Public Act 100-0089
 
SB1297 EnrolledLRB100 09657 JLS 19826 b


  
    AN ACT concerning regulation.
  
 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:
  


 
    Section 5. The Illinois Insurance Code is amended  by 
changing Sections 189 and 204 as follows:
 



    (215 ILCS 5/189)  (from Ch. 73, par. 801)



    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

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

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. 

(Source: P.A. 88-297; 89-206, eff. 7-21-95.)

 



    (215 ILCS 5/204)  (from Ch. 73, par. 816)


    Sec. 204. Prohibited and voidable transfers and liens. 

    (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.

    (2) Any preference may be avoided by the Director as 
rehabilitator,
liquidator, or conservator if:


        (A) the company was insolvent at the time of the 
    transfer; and


        (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

    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.

    (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.

    (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.

    (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.

    (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.

    (4) A transfer not perfected before the filing of a 
complaint shall
be deemed to be made immediately before the 
filing of the complaint.

    (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.

    (c) For purposes of this Section:


        (1) A lien obtainable by legal or
equitable proceedings 
    upon a simple contract is one arising in the ordinary

    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

    special priority over other liens that are prior in time.


        (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.

    (d) A transfer of property for or on account of a new and

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'

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.

    (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

transfer or lien shall also be deemed voidable.

    (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.

    (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,

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.

    (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

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

Director as rehabilitator, liquidator, or conservator.

    (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.

    (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

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.

    (k) (1) An officer, director, manager, employee,

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,

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.

There is a reasonable cause to so believe
if the transfer was 
made within 4 months before the date of filing of the

complaint.

    (2) A person receiving any property from the company or the

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.

    (3) Nothing in this Section shall prejudice any other claim 
by the
Director as rehabilitator, liquidator, or conservator 
against any person.

    (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.

    (m) The Director as rehabilitator, liquidator, or 
conservator may not
avoid a transfer under this Section to the 
extent that the transfer was:


        (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


        (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

        (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 .

        (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.

    (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.)

 

    Section 99. Effective date. This Act takes effect upon 
becoming law.