocation methods established by the Director.

(2) Notwithstanding the foregoing provisions of this subsection (c), the salary of the special deputies, together with the salaries or fees of those clerks, assistants, attorneys, actuaries, accountants, consultants, or other persons appointed or retained by the Director under this Section, and the other expenses of taking possession of the property and the administration of the company and its property, may be paid out of amounts appropriated to the Department of Insurance. Any amounts paid under this Section from appropriated funds shall be repaid to the State treasury from any available funds or assets of the company on whose behalf the expenses were incurred, subject to the approval of the court before which is pending the delinquency proceeding of the company.

(d) (1) For each calendar quarter or other period as the court may determine, the Director shall file with the court before which is pending the delinquency proceeding of each company in liquidation or rehabilitation a report for the period reflecting the company's (i) cash and invested assets held by the Director at the beginning of the period, (ii) cash receipts, (iii) cash disbursements for payments of salaries, compensation, professional fees, and all other expenses of administration of the company and its property, (iv) all other cash disbursements, and (v) cash and invested assets held by the Director at the end of the period; provided that the report need not be filed more than once for each calendar year if the cash and invested assets of the company are less than $250,000. For each such period, the Director shall file with the court a similar report for each company in conservation, except that this report shall reflect only those cash disbursements for payments of salaries, compensation, professional fees, and all other expenses of the administration of the company and its property.

(2) No party to the proceedings may object to any aspect of that report unless the basis of the party's objection is set forth in a motion filed with the court not later than 30 days after the filing of the report. In the event that objections to the report are filed, the Director shall have 15 days to file a response to the objections, and a hearing on the matter shall be held at the earliest possible date consistent with the schedule of the court. Any hearing on objections shall be limited solely to the specific objections raised in the original motion.

(e) (1) For purposes of this subsection (e):

"Receiver" means the Director in his or her capacity as the liquidator, rehabilitator, or conservator of a company in liquidation, rehabilitation, or conservation.

"Director as trustee" means the Director when appointed as trustee under this Article.

"Employees" means all present and former special deputies appointed by the Director and all persons that the Director or special deputies may appoint or employ or may have appointed or employed to assist in the liquidation, rehabilitation, or conservation of a company. "Employees" shall not include any attorneys, accountants, auditors, or other professional persons or firms (or their employees) who are retained as independent contractors by either the Director or by any special deputy appointed under this Section.

"Advisors" means all persons that the Director may appoint or may have appointed under Section 202.1.

(2) If a cause of action is commenced against the receiver, the Director as trustee, employees, or advisors, either personally or in their official capacity, alleging property damage, property loss, personal injury, or other civil liability arising out of any act, error, or omission of the receiver, the Director as trustee, employees, or advisors committed within the scope of their duties or employment involving a company in liquidation, rehabilitation, or conservation, the receiver, the Director as trustee, employees, or advisors shall be indemnified out of the assets of the company for all expenses, attorneys' fees, judgments, settlements, decrees, fines, penalties, or amounts paid in satisfaction of or incurred in the defense of the cause of action unless it is determined upon a final adjudication on the merits that the act, error, or omission of the receiver, the Director as trustee, employees, advisors, or the court giving rise to the claim was not within the scope of his or her duties or employment or was caused by intentional, wilful, or wanton misconduct. Any payments out of the assets of the company under this subsection (e) shall be subject to the prior approval of the court before which is pending the delinquency proceeding of the company.

The court shall be entitled to indemnification under Section 2 of the Representation and Indemnification of State Employees Act.

Attorneys' fees and expenses incurred in defending an action against the receiver, the Director as trustee, employees, or advisors for which indemnity is available under this part (2) may, upon the approval of the receiver and the court before which is pending the delinquency proceeding of the company, be paid from the assets of the company's estate in advance of the final disposition of the action upon receipt of an undertaking by or on behalf of the receiver, the Director as trustee, employees, or advisors to pay that amount, if it shall ultimately be determined upon a final adjudication on the merits that he or she is not entitled to be indemnified under this part (2).

Any indemnification, expense payments, and attorneys' fees from the company's assets for actions against the receiver, the Director as trustee, employees, or advisors under this part (2) shall be considered an administrative expense of the estate.

In the event of actual or threatened litigation against the receiver, the Director as trustee, employees, or advisors for which indemnity is available under this part (2), a reasonable amount of funds, which in the judgment of the Director may be needed to provide indemnity, may be segregated and reserved from the assets of the company as security for the payment of indemnity until all applicable statutes of limitations shall have run and all actual or threatened actions against the receiver, the Director as trustee, employees, or advisors have been completely and finally resolved.

(3) Nothing contained or implied in this subsection (e) shall operate, or be construed or applied, to deprive the Director, receiver, the Director as trustee, the company's estate, any employee, any advisor or the court of any defense, claim, or right of immunity heretofore available.

(Source: P.A. 88-297; 89-206, eff. 7-21-95.)

(215 ILCS 5/202.1) (from Ch. 73, par. 814.1)

Sec. 202.1. The Director may, with the approval of the court, appoint an Advisory Committee, consisting of policyholders, claimants, or other creditors, including Guaranty Funds and Guaranty Associations, should the Director deem it necessary to the proper performance of his responsibilities under this Article and Article XIII 1/2. The Committee shall serve at the pleasure of the Director and shall serve without compensation other than reimbursement for travel and per diem living expenses incurred in attending committee meetings. No other committees of any nature shall be appointed by the Director or the court in any proceeding conducted under this Article and Article XIII 1/2.

(Source: P.A. 86-1155; 86-1156.)

(215 ILCS 5/203) (from Ch. 73, par. 815)

Sec. 203. Exemption from filing fees.

The Director shall not be required to pay any fee to any public officer for filing, recording or in any manner authenticating any paper or instrument relating to any proceeding under this article, nor for services rendered by any public officer for serving any process; but such fees and costs may be taxed as costs against the defendant in the suit by order of the court and paid to such public officer.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/204) (from Ch. 73, par. 816)

Sec. 204. Prohibited and voidable transfers and liens.

(a)(1) A preference is a transfer of any of the property of a company to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the company within 2 years before the filing of a complaint under this Article, the effect of which may be to enable the creditor to obtain a greater percentage of this debt than another creditor of the same class would receive.

(2) Any preference may be avoided by the Director as rehabilitator, liquidator, or conservator if:

(A) the company was insolvent at the time of the transfer; and

(B) the transfer was made within 4 months before the filing of the complaint; or the creditor receiving it was (i) an officer, or any employee or attorney or other person who was in fact in a position of comparable influence in the company to an officer whether or not that person held such a position, (ii) any shareholder holding, directly or indirectly, more than 5% of any class of any equity security issued by the company, or (iii) any other person, firm, corporation, association, or aggregation of individuals with whom the company did not deal at arm's length.

(3) Where the preference is voidable, the Director as rehabilitator, liquidator, or conservator 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, the purchaser or lienor shall have a lien upon the property to the extent of the consideration actually given. 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 Director as rehabilitator or liquidator.

(b)(1) A transfer of property other than real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee.

(2) A transfer of real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the company could obtain rights superior to the rights of the transferee.

(3) A transfer that creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created.

(4) A transfer not perfected before the filing of a complaint shall be deemed to be made immediately before the filing of the complaint.

(5) The provisions of this subsection apply whether or not there are or were creditors who might have obtained liens or persons who might have become bona fide purchasers.

(c) For purposes of this Section:

(1) A lien obtainable by legal or equitable proceedings upon a simple contract is one arising in the ordinary course of the proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution, or like process, whether before, upon, or after judgment or decree and whether before or upon levy. It does not include liens that, under applicable law, are given a special priority over other liens that are prior in time.

(2) A lien obtainable by legal or equitable proceedings could become superior to the rights of a transferee, or a purchaser could obtain rights superior to the rights of a transferee within the meaning of subsection (b) of this Section, if such consequences would follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. A lien could not, however, become superior and a purchase could not create superior rights for the purpose of subsection (b) of this Section through any acts subsequent to an obtaining of the lien or subsequent to a purchase that requires the agreement or concurrence of any third party or that requires any further judicial action or ruling.

(d) A transfer of property for or on account of a new and contemporaneous consideration which is deemed under subsection (b) of this Section to be made or suffered after the transfer because of delay in perfecting it does not thereby become a transfer for or on account of an antecedent debt if any acts required by the applicable law to be performed in order to perfect the transfer as against liens or bona fide purchasers' rights are performed within 21 days or any period expressly allowed by the law, whichever is less. A transfer to secure a future loan, if the loan is actually made, or a transfer that becomes security for a future loan, shall have the same effect as a transfer for or on account of a new and contemporaneous consideration.

(e) If any lien deemed voidable under part (2) of subsection (a) of this Section has been dissolved by the furnishing of a bond or other obligation, the surety on which has been indemnified directly or indirectly by the transfer of or the creation of a lien upon any property of a company before the filing of a complaint under this Article, the indemnifying transfer or lien shall also be deemed voidable.

(f) The property affected by any lien deemed voidable under subsections (a) and (e) of this Section shall be discharged from the lien, and that property and any of the indemnifying property transferred to or for the benefit of a surety shall pass to the Director as rehabilitator or liquidator, except that the court may, on due notice, order any such lien to be preserved for the benefit of the estate and the court may direct that such conveyance be executed as may be proper or adequate to evidence the title of the Director as rehabilitator or liquidator.

(g) The court shall have summary jurisdiction over any proceeding by the Director as rehabilitator, liquidator, or conservator to hear and determine the rights of any parties under this Section. Reasonable notice of any hearings in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other life obligation. Where an order is entered for the recovery of indemnifying property in kind or for the avoidance of an indemnifying lien, the court, upon application of any party in interest, shall in the same proceeding ascertain the value of the property or lien, and if the value is less than the amount for which the property is 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, to the Director as rehabilitator, liquidator, or conservator, within such reasonable times as the court shall fix.

(h) The liability of the surety under the releasing bond or other similar obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and avoided by the Director as rehabilitator, liquidator, or conservator. Where the property is retained under subsection (g) of this Section, the liability shall be discharged to the extent of the amount paid to the Director as rehabilitator, liquidator, or conservator.

(i) If a creditor has been preferred and thereafter in good faith gives the company further credit without security of any kind, for property which becomes a part of the company's estate, the amount of the new credit remaining unpaid at the time of the petition may be set off against the preference which would otherwise be recoverable from the creditor.

(j) If a company shall, directly or indirectly, within 4 months before the filing of a complaint under this Article, or at any time in contemplation of such a proceeding, pay money or transfer property to any attorney for services rendered or to be rendered, the transactions may be examined by the court on its own motion or shall be examined by the court on petition of the Director as rehabilitator, liquidator, or conservator and shall be held valid only to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the Director as rehabilitator, liquidator, or conservator for the benefit of the estate provided that where the attorney is in a position of influence in the company or an affiliate thereof payment of any money or the transfer of any property to the attorney for services rendered or to be rendered shall be governed by item (B) of part (2) of subsection (a) of this Section.

(k)(1) An officer, director, manager, employee, shareholder, member, subscriber, attorney, or other person acting on behalf of the company who knowingly participates in giving any preference when that officer, director, manager, employee, shareholder, member, subscriber, attorney, or other person has reasonable cause to believe the company is or is about to become insolvent at the time of the preference shall be personally liable to the Director as rehabilitator, liquidator, or conservator for the amount of the preference. There is a reasonable cause to so believe if the transfer was made within 4 months before the date of filing of the complaint.

(2) A person receiving any property from the company or the benefit thereof as a preference voidable under subsection (a) of this Section shall be personally liable therefor and shall be bound to account to the Director as rehabilitator, liquidator, or conservator.

(3) Nothing in this Section shall prejudice any other claim by the Director as rehabilitator, liquidator, or conservator against any person.

(l) For purposes of this Section, the company is presumed to have been insolvent on and during the 4 month period immediately preceding the date of the filing of the complaint.

(m) The Director as rehabilitator, liquidator, or conservator may not avoid a transfer under this Section to the extent that the transfer was:

(A) Intended by the company and the creditor to or for whose benefit the transfer was made to be a contemporaneous exchange for new value given to the company, and was in fact a substantially contemporaneous exchange; or

(B) In payment of a debt incurred by the company in the ordinary course of business or financial affairs of the company and the transferee; made in the ordinary course of business or financial affairs of the company and the transferee; and made according to ordinary business terms;

(C) In the case of a transfer by a company where the Director has determined that an event described in Section 35A-25 or 35A-30 has occurred, specifically approved by the Director in writing pursuant to this subsection, whether or not the company is in receivership under this Article. Upon approval by the Director, such a transfer cannot later be found to constitute a prohibited or voidable transfer based solely upon a deviation from the statutory payment priorities established by law for any subsequent receivership; or

(D) Of money or other property arising under or in connection with any Federal Home Loan Bank security agreement or any pledge, security, collateral or guarantee agreement, or any other similar arrangement or credit enhancement relating to a Federal Home Loan Bank security agreement.

(n) The Director as rehabilitator, liquidator, or conservator may avoid any transfer of or lien upon the property of a company that the estate of the company or a policyholder, creditor, member, or stockholder of the company may have avoided, and the Director as rehabilitator, liquidator, or conservator may recover and collect the property so transferred or its value from the person to whom it was transferred unless the property was transferred to a bona fide holder for value before the filing of the complaint. The Director as rehabilitator, liquidator, or conservator shall be deemed a creditor for purposes of pursuing claims under the Uniform Fraudulent Transfer Act.

(o) Notwithstanding any provision of this Article to the contrary, a Federal Home Loan Bank shall not be stayed, enjoined, or prohibited from exercising or enforcing any right or cause of action regarding collateral pledged under any security agreement or any pledge, security, collateral or guarantee agreement, or any other similar arrangement or credit enhancement relating to a Federal Home Loan Bank security agreement.

(Source: P.A. 100-89, eff. 8-11-17.)

(215 ILCS 5/205) (from Ch. 73, par. 817)

Sec. 205. Priority of distribution of general assets.

(1) The priorities of distribution of general assets from the company's estate is to be as follows:

(a) The costs and expenses of administration, including, but not limited to, the following:

(i) The reasonable expenses of the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, and the Illinois Health Maintenance Organization Guaranty Association and of any similar organization in any other state, including overhead, salaries, and other general administrative expenses allocable to the receivership (administrative and claims handling expenses and expenses in connection with arrangements for ongoing coverage), but excluding expenses incurred in the performance of duties under Section 547 or similar duties under the statute governing a similar organization in another state. For property and casualty insurance guaranty associations that guaranty certain obligations of any member company as defined by Section 534.5, expenses shall include, but not be limited to, loss adjustment expenses, which shall include adjusting and other expenses and defense and cost containment expenses. The expenses of such property and casualty guaranty associations, including the Illinois Insurance Guaranty Fund, shall be reimbursed as prescribed by Section 545, but shall be subordinate to all other costs and expenses of administration, including the expenses reimbursed pursuant to subparagraph (ii) of this paragraph (a).

(ii) The expenses expressly approved or ratified by the Director as liquidator or rehabilitator, including, but not limited to, the following:

(1) the actual and necessary costs of preserving or recovering the property of the insurer;

(2) reasonable compensation for all services rendered on behalf of the administrative supervisor or receiver;

(3) any necessary filing fees;

(4) the fees and mileage payable to witnesses;

(5) unsecured loans obtained by the receiver; and

(6) expenses approved by the conservator or rehabilitator of the insurer, if any, incurred in the course of the conservation or rehabilitation that are unpaid at the time of the entry of the order of liquidation.

Any unsecured loan falling under item (5) of subparagraph (ii) of this paragraph (a) shall have priority over all other costs and expenses of administration, unless the lender agrees otherwise. Absent agreement to the contrary, all other costs and expenses of administration shall be shared on a pro-rata basis, except for the expenses of property and casualty guaranty associations, which shall have a lower priority pursuant to subparagraph (i) of this paragraph (a).

(b) Secured claims, including claims for taxes and debts due the federal or any state or local government, that are secured by liens perfected prior to the filing of the complaint.

(c) Claims for wages actually owing to employees for services rendered within 3 months prior to the date of the filing of the complaint, not exceeding $1,000 to each employee unless there are claims due the federal government under paragraph (f), then the claims for wages shall have a priority of distribution immediately following that of federal claims under paragraph (f) and immediately preceding claims of general creditors under paragraph (g).

(d) Claims by policyholders, beneficiaries, and insureds, under insurance policies, annuity contracts, and funding agreements, liability claims against insureds covered under insurance policies and insurance contracts issued by the company, claims of obligees (and, subject to the discretion of the receiver, completion contractors) under surety bonds and surety undertakings (not to include mortgage or financial guaranty, or other forms of insurance offering protection against investment risk), claims by principals under surety bonds and surety undertakings for wrongful dissipation of collateral by the insurer or its agents, and claims incurred during any extension of coverage provided under subsection (5) of Section 193, and claims of the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and any similar organization in another state as prescribed in Section 545. For purposes of this Section, "funding agreement" means an agreement whereby an insurer authorized to write business under Class 1 of Section 4 of this Code may accept and accumulate funds and make one or more payments at future dates in amounts that are not based upon mortality or morbidity contingencies.

(e) Claims by policyholders, beneficiaries, and insureds, the allowed values of which were determined by estimation under paragraph (b) of subsection (4) of Section 209.

(f) Any other claims due the federal government.

(g) All other claims of general creditors not falling within any other priority under this Section including claims for taxes and debts due any state or local government which are not secured claims and claims for attorneys' fees incurred by the company in contesting its conservation, rehabilitation, or liquidation.

(h) Claims of guaranty fund certificate holders, guaranty capital shareholders, capital note holders, and surplus note holders.

(i) Proprietary claims of shareholders, members, or other owners.

Every claim under a written agreement, statute, or rule providing that the assets in a separate account are not chargeable with the liabilities arising out of any other business of the insurer shall be satisfied out of the funded assets in the separate account equal to, but not to exceed, the reserves maintained in the separate account under the separate account agreement, and to the extent, if any, the claim is not fully discharged thereby, the remainder of the claim shall be treated as a priority level (d) claim under paragraph (d) of this subsection to the extent that reserves have been established in the insurer's general account pursuant to statute, rule, or the separate account agreement.

For purposes of this provision, "separate account policies, contracts, or agreements" means any policies, contracts, or agreements that provide for separate accounts as contemplated by Section 245.21.

To the extent that any assets of an insurer, other than those assets properly allocated to and maintained in a separate account, have been used to fund or pay any expenses, taxes, or policyholder benefits that are attributable to a separate account policy, contract, or agreement that should have been paid by a separate account prior to the commencement of receivership proceedings, then upon the commencement of receivership proceedings, the separate accounts that benefited from this payment or funding shall first be used to repay or reimburse the company's general assets or account for any unreimbursed net sums due at the commencement of receivership proceedings prior to the application of the separate account assets to the satisfaction of liabilities or the corresponding separate account policies, contracts, and agreements.

To the extent, if any, reserves or assets maintained in the separate account are in excess of the amounts needed to satisfy claims under the separate account contracts, the excess shall be treated as part of the general assets of the insurer's estate.

(2) Within 120 days after the issuance of an Order of Liquidation with a finding of insolvency against a domestic company, the Director shall make application to the court requesting authority to disburse funds to the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and similar organizations in other states from time to time out of the company's marshaled assets as funds become available in amounts equal to disbursements made by the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and similar organizations in other states for covered claims obligations on the presentation of evidence that such disbursements have been made by the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and similar organizations in other states.

The Director shall establish procedures for the ratable allocation and distribution of disbursements to the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and similar organizations in other states. In determining the amounts available for disbursement, the Director shall reserve sufficient assets for the payment of the expenses of administration described in paragraph (1)(a) of this Section. All funds available for disbursement after the establishment of the prescribed reserve shall be promptly distributed. As a condition to receipt of funds in reimbursement of covered claims obligations, the Director shall secure from the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and each similar organization in other states, an agreement to return to the Director on demand funds previously received as may be required to pay claims of secured creditors and claims falling within the priorities established in paragraphs (a), (b), (c), and (d) of subsection (1) of this Section in accordance with such priorities.

(3) The changes made in this Section by this amendatory Act of the 100th General Assembly apply to all liquidation, rehabilitation, or conservation proceedings that are pending on the effective date of this amendatory Act of the 100th General Assembly and to all future liquidation, rehabilitation, or conservation proceedings.

(4) The provisions of this Section are severable under Section 1.31 of the Statute on Statutes.

(Source: P.A. 100-410, eff. 8-25-17; 101-652, eff. 1-1-23.)