Texas Insurance Code - Not Codified - Section 21A.154. Powers Of Liquidator
Legal Research Home >
Texas Lawyer > Insurance Code - Not Codified > Texas Insurance Code - Not Codified - Section 21A.154. Powers Of Liquidator
Sec. 21A.154. POWERS OF LIQUIDATOR. (a) The liquidator may
appoint a special deputy or deputies to act for the liquidator under
this chapter and employ or contract with legal counsel, actuaries,
accountants, appraisers, consultants, clerks, assistants, and
other personnel the liquidator may deem necessary to assist in the
liquidation. A special deputy has all powers of the liquidator
granted by this section, unless specifically limited by the
liquidator, and serves at the pleasure of the liquidator. A special
deputy or any other person with whom the liquidator contracts under
this subsection may act on behalf of the commissioner only in the
commissioner's capacity as liquidator. Any person with whom the
liquidator contracts is not considered to be an agent of the state
and any contract under this subsection is not a contract with the
state. The provisions of any law governing the procurement of goods
and services by the state do not apply to any contract entered into
by the commissioner as liquidator. This subsection does not waive
any immunity granted by Section 21A.014 or create any cause of
action against the state.
(b) The liquidator may determine the reasonable
compensation for any special deputies, employees, or contractors
retained by the liquidator as provided in Subsection (a) and pay
compensation in accordance with Section 21A.015.
(c) The liquidator may appoint, with the approval of the
receivership court, an advisory committee of policyholders,
claimants, or other creditors, including guaranty associations, if
the committee be deemed necessary. The advisory committee serves
at the pleasure of the liquidator, and the decision to appoint an
advisory committee is at the sole discretion of the liquidator. The
advisory committee serves without compensation or reimbursement
for expenses. The liquidator or the receivership court in
liquidation proceedings conducted under this chapter may not
appoint another committee of any nature.
(d) The liquidator may hold hearings, subpoena witnesses to
compel their attendance, administer oaths, examine any person under
oath, compel any persons to subscribe to their testimony after it
has been correctly reduced to writing, and, in connection with a
power under this subsection, require the production of any books,
papers, records, or other documents that the liquidator deems
relevant to the inquiry.
(e) The liquidator may audit the books and records of all
agents of the insurer to the extent that those books and records
relate to the business activities of the insurer.
(f) The liquidator may collect all debts and moneys due and
claims belonging to the insurer, wherever located, and may:
(1) institute action in other jurisdictions, in order to
forestall garnishment and attachment proceedings against the
debts;
(2) do other acts as necessary or expedient to collect,
conserve, or protect the insurer's property, including the power to
sell, compromise, or assign debts for purposes of collection upon
such terms and conditions as the liquidator deems consistent with
this chapter; and
(3) pursue any creditor's remedies available to enforce the
insurer's claims.
(g) The liquidator may conduct public and private sales of
the property of the insurer.
(h) The liquidator may use property of the estate of an
insurer under a liquidation order to transfer to a solvent assuming
insurer policy obligations or the insurer's obligations under
surety bonds and surety undertakings as well as collateral held by
the insurer with respect to the reimbursement obligations of the
principals under those surety bonds and surety undertakings, if the
transfer can be arranged without prejudice to applicable priorities
under Section 21A.301. If all insureds, principals, third-party
claimants, and obligees under the policies, surety bonds, and
surety undertakings consent or if the receivership court so orders,
the estate has no further liability under the transferred policies,
surety bonds, or surety undertakings after the transfer is made.
(i) The liquidator may, subject to Subsection (x), acquire,
hypothecate, encumber, lease, improve, sell, transfer, abandon, or
otherwise dispose of or deal with any property of the estate at its
market value or upon terms and conditions that are fair and
reasonable. The liquidator also has the power to execute,
acknowledge, and deliver any and all deeds, assignments, releases,
and other instruments necessary or proper to effectuate any sale of
property or other transaction in connection with the liquidation.
(j) The liquidator may borrow money on the security of the
property of the estate or without security and execute and deliver
all documents necessary to that transaction for the purpose of
facilitating the liquidation. Any funds borrowed under this
subsection may be repaid as an administrative expense and have
priority over any other claims in Class 1 under the priority of
distribution.
(k) The liquidator may enter into contracts as necessary to
carry out the order to liquidate and, subject to the provisions of
Section 21A.013, may assume or reject any executory contract or
unexpired lease to which the insurer is a party.
(l) The liquidator may continue to prosecute and institute
in the name of the insurer or in the liquidator's own name any and
all suits and other legal proceedings, in this state or elsewhere,
and abandon the prosecution of claims the liquidator deems
unprofitable to pursue further. If the insurer is dissolved under
Section 21A.153, the liquidator has the power to apply to any court
in this state or elsewhere for leave to substitute the liquidator
for the insurer as a party.
(m) The liquidator may prosecute any action that may exist
on behalf of the creditors, members, policyholders, shareholders of
the insurer, or the public against any person, except to the extent
that a claim is personal to a specific creditor, member,
policyholder, or shareholder and recovery on such claim would not
inure to the benefit of the estate. This subsection does not
infringe or impair any of the rights provided to a guaranty
association pursuant to its enabling statute or otherwise.
(n) The liquidator may take possession of the records and
property of the insurer as may be convenient for the purposes of
efficient and orderly execution of the liquidation. Guaranty
associations must be allowed reasonable access to the records of
the insurer as is necessary for the guaranty associations to carry
out their statutory obligations.
(o) The liquidator may deposit in one or more banks in this
state the amounts that are required for meeting current
administration expenses and dividend distributions.
(p) The liquidator may invest all amounts not currently
needed, unless the receivership court orders otherwise.
(q) The liquidator may file any necessary documents for
record in the office of any recorder of deeds or record office in
this state or elsewhere where property of the insurer is located.
(r) The liquidator may assert all defenses available to the
insurer as against third persons, including statutes of limitation,
statutes of frauds, and the defense of usury. A waiver of any
defense by the insurer after a petition is filed under this chapter
does not bind the liquidator. When a guaranty association has an
obligation to defend any suit, the liquidator shall defer to the
association's obligation.
(s) The liquidator may exercise and enforce all the rights,
remedies, and powers of any creditor, shareholder, policyholder, or
member, including any power to avoid any transfer or lien that may
be avoidable under this chapter or otherwise.
(t) The liquidator may intervene in any proceeding wherever
instituted that might lead to the appointment of a receiver or
trustee and act as the receiver or trustee whenever the appointment
is offered.
(u) The liquidator may enter into agreements with any
receivers or commissioners of any other states.
(v) The liquidator may exercise all powers held by receivers
on August 31, 2005, or conferred on receivers after that date by the
laws of this state not inconsistent with this chapter.
(w) The liquidator is vested with all the rights of the
entity or entities in receivership.
(x) The enumeration, in this section, of the powers and
authority of the liquidator may not be construed as a limitation
upon the liquidator, nor may it exclude in any manner the right to
do other acts not specifically enumerated or otherwise provided
for, to the extent necessary or appropriate for the accomplishment
of or in aid of the purpose of liquidation.
(y) The liquidator may hypothecate, encumber, lease, sell,
transfer, abandon, or otherwise dispose of or deal with any
property of the insurer, settle or resolve any claim brought by the
liquidator on behalf of the insurer, or commute or settle any claim
of reinsurance under any contract of reinsurance, as follows:
(1) if the property or claim has a market or settlement
value that does not exceed the lesser of $1 million or 10 percent of
the general assets of the estate as shown on the receivership's
financial statements, the liquidator may take action at the
liquidator's discretion, provided that the receivership court may,
upon petition of the liquidator, increase the threshold upon a
showing that compliance with this requirement is burdensome to the
liquidator in administering the estate and is unnecessary to
protect the material interests of creditors;
(2) in all instances other than those described in
Subdivision (1), the liquidator may take the action only after
obtaining approval of the receivership court as provided by Section
21A.007;
(3) the liquidator may, at the liquidator's discretion,
request the receivership court to approve a proposed action as
provided by Section 21A.007 if the value of the property or claim
appears to be less than the threshold provided by Subdivision (1)
but cannot be ascertained with certainty, or for any other reason as
determined by the liquidator; and
(4) after obtaining approval of the receivership court as
provided in Section 21A.007, the liquidator may, subject to
Subsection (z), transfer rights to payment under ceding reinsurance
agreements covering policies to a third-party transferee.
(z) The transferee of a right to payment under Subsection
(y)(4) has the rights to collect and enforce collection of the
reinsurance for the amount payable to the ceding insurer or to its
receiver, without diminution because of the insolvency or because
the receiver has failed to pay all or a portion of the claim, based
on the amounts paid or allowed pursuant to Section 21A.211. The
transfer of the rights does not give rise to any defense regarding
the reinsurer's obligations under the reinsurance agreement
regardless of whether an agreement or other applicable law
prohibits the transfer of rights under the reinsurance agreement.
Except as provided in this subsection, any transfer of rights
pursuant to Subsection (y)(4) does not impair any rights or
defenses of the reinsurer that existed prior to the transfer or that
would have existed in the absence of the transfer. Except as
otherwise provided in this subsection, any transfer of rights
pursuant to Subsection (y)(4) does not relieve the transferee or
the liquidator from obligations owed to the reinsurer pursuant to
the reinsurance or other agreement.
(aa) The liquidator is not obligated to defend any action
against the insurer or insured. Any insureds not defended by a
guaranty association may provide their own defense, and include the
cost of the defense as part of their claims, if the defense was an
obligation of the insurer. The right of the liquidator to contest
coverage on a particular claim is preserved without the necessity
for an express reservation of rights.
Added by Acts 2005, 79th Leg., ch. 995, Sec. 1, eff. Sept. 1, 2005.
Section: 21A.102 21A.103 21A.104 21A.105 21A.151 21A.152 21A.153 21A.154 21A.155 21A.156 21A.201 21A.202 21A.203 21A.204 21A.205
Last modified: August 11, 2007
|
