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Public Act 100-0089


 

Public Act 0089 100TH GENERAL ASSEMBLY

  
  
  

 


 
Public Act 100-0089
 
SB1297 EnrolledLRB100 09657 JLS 19826 b

    AN ACT concerning regulation.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Illinois Insurance Code is amended by
changing Sections 189 and 204 as follows:
 
    (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. 88-297; 89-206, eff. 7-21-95.)
 
    (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;
    or
        (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. 93-1083, eff. 2-7-05.)
 
    Section 99. Effective date. This Act takes effect upon
becoming law.

Effective Date: 8/11/2017