Illinois General Assembly - Illinois Compiled Statutes

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215 ILCS 5/193

(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.)