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| Public Act 100-0089 | ||||
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AN ACT concerning regulation.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 5. The Illinois Insurance Code is amended by | ||||
changing Sections 189 and 204 as follows:
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(215 ILCS 5/189) (from Ch. 73, par. 801)
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Sec. 189. Injunction. The court shall have jurisdiction, | ||||
upon, or at any time after the
filing
of the complaint to issue | ||||
an injunction restraining such company and its
officers, | ||||
agents, directors, employees and all other persons from
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transacting any company business or disposing of its property | ||||
until the
further order of the court. The court may also | ||||
restrain all persons,
companies, and
entities from bringing or | ||||
further prosecuting all actions and proceedings at
law or in | ||||
equity or otherwise, whether in this State or elsewhere, | ||||
against the
company or its assets or property or the Director | ||||
except insofar as those
actions or proceedings arise in or are | ||||
brought in the conservation,
rehabilitation, or liquidation | ||||
proceeding. The court may issue such other
injunctions or
enter | ||||
such other orders as may be deemed necessary to prevent | ||||
interference
with the proceedings, or with the Director's | ||||
possession and control or
title, rights or interests as herein | ||||
provided or to prevent interference
with the conduct of the | ||||
business by the Director, and may issue such other
injunctions | ||
or enter such other orders as may be deemed necessary to
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prevent waste of assets or the obtaining, asserting, or | ||
enforcing of
preferences, judgments,
attachments, or other | ||
like liens, including common law retaining
liens, or
the making | ||
of any levy against such
company or its property and assets | ||
while in the possession and control of
the Director. The court | ||
may issue any other injunctions or enter any other
orders that | ||
are necessary to protect enrollees in accordance with | ||
subsection
(c) of Section 5-6 of the Health Maintenance | ||
Organization Act. Any
injunction
issued under this article may | ||
be served and
enforced as in other civil proceedings, but no | ||
bond or other security shall
be required of the plaintiff, | ||
either for costs or for any injunction. The provisions of this | ||
Section are subject to the exclusion set forth in subsection | ||
(o) of Section 204 of this Article.
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(Source: P.A. 88-297; 89-206, eff. 7-21-95.)
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(215 ILCS 5/204) (from Ch. 73, par. 816)
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Sec. 204. Prohibited and voidable transfers and liens.
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(a)(1) A preference is a transfer of any of the property of | ||
a company
to or for the benefit of a creditor, for or on | ||
account of an antecedent
debt, made or suffered by the company | ||
within 2 years before
the
filing of
a complaint under this | ||
Article, the effect of which may be to
enable the creditor to | ||
obtain a greater percentage of this debt than
another creditor | ||
of the same class would receive.
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(2) Any preference may be avoided by the Director as | ||
rehabilitator,
liquidator, or conservator if:
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(A) the company was insolvent at the time of the | ||
transfer; and
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(B) the transfer was made within 4 months before the | ||
filing of the
complaint; or
the creditor receiving it was | ||
(i) an officer, or any employee or
attorney or other person | ||
who was in fact in a position of comparable
influence in | ||
the company to an officer whether or not that person held
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such a position, (ii) any shareholder holding, directly or | ||
indirectly, more than
5% of any class of any equity | ||
security issued by the company, or (iii) any other
person, | ||
firm, corporation,
association, or aggregation of | ||
individuals with whom the company did not
deal at arm's | ||
length.
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(3) Where the preference is voidable, the Director as | ||
rehabilitator,
liquidator, or conservator may recover the | ||
property or, if it has been
converted, its value from any | ||
person who has received or converted the
property; except where | ||
a bona fide purchaser or lienor has given less than
fair | ||
equivalent value, the purchaser or lienor shall have 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 lien or title | ||
to be preserved for the benefit of the
estate, in which event | ||
the lien or title shall pass to the Director as
rehabilitator | ||
or liquidator.
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(b) (1) A transfer of property other than real property | ||
shall be 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
could become | ||
superior to the rights of the transferee.
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(2) A transfer of real property shall be deemed to be made | ||
or suffered
when it becomes so far perfected that no subsequent | ||
bona fide purchaser
from the company could obtain rights | ||
superior to the rights of the transferee.
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(3) A transfer that creates an equitable lien shall not be | ||
deemed to be
perfected if there are available means by which a | ||
legal lien could be created.
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(4) A transfer not perfected before the filing of a | ||
complaint shall
be deemed to be made immediately before the | ||
filing of the complaint.
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(5) The provisions of this subsection apply whether or not | ||
there are or
were creditors who might have obtained liens or | ||
persons who might have
become bona fide purchasers.
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(c) For purposes of this Section:
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(1) A lien obtainable by legal or
equitable proceedings | ||
upon a simple contract is one arising in the ordinary
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course of the 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 that, under applicable law, are given a
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special priority over other liens that are prior in time.
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(2) A lien obtainable by legal or equitable proceedings | ||
could become
superior to the rights of a transferee, or a | ||
purchaser could obtain rights
superior to the rights of a | ||
transferee within the meaning of subsection (b)
of this | ||
Section, if such consequences would 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. A lien
could | ||
not, however, become superior and a purchase could not | ||
create
superior rights for the purpose of subsection (b) of | ||
this Section through any
acts subsequent to an obtaining of | ||
the lien or subsequent to a
purchase that requires the | ||
agreement or concurrence of any third party or
that | ||
requires any further judicial action or ruling.
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(d) A transfer of property for or on account of a new and
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contemporaneous consideration which is deemed under subsection | ||
(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'
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rights are performed within 21 days or any period expressly | ||
allowed
by the law, whichever is less. A transfer to secure a | ||
future loan, if the
loan is actually made, or a transfer that | ||
becomes security for a future
loan, shall have the same effect | ||
as a transfer for or on account of a new
and contemporaneous | ||
consideration.
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(e) If any lien deemed voidable under part (2) of | ||
subsection
(a) 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 a company
before | ||
the filing of a complaint under this Article, the indemnifying
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transfer or lien shall also be deemed voidable.
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(f) The property affected by any lien deemed voidable under | ||
subsections
(a) and (e) of this Section shall be discharged | ||
from the lien, and that
property and any of the indemnifying | ||
property transferred to or for the
benefit of a surety shall | ||
pass to the Director as rehabilitator or
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 Director as
rehabilitator | ||
or liquidator.
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(g) The court shall have summary jurisdiction over any | ||
proceeding by the
Director as rehabilitator, liquidator, or | ||
conservator to hear and determine
the rights of any parties | ||
under this Section. Reasonable notice of any
hearings in the | ||
proceeding shall be given to all parties in interest,
including | ||
the obligee of a releasing bond or other life 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 application of any party in interest,
shall in the | ||
same proceeding ascertain the value of the property or lien,
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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 | ||
Director as rehabilitator, liquidator, or
conservator, within | ||
such reasonable times as the court shall fix.
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(h) The liability of the surety under the releasing bond or | ||
other similar
obligation shall be discharged to the extent of | ||
the value of the
indemnifying property recovered or the | ||
indemnifying lien nullified and
avoided by the Director as
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rehabilitator, liquidator, or conservator. Where the property | ||
is retained
under subsection (g) of this Section, the liability | ||
shall be discharged to
the extent of the amount paid to the
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Director as rehabilitator, liquidator, or conservator.
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(i) If a creditor has been preferred and thereafter in good | ||
faith gives
the company further credit without security of any | ||
kind, for property which
becomes a part of the company's | ||
estate, the amount of the new credit
remaining unpaid at the | ||
time of the petition may be set off against the
preference | ||
which would otherwise be recoverable from the creditor.
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(j) If a company shall, directly or indirectly, within 4 | ||
months
before the filing of a complaint under this Article, or | ||
at any time in
contemplation of such a proceeding, pay money or | ||
transfer property to any
attorney for services rendered or to | ||
be rendered, the transactions may be
examined by the court on | ||
its own motion or shall be examined by the court
on petition of | ||
the
Director as rehabilitator, liquidator, or conservator 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 Director as rehabilitator,
liquidator, or conservator | ||
for the benefit of the estate provided that where
the attorney | ||
is in a position of influence in the company or an affiliate
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thereof payment of any money or the transfer of any property to | ||
the
attorney for services rendered or to be rendered shall be | ||
governed by
item (B) of part (2) of subsection (a) of this | ||
Section.
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(k) (1) An officer, director, manager, employee,
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shareholder,
member, subscriber,
attorney, or other person | ||
acting on behalf of the company who
knowingly
participates in | ||
giving any preference when that officer, director, manager,
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employee,
shareholder, member, subscriber, attorney, or other | ||
person has reasonable
cause to believe the company is or is | ||
about to become insolvent at the time
of the preference shall | ||
be personally liable to the Director as
rehabilitator, | ||
liquidator, or conservator for the amount of the preference.
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There is a reasonable cause to so believe
if the transfer was | ||
made within 4 months before the date of filing of the
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complaint.
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(2) A person receiving any property from the company or the
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benefit
thereof as a preference voidable under subsection (a) | ||
of this Section
shall be personally liable therefor and shall | ||
be bound to account to the
Director as rehabilitator, | ||
liquidator, or conservator.
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(3) Nothing in this Section shall prejudice any other claim | ||
by the
Director as rehabilitator, liquidator, or conservator | ||
against any person.
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(l) For purposes of this Section, the company is presumed | ||
to have been
insolvent on and during the 4 month period | ||
immediately preceding the date
of the filing of the complaint.
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(m) The Director as rehabilitator, liquidator, or | ||
conservator may not
avoid a transfer under this Section to the | ||
extent that the transfer was:
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(A) Intended by the company and the creditor to or for | ||
whose benefit
the transfer was made to be a contemporaneous | ||
exchange for new value given
to the company, and was
in | ||
fact a substantially contemporaneous exchange; or
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(B) In payment of a debt incurred by the company in the | ||
ordinary course
of business or financial affairs of the | ||
company and the transferee;
made in the ordinary course of | ||
business or financial affairs of the
company and the | ||
transferee; and
made according to ordinary business terms; | ||
or
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(C) In the case of a transfer by a company where the | ||
Director has determined that an event described in Section | ||
35A-25 or 35A-30 has occurred, specifically approved by the | ||
Director in writing pursuant to this subsection, whether or | ||
not the company is in receivership under this Article. Upon | ||
approval by the Director, such a transfer cannot later be | ||
found to constitute a prohibited or voidable transfer based | ||
solely upon a deviation from the statutory payment | ||
priorities established by law for any subsequent | ||
receivership; or .
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(D) Of money or other property arising under or in | ||
connection with any Federal Home Loan Bank security | ||
agreement or any pledge, security, collateral or guarantee | ||
agreement, or any other similar arrangement or credit | ||
enhancement relating to a Federal Home Loan Bank security | ||
agreement. | ||
(n) The Director as rehabilitator, liquidator, or | ||
conservator may avoid
any transfer of or lien upon the property | ||
of a company that the estate of the
company or a policyholder, | ||
creditor, member, or stockholder of the company
may have | ||
avoided, and the Director as rehabilitator, liquidator, or | ||
conservator
may recover and collect the property so transferred | ||
or its value from the
person to whom it was transferred unless | ||
the property was transferred to a
bona fide holder for value | ||
before the filing of the complaint. The Director
as | ||
rehabilitator, liquidator, or conservator shall be deemed a | ||
creditor for
purposes of pursuing claims under the Uniform | ||
Fraudulent Transfer Act.
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(o) Notwithstanding any provision of this Article to the | ||
contrary, a Federal Home Loan Bank shall not be stayed, | ||
enjoined, or prohibited from exercising or enforcing any right | ||
or cause of action regarding collateral pledged under any | ||
security agreement or any pledge, security, collateral or | ||
guarantee agreement, or any other similar arrangement or credit | ||
enhancement relating to a Federal Home Loan Bank security | ||
agreement. | ||
(Source: P.A. 93-1083, eff. 2-7-05.)
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Section 99. Effective date. This Act takes effect upon | ||
becoming law.
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