Sec. 38a-923. (Formerly Sec. 38-441). Powers of liquidator. (a) The liquidator
shall have the power: (1) To appoint a special deputy to act for him under sections 38a-903 to 38a-961, inclusive, and to determine his reasonable compensation. The special
deputy shall have all powers of the liquidator granted by this section. The special deputy
shall serve at the pleasure of the liquidator; (2) to employ employees and agents, legal
counsel, actuaries, accountants, appraisers, consultants and such other personnel as he
may deem necessary to assist in the liquidation, notwithstanding any contrary provision
of law, including chapters 55a and 67; (3) to fix the reasonable compensation of employees and agents, legal counsel, actuaries, accountants, appraisers and consultants with
the approval of the court; (4) to pay reasonable compensation to persons appointed and
to defray from the funds or assets of the insurer all expenses of taking possession of,
conserving, conducting, liquidating, disposing of, or otherwise dealing with the business
and property of the insurer. The liquidator shall have the power to pay reasonable compensation to such persons on an interim basis. All such interim payments shall be subject
to the approval of the court upon submission by the liquidator. In the event that the
property of the insurer does not contain sufficient cash or liquid assets to defray the
costs incurred, the commissioner may advance the costs so incurred out of any appropriation for the maintenance of the Insurance Department. Any amounts so advanced for
expenses of administration shall be repaid to the commissioner for the use of the Insurance Department out of the first available moneys of the insurer; (5) to hold hearings,
to subpoena witnesses, to compel their attendance, to administer oaths, to examine any
person under oath and to compel any person to subscribe to his testimony after it has
been correctly reduced to writing, and in connection therewith to require the production
of any books, papers, records or other documents which he deems relevant to the inquiry;
(6) to collect all debts and moneys due and claims belonging to the insurer, wherever
located, and for this purpose (A) to institute timely action in other jurisdictions in order
to forestall garnishment and attachment proceedings against such debts; (B) to do such
other acts as are necessary or expedient to collect, conserve or protect its assets or
property, including the power to sell, compound, compromise or assign debts for purposes of collection upon such terms and conditions as he deems best; and (C) to pursue
any creditor's remedies available to enforce the creditor's claims; (7) to conduct public
and private sales of the property of the insurer; (8) to use assets of the estate of an insurer
under a liquidation order to transfer policy obligations to a solvent assuming insurer, if
the transfer can be arranged without prejudice to applicable priorities under section 38a-944; (9) to acquire, hypothecate, encumber, lease, improve, sell, transfer, abandon or
otherwise dispose of or deal with, any property of the insurer at its market value or upon
such terms and conditions as are fair and reasonable. The liquidator shall also have
power to execute, acknowledge and deliver any and all deeds, assignments, releases
and other instruments necessary or proper to effectuate any sale of property or other
transaction in connection with the liquidation; (10) to borrow money on the security of
the assets in the insurer's estate or without security and to execute and deliver all documents necessary to that transaction for the purpose of facilitating the liquidation. Any
such funds borrowed may be repaid as an administrative expense and have priority over
any other claims in class 1 under the priority of distributions; (11) to enter into such
contracts as are necessary to carry out the order to liquidate and to affirm or disavow
any contracts to which the insurer is a party; (12) to continue to prosecute and to institute
in the name of the insurer or in the liquidator's own name any and all suits and other
legal proceedings, in this state or elsewhere, and to abandon the prosecution of claims
he deems unprofitable to pursue further. If the insurer is dissolved pursuant to section
38a-922, the liquidator shall have the power to apply to any court in this state or elsewhere
for leave to substitute the liquidator for the insurer as plaintiff; (13) to prosecute any
action which may exist on behalf of the creditors, members, policyholders or shareholders of the insurer against any officer of the insurer or any other person; (14) to remove
any or all records and property of the insurer to the offices of the commissioner or to
such other place as may be convenient for the purposes of efficient and orderly execution
of the liquidation. Guaranty associations shall have such reasonable access to the records
of the insurer as is necessary for them to carry out their statutory obligations; (15) to
deposit in one or more banks in this state such sums as are required for meeting current
administration expenses and dividend distributions; (16) to invest all sums not currently
needed, unless the court orders otherwise; (17) to file any necessary documents for
record in the office of any recorder of deeds or record office in this state or elsewhere
where property of the insurer is located; (18) to assert all defenses available to the insurer
as against third persons, including statutes of limitation, statutes of frauds and the defense
of usury. A waiver of any defense by the insurer after a petition in liquidation has been
filed shall not bind the liquidator. Whenever a guaranty association or foreign guaranty
association has an obligation to defend any suit, the liquidator shall give precedence to
such obligation and may defend only in the absence of a defense by such guaranty
associations; (19) to exercise and enforce all the rights, remedies, and powers of any
creditor, shareholder, policyholder, or member, including any power to avoid any transfer or lien that may be given by the general law and that is not included with sections
38a-928 to 38a-930, inclusive; (20) to intervene in any proceeding wherever instituted
that might lead to the appointment of a receiver or trustee and to act as the receiver or
trustee whenever the appointment is offered; (21) to enter into agreements with any
receiver or commissioner of any other state relating to the rehabilitation, liquidation,
conservation or dissolution of an insurer doing business in both states; (22) to exercise
all powers conferred upon receivers by the laws of this state not inconsistent with the
provisions of sections 38a-903 to 38a-961, inclusive; (23) to appoint, with the approval
of the court, an advisory committee of policyholders, claimants or other creditors including guaranty associations should such a committee be deemed necessary. The committee
shall serve at the pleasure of the commissioner and the decision to appoint an advisory
committee shall be at the sole discretion of the commissioner. The committee shall serve
without compensation and without reimbursement for expenses. No other committee
shall be appointed by the commissioner or the court in liquidation proceedings conducted
under sections 38a-903 to 38a-961, inclusive; (24) to audit the books and records of all
agents of the insurer insofar as those records relate to the business activities of the
insurer.
(b) The enumeration, in this section, of the powers and authority of the liquidator
shall not be construed as a limitation upon him, nor shall it exclude in any manner his
right to do other acts not specifically enumerated, or otherwise provided for, as may be
necessary or appropriate for the accomplishment of or in aid of the purpose of liquidation.
(c) The liquidator shall not be obligated to defend any action against the insurer or
insured and may enforce injunctions, stays and the claims procedure set forth in sections
38a-903 to 38a-961, inclusive. The liquidator may elect to defend any actions against
the insurer or insureds if it is in the best interest of the estate. Any insureds not defended
by a guaranty association shall provide their own defense, and include the cost of the
defense as part of their claims, if the defense was an obligation of the insurer. The rights
of the liquidator to contest coverage on a particular claim shall be deemed preserved
without the necessity for an express reservation of rights.
(P.A. 79-382, S. 21; P.A. 80-482, S. 4, 345, 348; 80-483, S. 112, 145, 186; P.A. 92-93, S. 16; P.A. 98-214, S. 13.)
History: P.A. 80-482 abolished the department of business regulation and restored its division of insurance as an
independent department (as it was prior to creation of the business regulation department in P.A. 77-614); P.A. 80-483
had no effect; Sec. 38-441 transferred to Sec. 38a-923 in 1991; P.A. 92-93 amended Subsec. (a) to allow repayment of
borrowed funds as administrative expense, to make technical corrections for statutory consistency, and to add Subdivs.
(23) and (24) re liquidator's powers to appoint advisory committee and audit books and records and added new Subsec.
(c) re liquidator having no obligation to defend claims subsequent to entry of liquidation order; P.A. 98-214 amended
Subsec. (a) to notwithstand any contrary provision of law, including chapters 55a and 67, to allow liquidator to, subject
to the approval of the court, pay reasonable compensation to persons on an interim basis, to substitute "the creditor's" for
"his" in Subpara. (a)(6)(C), to substitute "The liquidator" for "he" and "himself" and "the liquidator's" for "his" in Subdivs.
(9) and (12), to delete "foreign guaranty associations" in Subdiv. (14), to delete "now held or hereafter" in Subdiv. (22),
to make the decision to appoint an advisory committee be at the sole discretion of the commissioner, to delete compensation
for "reasonable travel and per diem living expenses", and to make technical changes, deleted "such" and "herein" in Subsec.
(b), and replaced existing Subsec. (c) with new language re obligations and powers of the liquidator.
Sec. 38a-924. (Formerly Sec. 38-442). Notice to creditors and others. Requirements. Exceptions. (a) Unless the court otherwise directs, the liquidator shall give or
cause to be given notice of the liquidation order as soon as possible: (1) By first class
mail and electronic communication to the Insurance Commissioner of each jurisdiction
in which the insurer is doing business; (2) by first class mail to any guaranty association
which is or may become obligated as a result of the liquidation; (3) by first class mail
to all the insurer's agents, brokers or producers of record, with current appointments or
current licenses to represent the insurer, and to all other agents, brokers or producers as
the liquidator deems appropriate at their last known address; (4) by first class mail to
all persons known or reasonably expected to have claims against the insurer, including
all policyholders and reinsurers, at their last known addresses as indicated by the records
of the insurer; and (5) by publication in a newspaper of general circulation in the town
in which the insurer has its principal place of business and in such other locations as
the liquidator deems appropriate.
(b) Whenever the Insurance Commissioner of this state is appointed receiver for
an insurer domiciled in another state, the notice of the liquidation order given by the
domiciliary liquidator in compliance with the laws of that state shall be sufficient notice,
and the ancillary receiver shall not be required to give any notice unless the domiciliary
liquidator fails to give notice. The ancillary receiver may request that the domiciliary
liquidator's notice mention the existence of any applicable guaranty association laws
in this state, and inform claimants that any claims which the guaranty association of
this state may cover may be filed with the domiciliary liquidator and will be forwarded
to the applicable guaranty association. If notice by the domiciliary liquidator in another
state does not mention the possibility of guaranty association coverage in this state, then
the ancillary receiver shall arrange to give notice to those who may have rights under
applicable guaranty association laws in this state, together with a citation to the guaranty
association statute in this state. The notice may include a brief summary of claimant's
rights under the guaranty association laws in this state and any other information deemed
appropriate.
(c) Except as otherwise established by the liquidator with the approval of the court,
notice to potential claimants under subsection (a) of this section shall require claimants
to file with the liquidator their claims together with proper proofs specified in section
38a-938, on or before a date the liquidator shall specify in the notice. The liquidator
need not require persons claiming cash surrender values or other investment values in
life insurance and annuities to file a claim. All claimants shall have a duty to keep the
liquidator informed of any changes of address.
(d) (1) Notice under subsection (a) to agents of the insurer and to potential claimants
who are policyholders shall include, where applicable, notice that coverage by state
guaranty associations may be available for all or part of policy benefits in accordance
with applicable state guaranty laws.
(2) The liquidator shall promptly provide to the guaranty associations such information concerning the identities and addresses of such policyholders and their policy coverages as may be within the liquidator's possession or control, and otherwise cooperate
with guaranty associations to assist them in providing to such policyholders timely
notice of the guaranty associations' coverage of policy benefits, including, as applicable,
coverage of claims and continuation or termination of coverages.
(e) If notice is given in accordance with this section, the distribution of assets of
the insurer under sections 38a-903 to 38a-961, inclusive, shall be conclusive with respect
to all claimants, whether or not they received notice.
(f) Notwithstanding the provisions of subsections (a) to (e), inclusive, of this section,
the liquidator shall have no duty to locate any person if no address is found in the records
of the insurer, or if mailings are returned to the liquidator because of an inability to
deliver at the address shown in the company's books and records. In such circumstances
the notice by publication as required by this chapter, or actual notice received shall be
sufficient notice. Written certification by the liquidator or other knowledgeable person
acting for the liquidator, that the notices were deposited in the United States mail, postage
prepaid, shall be prima facie evidence of mailing and receipt.
(g) Upon application of the liquidator and for good cause shown, the court may find
that notice by publication as required in this section is sufficient notice to those persons
holding an occurrence policy which expired more than four years prior to the entry of
the order of liquidation, and under which there are no pending claims; or the court may
order such notice to those persons as it deems appropriate.
(P.A. 79-382, S. 22; P.A. 92-93, S. 17; P.A. 98-214, S. 14.)
History: Sec. 38-442 transferred to Sec. 38a-924 in 1991; P.A. 92-93 inserted new Subsec. (c) re notice requirements
and guaranty association involvement and relettered former Subsec. (c) as (d); P.A. 98-214 amended Subdiv. (a)(1) to
substitute "electronic communication" for "either by telegram or telephone", deleted "foreign guaranty association" in
Subdiv. (2), replaced "all insurance agents of the insurer" with list of agents, brokers or producers of records, et al., and
amended Subdiv. (a)(4) to include reinsurers, inserted new Subsec. (b) re notice when the Insurance Commissioner is
appointed receiver for an insurer domiciled in another state, redesignated existing Subsecs. (b), (c) and (d) as Subsecs. (c),
(d) and (e), respectively, amending newly designated Subsec. (c) to allow exception as otherwise established by liquidator
with the approval of the court and substitute "proofs specified in" for "proofs thereof pursuant to", added new Subsec. (f)
notwithstanding Subsecs. (a) to (e) re liquidator's duty to locate persons, and added new Subsec. (g) re court authority to
find that notice by publication is sufficient notice in certain events.
Sec. 38a-925. (Formerly Sec. 38-443). Duties of agents. Penalty. (a) Every person who receives notice in the form prescribed in section 38a-924, that an insurer which
he represents as an agent is the subject of a liquidation order, shall within thirty days
of such notice provide to the liquidator, in addition to the information he may be required
to provide pursuant to section 38a-908, the information in the agent's records related
to any policy issued by the insurer through the agent, and if the agent is a general agent,
the information in the general agent's records related to any policy issued by the insurer
through an agent under contract to him, including the name and address of such subagent.
A policy shall be deemed issued through an agent if the agent has a property interest in
the expiration of the policy, or if the agent has had in his possession a copy of the
declarations of the policy at any time during the life of the policy, except where the
ownership of the expiration of the policy has been transferred to another. The written
notice shall include the name and address of the insurer, the name and address of the
agent, identification of the policy impaired and the nature of the impairment including
termination of coverage, as described in section 38a-921. Notice by a general agent
satisfies the notice requirement for any agents under contract to him. Each agent obligated to give notice under this section shall file a report of compliance with the liquidator.
(b) Any agent failing to give notice or file a report of compliance as required in
subsection (a) of this section may be subject to payment of a penalty of not more than
one thousand dollars and may have his license suspended, said penalty to be imposed
after a hearing held by the commissioner.
(P.A. 79-382, S. 23; P.A. 92-93, S. 18.)
History: Sec. 38-443 transferred to Sec. 38a-925 in 1991; P.A. 92-93 amended Subsec. (a) to increase the number of
days to respond to notice of liquidation from fifteen days to thirty days and to make additional provision for policy
information and deleted Subsec. (c) which had authorized liquidator to waive notification duties.
Sec. 38a-926. (Formerly Sec. 38-444). Actions by and against liquidator. (a)
Upon issuance of an order appointing a liquidator of a domestic insurer or of an alien
insurer domiciled in this state, no action at law or equity shall be brought against the
insurer or liquidator, whether in this state or elsewhere, nor shall any such existing
actions be maintained or further proceedings presented after issuance of such order. The
courts of this state shall give full faith and credit to injunctions against new actions
against the liquidator or the company or the continuation of existing actions against the
liquidator or the company, when such injunctions are included in an order to liquidate
an insurer issued pursuant to corresponding provisions in other states. Whenever in the
liquidator's judgment, protection of the estate of the insurer necessitates intervention
in an action against the insurer that is pending outside this state, he may intervene in
the action. The liquidator may defend any action in which he intervenes under this
section at the expense of the estate of the insurer.
(b) The liquidator may, upon or after an order for liquidation, within two years or
such time in addition to two years as applicable law may permit, institute an action or
proceeding on behalf of the estate of the insurer upon any cause of action against which
the period of limitation fixed by applicable law has not expired at the time of the filing
of the petition upon which such order is entered. Where, by any agreement, a period of
limitation is fixed for instituting a suit or proceeding upon any claim, or for filing any
claim, proof of claim, proof of loss, demand, notice, or the like, or where in any proceeding, judicial or otherwise, a period of limitation is fixed, either in the proceeding or by
applicable law, for taking any action, filing any claim or pleading, or doing any act, and
where in any such case the period had not expired at the date of the filing of the petition,
the liquidator may, for the benefit of the estate, take any such action or do any such act,
required of or permitted to the insurer, within a period of one hundred eighty days
subsequent to the entry of an order for liquidation, or within such further period as is
shown to the satisfaction of the court not to be unfairly prejudicial to the other party.
(c) No statute of limitations or defense of laches shall run with respect to any action
against an insurer between the filing of a petition for liquidation against an insurer and
the denial of the petition. Any action against the insurer that might have been commenced
when the petition was filed may be commenced for at least sixty days after the petition
is denied.
(d) Any guaranty association or foreign guaranty association shall have standing
to appear in any court proceeding concerning the liquidation of an insurer if such association is or may become liable to act as a result of the liquidation.
(P.A. 79-382, S. 24; P.A. 92-93, S. 19.)
History: Sec. 38-444 transferred to Sec. 38a-926 in 1991; P.A. 92-93 made technical corrections for statutory consistency.