Section 180C: Domestic companies; liquidation proceedings; approval of proposal to distribute; notice of application
Section 180C. If the commissioner deems that a domestic company which is the subject of a rehabilitation proceeding under section one hundred and eighty B, or which may properly be the subject of such a proceeding for any cause referred to in said section, hereinafter referred to as the company, is insolvent and that it should be liquidated, he shall make application to the court for a decree authorizing him to liquidate the company. The court, after notice to all known creditors and stockholders of the company and a full hearing, may order its liquidation and appoint the commissioner as permanent receiver thereof. The pertinent provisions of section six and of section one hundred and eighty B shall apply in case of any application under this section.
Upon the entry of a decree ordering liquidation of a company the receiver shall proceed forthwith to liquidate the business thereof. Subject to the approval of the court, he may sell or otherwise dispose of the real and personal property, or any part thereof, and sell or compromise all choses in action, of the company. He shall endeavor to obtain a proposal from a solvent company or companies to take over or assume the policies of the company in whole or in part, or to take over or assume, on modified terms, the liabilities of the company to its policyholders, and shall submit to the court such proposal as he deems best for the interest of the policyholders. He may, with the authority of the court, which it may give if in its opinion the best proposal in the interest of the policyholders has been obtained, execute such contracts and make such assignments and transfers as may be necessary to carry such proposal into effect.
Within one hundred and twenty days of a final determination of insolvency of a company by the supreme judicial court, the receiver shall make application to the supreme judicial court for approval of a proposal to disburse assets out of such company's marshalled assets from time to time as such assets become available, to the Massachusetts Insurers Insolvency Fund, the Massachusetts Life and Health Insurance Guaranty Association, and to any similar organization in another state, such fund, association or organization hereinafter collectively referred to as Funds. The supreme judicial court may approve or disapprove the proposal in whole or in part.
Such proposal shall at least include provision for:
(a) reserving amounts for the payment of the expenses of administration and claims falling within the priorities established in section one hundred and eighty F;
(b) disbursement of the assets marshalled to date and subsequent disbursements of assets as they become available;
(c) equitable allocation of disbursements to each of the Funds entitled thereto; and
(d) the securing by the receiver from each of the Funds entitled to disbursements an agreement to return to the receiver such assets previously disbursed as may be required to pay claims of secured creditors and claims falling within the priorities established in section one hundred and eighty F. No bond shall be required of any such Fund.
The receiver's proposal shall provide for disbursements to the Funds in amounts at least equal to the payments made or to be made thereby for which such Funds could assert claims against the receiver, and shall further provide that if the assets available for disbursement from time to time do not equal or exceed the amount of such payments made or to be made by the Funds then disbursements shall be in the amount of available assets.
Notice of such application shall be given to the Funds in and to the commissioners of insurance of each of the states in which the insurer was doing business. Any such notice shall be deemed to have been given when deposited in the United States mails, first class postage prepaid, at least thirty days prior to submission of such application to the supreme judicial court. Action on the application may be taken by the supreme judicial court provided the above required notice has been given and the proposal complies with this section.
The rights and liabilities of the company and of its creditors, except those holding contingent claims, and of its policyholders, stockholders or members, and of all other persons interested in its assets, shall, unless otherwise ordered by the court, be fixed as of the date of the decree ordering liquidation. The rights of claimants holding contingent claims shall be determined as provided in sections one hundred and eighty G and one hundred and eighty H.
Mutual debts or mutual credits, whether arising out of one or more contracts between an insolvent insurer and another insurer, in connection with any action or proceeding under this chapter shall be set off and the balance shall be allowed or paid except as hereinafter provided. No set off shall be allowed in favor of any insurer where:
(1) the obligation of the insolvent insurer to the other insurer would not, as of the date of the filing of the petition for receivership, entitle the other insurer to share as a claimant in the assets of the insolvent insurer;
(2) the obligation of the insolvent insurer to the other insurer was purchased by or transferred to the other insurer with a view to its being used as a set off;
(3) the obligation of the insolvent insurer is owed to an affiliate of such insurer, or any other entity or association other than the insurer;
(4) the obligation of the insurer is owed to an affiliate of the insolvent insurer or any other entity or association other than the insolvent insurer;
(5) the obligation of the insurer is to pay an assessment levied against the members or subscribers of the insolvent insurer or is to pay a balance upon a subscription to the capital stock of the insolvent insurer or is any other way in the nature of a capital contribution; or
(6) the obligations between the insurer and the insolvent insurer arise from business where either the insurer or the insolvent insurer has assumed risks and obligations from the other party and then has ceded back to the party substantially the same risks and obligations.