| |
Illinois Compiled Statutes
Information maintained by the Legislative Reference Bureau Updating the database of the Illinois Compiled Statutes (ILCS) is an ongoing process. Recent laws may not yet be included in the ILCS database, but they are found on this site as Public Acts soon after they become law. For information concerning the relationship between statutes and Public Acts, refer to the Guide. Because the statute database is maintained primarily for legislative drafting purposes, statutory changes are sometimes included in the statute database before they take effect. If the source note at the end of a Section of the statutes includes a Public Act that has not yet taken effect, the version of the law that is currently in effect may have already been removed from the database and you should refer to that Public Act to see the changes made to the current law.
INSURANCE (215 ILCS 5/) Illinois Insurance Code. 215 ILCS 5/179E-65
(215 ILCS 5/179E-65)
Sec. 179E-65.
Fees and taxes.
The Director may charge fees to reimburse
the
Director for expenses and costs incurred by the Department incident to the
examination of
financial statements and review of the plan of operation and to reimburse other
such
activities of the Director related to the formation and ongoing operation of an
SPRV. An
SPRV is not be subject to State premium or other State taxes incidental to the
operation of
its business as long as the business remains within the limitations of this
Article.
(Source: P.A. 92-124, eff. 7-20-01.)
|
215 ILCS 5/179E-70
(215 ILCS 5/179E-70)
Sec. 179E-70.
Dissolution.
An SPRV operating under this Article may be
dissolved
by a vote of its board of directors at any time after the Director has approved
that action. A
voluntary dissolution may not be effected or allowed until and unless all of
the obligations
of the SPRV pursuant to the insurance securitization have been fully and
finally satisfied
pursuant to their terms. In the case of voluntary dissolution, the disposition
of the affairs of
the SPRV (including the settlement of all outstanding obligations) shall be
made by the
officers or directors of the SPRV, and when the liquidation has been completed
and a final
statement, in acceptable form, filed with and approved, or deemed approved, by
the
Director, the provisions for voluntary dissolution under the laws of this State
shall be
followed to dissolve the SPRV.
(Source: P.A. 92-124, eff. 7-20-01.)
|
215 ILCS 5/179E-75
(215 ILCS 5/179E-75)
Sec. 179E-75.
Conservation, rehabilitation, or liquidation.
(a) The provisions of Articles XIII and XIII 1/2 apply to an SPRV, except
to
the
extent modified in this Section.
(b) Notwithstanding the provisions of Section 188 of this Code, the Director
may
apply by petition to the Circuit Court of Cook County, the Circuit Court of
Sangamon
County, or the circuit court of the county in which an SPRV has or last had its
principal
office for an order authorizing the Director to conserve, rehabilitate or
liquidate an
SPRV domiciled in
this State solely on one or more of the following grounds:
(1) there has been embezzlement, wrongful | | sequestration, dissipation, or diversion of the assets of the SPRV intended to be used to pay amounts owed to the ceding insurer or the holders of SPRV securities; or
|
|
(2) the SPRV is insolvent and the holders of a
| | majority in outstanding principal amount of each class of SPRV securities request or consent to conservation, rehabilitation, or liquidation under this Article.
|
|
The court shall not grant relief under item (1) of this subsection
unless, after notice
and a hearing, the Director, who has the burden of proof, establishes by clear
and
convincing evidence that the relief should be granted.
(c) Notwithstanding any contrary provision in this Code, the rules
promulgated
under this Code, or any other applicable law or rule, upon any order of
conservation,
rehabilitation, or liquidation of the SPRV, the receiver shall be bound to deal
with the
SPRV's assets and liabilities, in accordance with the requirements set forth in
this Article.
(d) With respect to amounts recoverable under an SPRV contract, the amount
recoverable by the receiver may not be reduced or diminished as a result of the
entry of an
order of conservation, rehabilitation, or liquidation with respect to the
ceding insurer
notwithstanding any provisions to the contrary in the contracts or other
documentation
governing the SPRV insurance securitization.
(e) Notwithstanding the provisions of Article XIII and XIII 1/2 of this
Code, any
application, petition, or temporary restraining order or injunction issued
under those
Articles, with respect to a ceding insurer shall not prohibit the transaction
of any business by
an SPRV, including any payment by an SPRV made pursuant to an SPRV security, or
any
action or proceeding against an SPRV or its assets.
(f) Notwithstanding the provisions of Articles XIII and XIII 1/2 of this
Code, the
commencement of a summary proceeding or other interim proceeding commenced
before a
formal delinquency proceeding with respect to an SPRV, and any order issued by
the court
thereunder, shall not prohibit:
(1) the payment by an SPRV made pursuant to an SPRV
| | security or SPRV contract; or
|
|
(2) the SPRV from taking any action required to make
| |
(g) Notwithstanding any other provision of Articles XIII and XIII 1/2 of
this Code or
other State law:
(1) a receiver of a ceding insurer may not avoid a
| | non-fraudulent transfer by a ceding insurer to an SPRV of money or other property made pursuant to an SPRV contract; and
|
|
(2) a receiver of an SPRV may not void a
| | non-fraudulent transfer by the SPRV of money or other property made to a ceding insurer pursuant to an SPRV contract or made to or for the benefit of any holder of an SPRV security on account of the SPRV security.
|
|
(h) With the exception of the fulfillment of the obligations under an SPRV
contract,
and notwithstanding any other provisions of this Article or other law of this
State to the
contrary, the assets of an SPRV, including assets held in trust, may not be
consolidated with
or included in the estate of a ceding insurer in any delinquency proceeding
against the
ceding insurer under this Article for any purpose, including, without
limitation, distribution
to creditors of the ceding insurer.
(i) Notwithstanding any other provision of this Article:
(1) A domiciliary receiver of an SPRV domiciled in
| | another state shall be vested by operation of law with the title to all of the assets, property, contracts, and rights of action, and all of the books, accounts, and other records of the SPRV located in this State. The domiciliary receiver shall have the immediate right to recover all of the vested property, assets, and causes of action of the SPRV located in this State.
|
|
(2) An ancillary proceeding may not be commenced or
| | prosecuted in this State against an SPRV domiciled in another state.
|
|
(Source: P.A. 92-124, eff. 7-20-01.)
|
215 ILCS 5/179E-80
(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
(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
| |
(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
(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
(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
(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
(215 ILCS 5/Art. XII heading)
ARTICLE XII.
DOMESTICATION OF
FOREIGN AND ALIEN COMPANIES
|
215 ILCS 5/180
(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
(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
(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
(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
(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
(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
(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
(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
(215 ILCS 5/Art. XII.5 heading)
ARTICLE XII 1/2.
CORRECTIVE ORDERS
|
215 ILCS 5/186.1
(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
(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
(215 ILCS 5/Art. XIII heading)
ARTICLE XIII.
REHABILITATION, LIQUIDATION, CONSERVATION AND DISSOLUTION OF
COMPANIES
|
215 ILCS 5/187
(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
(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
| |
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,
| |
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
(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 (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
(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
(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
(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
(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
(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
(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
(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
(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
(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
(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
(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
(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
(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
(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
(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
(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.)
|
|
|
|