Prohibited and voidable transfers and liens.
1. No insurer shall make any transfer of or create any lien upon any of its property with the intent of giving to or enabling any creditor or policyholder to obtain a greater percentage of his debt than any other creditor or policyholder of the same class.
2. Any transfer of, or lien upon, any property of any insurer made or created within 4 months prior to the filing of a petition for an order to show cause under this chapter, which gives to any creditor or policyholder or enables him to obtain a greater percentage of his debt than any other creditor or policyholder in the same class, and which is accepted by a creditor or policyholder having reasonable cause to believe that such a preference will occur, is voidable. Where the preference consists of a transfer, such period of 4 months shall not expire until 4 months after the date of the recording or registering of the transfer if by law such recording or registering is required.
3. Every director, officer, employee, stockholder, member or any other person acting on behalf of such insurer, who, within 2 years prior to the filing of a petition for an order to show cause against such insurer under this chapter, knowingly participates in the making of any transfer or the creation of any lien prohibited by subsection 1, and every person receiving any property of, or cash surrender from, such insurer or the benefit thereof as a result of a transaction voidable under subsection 2, shall be jointly and severally liable therefor and shall be bound to account to the Commissioner as receiver, rehabilitator, liquidator or conservator, as the case may be.
4. The Commissioner as receiver, rehabilitator, liquidator or conservator may avoid any transfer of or lien upon the property of an insurer which any creditor, stockholder or member of such insurer might have avoided and may recover the property so transferred or its value from the person to whom it was transferred unless he was a bona fide holder for value prior to the date of the entry of an order to show cause under this chapter. Such property may be recovered or its value collected from whoever may have received it except a bona fide holder for value.
Last modified: February 27, 2006