Section 6: Injunction and appointment of receiver for domestic company; grounds
Section 6. If it appears to the commissioner that the capital of a domestic stock company other than a life company is impaired to the extent of one quarter or more on the basis fixed by sections ten to twelve, inclusive, but that the company can with safety to the public and its policyholders be permitted to continue to transact business, he shall notify the company in writing that its capital is legally subject to be made good as provided in section sixty-nine. If such a company other than a life company shall not within three months after receiving such notice satisfy the commissioner that it has fully made good its capital or reduced it as provided in section seventy-one, or, if he is satisfied that any domestic company is insolvent or in an unsound financial condition, or that its business policies or methods are unsound or improper, or that its condition or management is such as to render its further transaction of business hazardous to the public or to its policyholders or creditors, or that it is transacting business fraudulently or that it or its officers or agents have refused to submit to an examination under section four or seventy-three, or that it has attempted or is attempting to compromise with its creditors on the ground that it is financially unable to pay its claims in full, or that, when its assets are less than its liabilities, inclusive of unearned premiums but exclusive of capital, if any, it has attempted or is attempting to the disadvantage of policyholders who have sustained losses to prefer or, has preferred, by reinsurance, policyholders who have sustained no losses, he shall, except as provided in section one hundred and eighty B or one hundred and eighty C, or, if he is satisfied that any domestic company has exceeded its powers or has violated any provision of law, or that the amount of its funds, insurance in force or premiums or number of risks is deficient or that its guaranty capital under section ninety B or ninety-three or its guaranty fund under section ninety C is impaired, as set forth in sections twenty-three, seventy-four, ninety-three D and one hundred and sixteen, he may, apply to the supreme judicial court for an injunction restraining it in whole or in part from further proceeding with its business and for the appointment of a receiver or receivers. The court may issue a temporary injunction and appoint the commissioner temporary receiver forthwith and it may after a full hearing make the injunction permanent and appoint the commissioner permanent receiver to take possession of all the property and effects of the company, to settle its affairs, and to distribute its assets, subject to such rules and orders as the court may prescribe. In the case of a domestic company conducting an intrastate business only, or of a domestic company transacting business in any other reciprocal state, as defined in section one hundred and eighty A, the commissioner, instead of proceeding under this section, may institute a proceeding under section one hundred and eighty B or one hundred and eighty C.
At any time during pendency of a proceeding under this section against a domestic company transacting business in any other reciprocal state, as defined in section one hundred and eighty A for any cause other than that the company has exceeded its powers or has violated any provision of law, the commissioner may make application to the court for the termination of said proceeding and for his appointment as receiver to rehabilitate or liquidate the company as provided in and subject to section one hundred and eighty B or section one hundred and eighty C. The court may, after due notice and a full hearing, grant such application and appoint the commissioner as receiver, and thereupon he shall proceed in like manner as in a rehabilitation or liquidation proceeding instituted under said section one hundred and eighty B or one hundred and eighty C.
The appointment of a permanent receiver or receivers under this section shall terminate the liability of the company under all of its policies or contracts in force on the date of said appointment in respect to claims arising after thirty days from said date; provided, that its liability under any motor vehicle liability policy or motor vehicle liability bond, both as defined in section thirty-four A of chapter ninety, which is in force on said date, shall terminate on the effective date of the new certificate, if any, filed under section thirty-four H of said chapter ninety, or, if no certificate is filed as aforesaid, on the effective date of the revocation under said section thirty-four H of the registration of the motor vehicle or trailer covered by such policy or bond. The insured under any policy, other than a motor vehicle liability policy or motor vehicle liability bond, both as defined as aforesaid, which is in force on the thirtieth day following the date of the appointment of such receiver or receivers and which by its terms provides for a cancellation thereof either by the insured or the company shall be entitled, subject to the provisions of section forty-six, to a return premium calculated on a pro rata basis as of the thirtieth day following the date of said appointment, if he has paid the premium thereon to the company, or its agent who issued the policy or to the duly licensed insurance broker, if any, through whom the policy was negotiated; and the insured under a motor vehicle liability policy or the principal on a motor vehicle liability bond, both as defined as aforesaid, shall be entitled, subject to said section forty-six, if he has paid the premium thereon as aforesaid, to a return premium calculated on a pro rata basis as of the effective date of the new certificate, if any, filed by him under said section thirty-four H, or, if no certificate is filed as aforesaid, as of the effective date of the revocation under said section thirty-four H of the registration of the motor vehicle or trailer covered by such policy or bond. Nothing in this section shall be construed in any case to continue any policy or contract in force beyond its date of expiration, or to prohibit a cancellation thereof by the insured or by the receiver or receivers in accordance with law and its terms during the said period of thirty days or prior to the filing of a new certificate or the revocation of the registration as aforesaid, or to affect the liability of the holder of a policy or contract to pay to the receiver or receivers the full amount of the premium due on any policy or contract or the liability of a member of a mutual company, other than a life company, to pay the full amount of any valid assessment levied on its members.