1. No insurer shall make any transfer of or create any lien upon any of its property
with the intent of giving to or enabling any creditor or policyholder to obtain a
greater percentage of his or her debt than any other creditor or policyholder of the
2. Any transfer of, or lien upon, any property of any insurer made or created within
4 months prior to the filing of a petition for an order to show cause under this chapter,
which gives to any creditor or policyholder or enables the creditor or policyholder
to obtain a greater percentage of his or her debt than any other creditor or policyholder
in the same class, and which is accepted by a creditor or policyholder having reasonable
cause to believe that such a preference will occur, is voidable. Where the preference consists of a transfer, such period of 4 months shall not expire
until 4 months after the date of the recording or registering of the transfer if by
law such recording or registering is required.
3. Every director, officer, employee, stockholder, member or any other person acting
on behalf of such insurer, who, within 2 years prior to the filing of a petition for
an order to show cause against such insurer under this chapter, knowingly participates
in the making of any transfer or the creation of any lien prohibited by subsection
1, and every person receiving any property of, or cash surrender from, such insurer
or the benefit thereof as a result of a transaction voidable under subsection 2, shall
be jointly and severally liable therefor and shall be bound to account to the Commissioner
as receiver, rehabilitator, liquidator or conservator, as the case may be.
4. The Commissioner as receiver, rehabilitator, liquidator or conservator may avoid
any transfer of or lien upon the property of an insurer which any creditor, stockholder
or member of such insurer might have avoided and may recover the property so transferred
or its value from the person to whom it was transferred unless the person was a bona
fide holder for value prior to the date of the entry of an order to show cause under
this chapter. Such property may be recovered or its value collected from whoever may have received
it except a bona fide holder for value.
FindLaw Codes may not reflect the most recent version of the law in your jurisdiction. Please verify the status of the code you are researching with the state legislature or via Westlaw before relying on it for your legal needs.
Was this helpful?
Response sent, thank you
Welcome to FindLaw's Cases & Codes
A free source of state and federal court opinions, state laws, and the United States Code. For more information about the legal concepts addressed by these cases and statutes, visit FindLaw's Learn About the Law.