The online versions of legislation provided on this website are not official. Enrolled bills are the final version passed by the Ohio General Assembly and presented to the Governor for signature. The official version of acts signed by the Governor are available from the Secretary of State's Office in the Continental Plaza, 180 East Broad St., Columbus.
|
H. B. No. 282As IntroducedAs Introduced
125th General Assembly | Regular Session | 2003-2004 |
| |
REPRESENTATIVES Flowers, Martin, Seitz, Setzer, Allen
A BILL
To amend section 3903.28 of the Revised Code to lengthen the time period during which the liquidator of an insolvent insurance company may void certain preferential transfers of property by the company to a creditor.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That section 3903.28 of the Revised Code be amended to read as follows:
Sec. 3903.28. (A)(1) A preference is a transfer of any of
the property of an insurer or of an interest in the property of an insurer to or for the benefit of a creditor,
for or on account of an antecedent debt, made or suffered by the
insurer within one year two years before the filing of a successful
complaint for liquidation under sections 3903.01 to 3903.59 of
the Revised Code, the effect of which transfer may be to enable
the creditor to obtain a greater percentage of his debt than another creditor of the same class would receive. If
a liquidation order is entered while the insurer is already subject
to a rehabilitation order, then such transfer shall be deemed
preferences if made or suffered within one year
before the filing of the successful complaint for rehabilitation,
or within two years before the filing of the successful complaint
for liquidation, whichever time is shorter date that enables the creditor to receive more than the creditor would receive if the insurer was liquidated under this chapter, the transfer had not been made, and the creditor received payment of the debt to the extent provided by the provisions of this chapter. (2) Any preference may be avoided by the liquidator if any
of the following apply: (a) The insurer was insolvent at the time of the transfer; (b) The transfer was made within four months one hundred twenty days before the
filing of the complaint date; (c) The creditor receiving it or to be benefited thereby
or his the creditor's agent acting with reference thereto had,
at the time when
the transfer was made, reasonable cause to believe that the
insurer was insolvent or was about to become insolvent; (d) The creditor receiving it was an officer, or any
of the following: (i) An officer or director of the insurer; (ii) A person, including but not limited to an employee or attorney or other person, who was in fact in a
position of comparable influence in to effect a level of control over the actions of the insurer comparable to that of an officer
or director whether or not he the person held
such position, or any excluding employees of the department of insurance and any person retained or appointed by the department to assist in the examination, supervision, or other regulation or monitoring of the insurer; (iii) A shareholder holding directly or indirectly more than
five per cent of any class of any equity security issued by the insurer, or
any; (iv) Any other person, firm, corporation, association, or aggregation of persons
with
whom the insurer did not deal at arm's length. (3) Where the preference is voidable, the liquidator may
recover the property or the value of the property from the initial transferee, and if it the property has been transferred or converted, its the liquidator may recover the property or the value of the property from
any person who has received or converted the property, except
that a bona fide purchaser or lienor who has given consideration
of less than fair equivalent value has a lien upon the property
to the extent of the consideration actually given. Where a
preference by way of lien or security title is voidable, the
court may on due notice order the such lien or title to be is preserved
for the benefit of the estate, in which event the lien or title
shall pass to the liquidator.
(4) The liquidator may not avoid a transfer under this section as provided by the following: (a) To the extent that the transfer was intended, by both the insurer and the creditor to or for whose benefit the transfer was made, to be a contemporaneous exchange for new value given to the insurer and was in fact a substantially contemporaneous exchange; (b) To the extent that the transfer was in payment of a debt incurred by the insurer in the ordinary course of business or financial affairs of the insurer and the transferee and the transfer both was made in the ordinary course of business or financial affairs of the insurer and the transferee and was made according to ordinary business terms; (c) If the transfer was made to or for the benefit of a creditor, to the extent that after the transfer the creditor gave new value to or for the benefit of the insurer not secured by an otherwise avoidable security interest, on account of which new value the insurer did not make an otherwise unavoidable transfer to or for the benefit of such creditor. (B)(1) A transfer of property other than real property is
deemed to be made or suffered when it becomes so far perfected
that no subsequent lien obtainable by legal or equitable
proceedings on a simple contract can become superior to the
rights of the transferee. (2) A transfer of real property is deemed to be made or
suffered when it becomes so far perfected that no subsequent bona
fide purchaser from the insurer can obtain rights superior to the
rights of the transferee. (3) A transfer which creates an equitable lien is not
deemed to be perfected if there are available means by which a
legal lien can be created. (4) A transfer not perfected prior to the filing of a
complaint for liquidation date is deemed to be made immediately before
the filing of the successful complaint date. (5) The provisions of division (B) of this section apply
whether or not there are or were creditors who might have
obtained liens or persons who might have become bona fide
purchasers. (C)(1) A lien obtainable by legal or equitable proceedings
upon a simple contract is one arising in the ordinary course of
such proceedings upon the entry or docketing of a judgment or
decree, or upon attachment, garnishment, execution, or like
process, whether before, upon, or after judgment or decree and
whether before or upon levy. It does not include liens which
under applicable law are given a special priority over other
liens which are prior in time. (2) A lien obtainable by legal or equitable proceedings is
superior to the rights of a transferee, or a purchaser may obtain
rights superior to the rights of a transferee within the meaning
of division (B) of this section, if such consequences follow only
from the lien or purchase itself, or from the lien or purchase
followed by any step wholly within the control of the respective
lienholder or purchaser, with or without the aid of ministerial
action by public officials. Such a lien is not, however,
superior and such a purchase does not create superior rights for
the purpose of division (B) of this section through any acts
subsequent to the obtaining of such a lien or subsequent to such
a purchase which require the agreement or concurrence of any
third party or which require any further judicial action or
ruling. (D) A transfer of property for or on account of a new and
contemporaneous consideration that is deemed under division (B)
of this section to be made or suffered after the transfer because
of delay in perfecting it does not thereby become a transfer for
or on account of an antecedent debt if any acts required by the
applicable law to be performed in order to perfect the transfer
as against liens or bona fide purchasers' rights are performed
within twenty-one days or any period expressly allowed by the
law, whichever is less. A transfer to secure a future loan, if
such a loan is actually made, or a transfer which becomes
security for a future loan, has the same effect as a transfer for
or on account of a new and contemporaneous consideration. (E) If any lien deemed voidable under division (A)(2) of
this section has been dissolved by the furnishing of a bond or
other obligation, the surety on which has been indemnified
directly or indirectly by the transfer of or the creation of a
lien upon any property of an insurer before the filing of a
complaint under sections 3903.01 to 3903.59 of the Revised Code
which results in a liquidation order date, the indemnifying transfer
or lien is also deemed voidable. (F) The property affected by any lien deemed voidable
under divisions (A) and (E) of this section is discharged from
such lien, and that property and any of the indemnifying property
transferred to or for the benefit of a surety passes to the
liquidator, except that the court may on due notice order any
such lien to be preserved for the benefit of the estate and the
court may direct that such conveyance be executed as may be
proper or adequate to evidence the title of the liquidator. (G) The Franklin county court of common pleas has
exclusive jurisdiction of any proceeding by the liquidator to
hear and determine the rights of any parties under this section.
Reasonable notice of any hearing in the proceeding shall be given
to all parties in interest, including the obligee of a releasing
bond or other like obligation. Where an order is entered for the
recovery of indemnifying property in kind or for the avoidance of
an indemnifying lien, the court, upon motion of any party in
interest, shall may in the same proceeding ascertain the value of the
property or lien, and if the value is less than the amount for
which the property is indemnity or than the amount of the lien,
the transferee or lienholder may elect to retain the property or
lien upon payment of its value, as ascertained by the court, to
the liquidator, within such reasonable times as the court shall
fix. (H) The liability of a surety under a releasing bond or
other like obligation shall be discharged to the extent of the
value of the indemnifying property recovered or the indemnifying
lien nullified and avoided by the liquidator, or where the
property is retained under division (G) of this section to the
extent of the amount paid to the liquidator. (I) If a creditor has been preferred, and afterward in
good faith gives the insurer further credit without security of
any kind, for property which becomes a part of the insurer's
estate, the amount of the new credit remaining unpaid at the time
of the complaint may be set off against the preference which
would otherwise be recoverable from him. (J) If an insurer shall, directly or indirectly, within
four months one hundred twenty days before the filing of a successful complaint for
liquidation under sections 3903.01 to 3903.59 of the Revised
Code date, or at any time in contemplation of a proceeding to
liquidate it, pay money or transfer property to an
attorney-at-law for services rendered or to be rendered, the
transaction may be examined by the court on its own motion or
shall be examined by the court on motion of the liquidator and
shall be held valid only to the extent of a reasonable amount to
be determined by the court, and the excess may be recovered by
the liquidator for the benefit of the estate provided that where
the attorney is in a position of influence in the insurer or an
affiliate thereof, payment of any money or the transfer of any
property to the attorney-at-law for services rendered or to be
rendered shall be governed by the provisions of division (A)(2)
of this section.
(K)(1) Every officer, manager, employee, shareholder,
member, subscriber, attorney, or any other person acting on
behalf of the insurer who knowingly participates in giving any
preference when he has reasonable cause to
believe the insurer is or is about to become insolvent at the time of the
preference shall be personally liable to the liquidator for the amount of
the preference. It shall be presumed that there is reasonable
cause to so believe if the transfer was made within four months
before the date of filing of the successful complaint for
liquidation.
(2)(J) As to every transfer subject to avoidance under this section:
(1) Every person receiving any property from the insurer
or the benefit thereof as a preference voidable under division
(A) of this section shall be personally liable for the property
and shall be bound to account to the liquidator. (3)(2) The liquidator has the burden of proving that a transfer under division (A)(2) of this section is voidable, and the person against which recovery or voidability is sought has the burden of proving that a transfer under division (A)(4) of this section is not voidable.
(3) The fact that the insurer was under examination, supervision, or other regulatory oversight by the department of insurance, or that the department may have acquiesced in or approved any payments made by the insurer, does not effect or otherwise create a defense to avoidance of a transfer voidable under this section. (K) Nothing in this division shall be construed to
prejudice any other claim by the liquidator against any person.
(L) As used in this section: (1) "Complaint date" means the date on which a complaint is filed by the superintendent of insurance seeking the liquidation of an insurer, if the complaint results in an order of liquidation. If the insurer is placed in rehabilitation, which rehabilitation is later converted to liquidation, the "complaint date" is the date on which the original complaint seeking rehabilitation was filed. (2) "New value" means money or money's worth in goods, services, new credit, or the release by a transferee of property previously transferred to the transferee in a transaction that is neither void nor voidable by the liquidator under any applicable law, including the proceeds of the transferred property, but does not include an obligation substituted for an existing obligation.
Section 2. That existing section 3903.28 of the Revised Code is hereby repealed.
|
|