Rutgers Law

New Jersey Statutes, Title: 17B, INSURANCE

    Chapter 32:

      Section: 17B:32-55: Transfers, obligations deemed fraudulent.

          25. a. Every transfer made or suffered and every obligation incurred by an insurer within one year prior to the filing of a successful petition for rehabilitation or liquidation under this act shall be fraudulent as to then existing and future creditors if made or incurred without fair consideration, or with actual intent to hinder, delay or defraud either existing or future creditors. A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under this act, which is fraudulent under this section, may be avoided by the receiver, except as to a person who in good faith is a purchaser, lienholder or obligee for a present fair equivalent value, and except that any purchaser, lienholder or obligee, who in good faith has given a consideration which is less than fair for that transfer, lien or obligation, may retain the property, lien or obligation as security for repayment. The court may, on due notice, order any such transfer or obligation to be preserved for the benefit of the estate, and in that event, the receiver shall succeed to and may enforce the rights of the purchaser, lienholder or obligee.

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 under subsection c. of section 27 of this act.

(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 insurer could obtain rights superior to the rights of the transferee.

(3) A transfer which 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) Any transfer not perfected prior to the filing of a petition for liquidation shall be deemed to be made immediately before the filing of the successful petition.

(5) The provisions of this subsection apply whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers.

c. Any transaction of the insurer with a reinsurer shall be deemed fraudulent and may be avoided by the receiver under subsection a. of this section if:

(1) The transaction consists of the termination, adjustment or settlement of a reinsurance contract in which the reinsurer is released from any part of its duty to pay the originally specified share of losses that had occurred prior to the time of the transactions, unless the reinsurer gives a present fair equivalent value for the release; and

(2) Any part of the transaction took place within one year prior to the date of filing of the petition through which the receivership was commenced.

d. Every director, officer, employee, stockholder, policyholder and any other person acting on behalf of the insurer who is concerned in any fraudulent transfer and every person receiving any property from the insurer or any benefit thereof which is a fraudulent transfer under subsection a. of this section shall be personally liable therefor and shall be bound to account to the liquidator.

e. (1) A receiver for an insurer-member subject to a delinquency shall not void a transfer made to a federal home loan bank provided that the transfer:

(a) is made in the ordinary course of business and in compliance with the advance agreement with that federal home loan bank; and

(b) is valid pursuant to State law and the "Federal Home Loan Bank Act" (12 U.S.C. s.1421 et seq.).

(2) A receiver shall not void a redemption or repurchase of any stock or equity securities made by the federal home loan bank if the redemption or repurchase: (a) is made within 12 months of the commencement of the delinquency proceeding; or (b) has received prior approval of the receiver.

(3) A receiver may void any transfer if the transfer is made with actual intent to hinder, delay, or defraud the insurer-member, a receiver appointed for the insurer-member, or existing or future creditors.

f. Following the appointment of a receiver for an insurer-member and upon request of the receiver, the federal home loan bank shall, within 10 days of that request, provide a process and establish a timeline for:

(1) the release of collateral that exceeds the lending value required to support secured obligations remaining after a repayment of advances, as determined in accordance with the federal home loan bank security agreement;

(2) the release of any collateral remaining in the federal home loan bank's possession following repayment of all outstanding secured obligations in full;

(3) the payment of fees and the operation of deposits and other accounts with the federal home loan bank; and

(4) the possible redemption or repurchase of federal home loan bank stock or excess stock of any class that an insurer-member is required to own.

g. Upon the request of the receiver for an insurer-member, the federal home loan bank shall provide any available options for the insurer-member to renew or restructure an advance to defer associated prepayment fees, to the extent that market conditions, the terms of the advance outstanding to the insurer-member, the applicable policies of the federal home loan bank, and compliance with the "Federal Home Loan Bank Act" (12 U.S.C. s.1421 et seq.) and corresponding regulations permit.

h. Nothing in this section shall affect the receiver's rights pursuant to 12 C.F.R. s.1266.4 regarding advances to an insurer-member in delinquency proceedings.

L.1992,c.65,s.25; amended 2023, c.172, s.7.

This section added to the Rutgers Database: 2024-03-04 16:44:07.

Older versions of 17b:32-55 (if available):

Court decisions that cite this statute: CLICK HERE.