Insurers Rehabilitation and Liquidation

KRS tit. XXV, ch. 304, subtit. 33

in effect

KRS 304.33-010 Title, construction, and purpose

304.33-010. Title, construction, and purpose (1) Short title. This subtitle may be cited as the "Insurers Rehabilitation and Liquidation Law." (2) Construction. No limitation of powers. This subtitle shall not be interpreted to limit the powers granted the commissioner by other provisions of the law. (3) Liberal construction. This subtitle shall be liberally construed to effect the purpose stated in subsection (4) of this section. (4) Purpose. The purpose of this subtitle is the protection of the interests of insureds, creditors, and the public generally, with minimum interference with the normal prerogative of proprietors, through: (a) Early detection of any potentially dangerous condition in an insurer, and prompt application of appropriate corrective measures, neither unduly harsh nor subject to the kind of publicity that would needlessly damage or destroy the insurer; (b) Improved methods for rehabilitating insurers, by enlisting the advice and management expertise of the insurance industry; (c) Enhanced efficiency and economy of liquidation, through the consolidation of matters relating to the liquidation under the supervision of a single court so as to avoid divergent rulings by a multiplicity of judicial tribunals and through clarification and specification of the law, to minimize legal uncertainty and litigation; (d) Equitable apportionment of any unavoidable loss; (e) Lessening the problems of interstate rehabilitation and liquidation by facilitating cooperation between states in the liquidation process, and by extension of the scope of personal jurisdiction over debtors of the insurer outside this state; (f) Regulation of the insurance business by the impact of the law relating to delinquency procedures and substantive rules on the entire insurance business; and (g) Provision for a comprehensive scheme for the supervision, rehabilitation, and liquidation of insurance companies and those subject to this subtitle as part of the regulation of the business of insurance, insurance industry, and insurers in this state. Proceedings in cases of insurer insolvency and delinquency shall be deemed an integral aspect of the business of insurance and are of vital public interest and concern. (5) All persons who voluntarily transact business with an insurer which is subsequently the subject of a delinquency proceeding under this subtitle shall be conclusively presumed to have transacted business with the intent that the provisions of this subtitle would control if there is any delinquency proceeding in this state. (6) If there is a delinquency proceeding under this subtitle, the provisions of this subtitle shall govern those proceedings, and all conflicting contractual provisions contained in any contract between the insurer which is subject to the delinquency proceeding and any third party shall be deemed subordinated to the provisions of this subtitle. However, notwithstanding the foregoing, in any delinquency proceeding commenced against an insurer after July 15, 1996, nothing in this subtitle shall be construed to subordinate or restrict the rights of parties to submit their disputes to arbitration pursuant to a contractual arbitration clause contained in a reinsurance agreement. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1428, effective July 15, 2010. -- Amended 1996 Ky. Acts ch. 183, sec. 1, effective July 15, 1996. -- Amended 1990 Ky. Acts ch. 422, sec. 1, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 1, effective June 18, 1970.

KRS 304.33-020 Persons covered

304.33-020. Persons covered The proceedings authorized by this subtitle may be applied to: (1) All domestic insurers, whether or not they purport to do business in this state; (2) All insurers who are doing, or have done, an insurance business in this state, and against whom claims arising from that business may exist now or in the future; (3) All insurers who purport to do an insurance business in this state; (4) All insurers who have insureds resident in this state; (5) All other persons organized or in the process of organizing with the intent to do an insurance business in this state; (6) All fraternal benefit societies as defined in Subtitle 29; (7) All nonprofit hospital, medical-surgical, dental, and health service corporations, as defined in Subtitle 32; (8) All health maintenance organizations as defined in Subtitle 38; (9) All limited health service organizations as defined in KRS 304.38A-010; (10) Workers' compensation self-insured groups authorized in KRS 342.350; (11) Workers' compensation self-insured groups authorized in KRS 304.50-010 and defined in KRS 304.50-015; and (12) Liability self-insurance groups defined in KRS 304.48-020 and authorized in KRS 304.48-030. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 48, sec. 1, effective July 15, 2010. -- Amended 2005 Ky. Acts ch. 7, sec. 33, effective March 1, 2005. -- Amended 2002 Ky. Acts ch. 105, sec. 30, effective July 15, 2002. -- Amended 1990 Ky. Acts ch. 422, sec. 2, effective July 13, 1990. -- Amended 1974 Ky. Acts ch. 357, sec. 21, effective June 21, 1974. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 2, effective June 18, 1970. Legislative Research Commission Note (3/1/2005). 2005 Ky. Acts ch. 7, sec. 51, states that "[t]he amendments made to KRS 304.33-020 in [2005 Ky. Acts ch. 7, sec. 33] shall apply to proceedings initiated on or after August 1, 2004."

KRS 304.33-030 Definitions for subtitle

304.33-030. Definitions for subtitle For the purposes of this subtitle: (1) "Agent" means all persons who have collected or are holding premiums or other assets of the insurer, including but not limited to brokers, intermediaries, managing general agents, underwriting managers, and reinsurance managers, and any other persons who have entered into a fiduciary relationship with the insurer subject to delinquency proceedings, including but not limited to persons holding licenses under Subtitles 9, 32, 38, and 43 of KRS Chapter 304; (2) "Ancillary state" means any state other than a domiciliary state; (3) "Court" means the Franklin Circuit Court; (4) "Creditor" is a person having any claim, whether matured or unmatured, liquidated or unliquidated, secured or unsecured, absolute, fixed or contingent; (5) "Delinquency proceeding" means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing, or conserving such insurer, and any summary proceeding under KRS 304.33-110 to 304.33-130, inclusive; (6) "Domiciliary state" means the state in which an insurer is incorporated or organized or, in the case of an alien insurer, the state in which the insurer has, at the commencement of delinquency proceedings, the largest amount of its assets held in trust and on deposit for the benefit of policyholders and creditors in the United States; (7) "Fair consideration" is given for property or an obligation: (a) When in exchange for such property or obligation, as a fair equivalent therefor, and in good faith, property is conveyed or services are rendered or obligation is incurred or an antecedent debt is satisfied; or (b) When such property or obligation is received in good faith to secure a present advance or antecedent debt in amount not disproportionately small as compared to the value of the property or obligation obtained; (8) "Federal home loan bank" means an institution chartered under the Federal Home Loan Bank Act of 1932, 12 U.S.C. sec. 1421 et seq.; (9) "Foreign country" means territory not in any state; (10) "General assets" means all property, real, personal or otherwise, not specifically mortgaged, pledged, deposited or otherwise encumbered for the security or benefit of specified persons or limited classes of persons, and as to specifically encumbered property the term includes all such property or its proceeds in excess of the amount necessary to discharge the sums secured thereby, except as otherwise expressly provided in this subtitle. Assets held in trust and on deposit for the security or benefit of all policyholders or all policyholders and creditors, in more than a single state, shall be treated as general assets; (11) "Guaranty association" means the Kentucky Insurance Guaranty Association, the Kentucky Life and Health Insurance Guaranty Association and any other similar entity now or hereafter created by the Legislature of this state for the payment of claims of insolvent insurers. "Foreign guaranty association" means any similar entities now in existence in, or hereafter created by the legislature of, any other state; (12) "Insolvency" means that the insurer is unable to pay its debts or meet its obligations as they mature or that its assets do not exceed its liabilities plus the greater of: (a) Any capital and surplus required by law to be constantly maintained; or (b) Its authorized and issued capital stock. For purposes of this subsection, "assets" includes one-half (1/2) of the maximum total assessment liability of the policyholders of the insurer, and "liabilities" includes reserves required by law. For policies issued on the basis of unlimited assessment liability, the maximum total liability, for purposes of determining solvency only, shall be deemed to be that amount that could be obtained if there were one hundred percent (100%) collection of an assessment at the rate of ten (10) mills; (13) "Insurer" has the meaning defined in Subtitle 1 of this chapter. For purposes of this subtitle, all other persons included under KRS 304.33-020 shall be deemed to be insurers; (14) "Insurer-member" means an insurer that is a member of a federal home loan bank; (15) "Preferred claim" means any claim with respect to which the law accords priority of payment from the general assets of the insurer; (16) "Premium" has the meaning set forth in Subtitle 14 of this chapter; (17) "Receiver" means receiver, liquidator, rehabilitator, or conservator, as the context requires; (18) "Reciprocal state" means any state other than this state in which in substance and effect subsection (1) of KRS 304.33-200, subsections (1) and (3) of KRS 304.33- 530, KRS 304.33-540, and KRS 304.33-560 to 304.33-590, inclusive, are in force, and in which provisions are in force requiring that the commissioner be the receiver of a delinquent insurer, and in which some provision exists for the avoidance of fraudulent conveyances and preferential transfers; (19) "Reinsurance intermediary" means any person who acts as a broker in soliciting, negotiating, or procuring the making of any reinsurance contract or binder, or acts as an agent in accepting any reinsurance contract or binder on behalf of an insurer; (20) "Secured claim": (a) Means any claim secured by mortgage, trust deed, pledge, deposit as security, escrow or otherwise, but not including special deposit claims or claims against general assets including, but not limited to, claims of setoff, counterclaim, or recoupment against obligations to pay premiums to the insurer; and (b) Shall include claims which have become liens upon specific assets by reason of judicial process, except where they have been invalidated; (21) "Special deposit claim" means any claim secured by a deposit made pursuant to law for the security or benefit of one (1) or more limited classes of persons, but not including any claim secured by general assets; and (22) "Transfer" includes the sale and every other method, direct or indirect, of disposing of or of parting with property or with an interest therein or with the possession thereof or of fixing a lien upon property or upon an interest therein, absolutely or conditionally, voluntarily or involuntarily, by or without judicial proceedings. The retention of a security title to property delivered to a debtor shall be deemed a transfer suffered by the debtor. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 61, sec. 1, effective July 14, 2022. -- Amended 2010 Ky. Acts ch. 24, sec. 1429, effective July 15, 2010. -- Amended 1990 Ky. Acts ch. 422, sec. 3, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 3, effective June 18, 1970. Legislative Research Commission Note (7/14/2022). Under the authority of KRS 7.136(1), the Reviser of Statutes has altered the format of this statute during codification to place the terms in alphabetical order. The words in the text were not changed.

KRS 304.33-040 Jurisdiction and venue

304.33-040. Jurisdiction and venue (1) Actions by commissioner. Except as provided in subsection (2) of this section, and subsection (1) of KRS 304.33-230, no delinquency proceeding shall be commenced under this subtitle by anyone other than the commissioner and no court shall have jurisdiction to entertain, hear or determine any proceeding commenced by any other person. (2) Action by judgment creditors: (a) The judgment creditors of three (3) or more unrelated judgments may commence proceedings under the conditions and in the manner prescribed in this subsection, by serving notice upon the commissioner and the insurer of intention to file a petition for liquidation under KRS 304.33-190 or 304.33- 520. Each of the judgments must: 1. Have been rendered against the insurer by a court in this state having jurisdiction over the subject matter and the insurer; 2. Have been entered more than sixty (60) days before the service of notice; 3. Not have been paid in full; 4. Not be the subject of a valid contract between the insurer and any judgment creditor for payment of the judgment, unless the contract has been breached by the insurer; and 5. Not be a judgment on which an appeal or review is pending. (b) If any one (1) of the judgments in favor of a petitioning creditor remains unpaid for thirty (30) days after service of the notice, and the commissioner has not then filed a petition for liquidation, the creditor may file in the name of the commissioner a verified petition for liquidation of the insurer under KRS 304.33-190 or 304.33-520 alleging the conditions stated in this subsection. The commissioner shall be served and joined in the action. (3) Exclusiveness of proceedings. (a) The court shall have exclusive jurisdiction to entertain, hear, or determine all matters in any way relating to any delinquency proceeding under this subtitle, including but not limited to all disputes involving purported assets of the insurer. (b) Notwithstanding the provisions of paragraph (a) of this subsection, the court may authorize the receiver to seek injunctive or other appropriate relief from other courts, either within or without this state, if, in the opinion of the court, this action will be an aid to any delinquency proceeding. (c) The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this subtitle. No provisions in this subtitle shall be construed to preclude the court from, on its own motion, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules or to prevent an abuse of process. (4) Change of venue. Venue for proceedings arising under this subtitle shall be laid initially as specified in the sections providing for such proceedings. All other actions and proceedings initiated by the receiver may be commenced and tried where the delinquency proceedings are then pending, or where venue would be laid by KRS Chapter 452 or other applicable law. All other actions and proceedings against the receiver shall be commenced and tried in the county where the delinquency proceedings are pending. At any time upon motion of any party, venue may be changed by order of the court or the presiding judge thereof to any other Circuit Court in this state, as the convenience of the parties and witnesses and the ends of justice may require. This subsection relates only to venue and is not jurisdictional. (5) Personal jurisdiction, grounds for. In addition to other grounds for jurisdiction provided by the law of this state, a court of this state having jurisdiction of the subject matter shall have jurisdiction over a person served in an action brought by the receiver of a domestic insurer or an alien insurer domiciled in this state: (a) If the person served is obligated to the insurer in any way as an incident to any agency or brokerage arrangement that may exist or has existed between the insurer and the agent or broker, in any action on or incident to the obligation; (b) If the person served is a reinsurer who has at any time issued a contract of reinsurance to an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, or is an agent or broker of or for the reinsurer, in any action on or incident to the reinsurance contract; (c) If the person served is or has been an officer, manager, trustee, organizer, promoter, or person in a position of comparable authority or influence in an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, in any action resulting from the relationship with the insurer; (d) If the person served is or was at the time of the institution of the delinquency proceedings holding assets in which the receiver claims an interest on behalf of the insurer; (e) If the person served has filed a claim against the insurer under the provisions of KRS 304.33-360; (f) If the person served is otherwise amenable to the exercise of personal jurisdiction by the courts of this state under the provisions of the due process clause of the Fourteenth Amendment to the United States Constitution; or (g) If the person served is obligated to the insurer in any way in any action on or incident to the obligation. (6) Service of process. (a) If personal jurisdiction is authorized by this section, service of process may be made on the person, or any agent of the person, in the county of this state where he or she may be found, or on the Secretary of State who, for this purpose, shall be deemed to be the statutory agent of the person. (b) The clerk of the court in which the action is brought shall issue a summons against the defendant named in the complaint. The clerk shall execute the summons by sending by certified mail a true copy to the Secretary of State and shall also mail with the summons an attested copy of the complaint. The Secretary of State shall, within seven (7) days of receipt thereof in his or her office, mail the copy of the summons and complaint to the defendant at the address given in the complaint. The letter shall be posted by certified mail, return receipt requested, and shall bear the return address of the Secretary of State. The clerk shall make the usual return to the court, and, in addition, the Secretary of State shall make a return to the court showing that the acts contemplated by this statute have been performed, and shall attach to his or her return the registry receipt, if any. Summons shall be deemed to be served upon the return of the Secretary of State and the action shall proceed as provided in the Rules of Civil Procedure. (c) The clerk mailing the summons to the Secretary of State shall mail to him or her, at the same time, a fee of ten dollars ($10), which shall be taxed as costs in the action. (7) Forum non conveniens. If the court on motion of any party finds that any action commenced under subsection (5) of this section should as a matter of substantial justice be tried in a forum outside this state, the court may enter an order to stay further proceedings on the action in this state. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1430, effective July 15, 2010. -- Amended 1990 Ky. Acts ch. 422, sec. 4, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 4, effective June 18, 1970.

KRS 304.33-050 Injunctions and orders

304.33-050. Injunctions and orders (1) Except as provided in KRS 304.33-052 and 304.33-055, any receiver appointed in a proceeding under this subtitle may at any time apply for and any court of general jurisdiction may grant such restraining orders, temporary and permanent injunctions, and other orders as are deemed necessary and proper to prevent: (a) The transaction of further business by or on behalf of the insurer; (b) The transfer of property against which the receiver has a claim; (c) Interference with the receiver or with the proceedings; (d) Waste of the insurer's assets; (e) Dissipation and transfer of bank accounts; (f) The institution or further prosecution of any actions or proceedings by or on behalf of the insurer; (g) The institution or further prosecution of any action against the receiver or the insurer, including but not limited to interpleader or other actions involving assets against which the receiver has a claim; (h) The obtaining of preferences, judgments, attachments, garnishments, or liens against the insurer or its assets ; (i) The levying of execution against the insurer or its assets; (j) The making of any sale or deed for nonpayment of taxes or assessments that would lessen the value of the assets of the insurer; (k) The withholding from the receiver of books, accounts, documents, or other records relating to the business of the insurer; (l) Any other threatened or contemplated action that might lessen the value of the insurer's assets or prejudice the rights of policyholders, creditors, or shareholders, or the administration of the proceeding; or (m) Any suit or other action against a reinsurer of the insurer. (2) The receiver may apply to any court outside of this state for the relief described in subsection (1) of this section. Effective: June 27, 2025 History: Amended 2025 Ky. Acts ch. 67, sec. 4, effective June 27, 2025. -- Amended 2022 Ky. Acts ch. 61, sec. 3, effective July 14, 2022. -- Amended 1990 Ky. Acts ch. 422, sec. 5, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 5, effective June 18, 1970.

KRS 304.33-052 Federal home loan banks -- Rights regarding collateral --Procedures

304.33-052. Federal home loan banks -- Rights regarding collateral --Procedures (1) (a) A federal home loan bank shall not be stayed or otherwise prohibited by a court from exercising its rights regarding collateral pledged by an insurer- member for more than ten (10) days following the date a temporary restraining order, preliminary injunction, or permanent injunction is issued by the court pursuant to KRS 304.33-050. (b) A federal home loan bank exercising its rights regarding collateral pledged by an insurer-member shall, within seven (7) days of receiving a redemption request made by the insurer-member, repurchase any of the insurer-member's outstanding capital stock in excess of the amount the insurer-member must hold as a minimum investment. The federal home loan bank shall repurchase the excess outstanding capital stock only to the extent it determines in good faith that the repurchase is: 1. Permissible under federal laws and regulations and the federal home loan bank's capital plan; and 2. Consistent with the capital stock practices currently applicable to the federal home loan bank's entire membership. (2) (a) Not later than ten (10) days after the date of appointment of a receiver in a proceeding under this subtitle involving an insurer-member, the federal home loan bank shall provide to the receiver a process and timeline for all of the following: 1. The release of any collateral held by the federal home loan bank that exceeds the amount that is required to support the secured obligation of the insurer-member and that is remaining after any repayment of loans, as determined under the applicable agreements between the federal home loan bank and insurer-member; 2. The release of any collateral of the insurer-member remaining in the federal home loan bank's possession following the repayment in full of all outstanding secured obligations of the insurer-member; 3. The payment of fees owed by the insurer-member and the operation, maintenance, closure, or disposition of deposits and other accounts of the insurer-member, as mutually agreed upon by the receiver and the federal home loan bank; and 4. Any redemption or repurchase of federal home loan bank stock or excess stock of any class that the insurer-member is required to own under agreements between the federal home loan bank and the insurer- member. (b) Upon request of the receiver appointed in a proceeding under this subtitle involving an insurer-member, the federal home loan bank shall provide to the receiver any available options for the insurer-member to renew or restructure a loan. In determining which options are available, the federal home loan bank may consider: 1. Market conditions; 2. The terms of any loans outstanding to the insurer-member; 3. The applicable policies of the federal home loan bank; and 4. The federal laws and regulations applicable to federal home loan banks. Effective: July 14, 2022 History: Created 2022 Ky. Acts ch. 61, sec. 2, effective July 14, 2022.

KRS 304.33-055 Rights and requirements of netting agreements and qualified financial contracts

304.33-055. Rights and requirements of netting agreements and qualified financial contracts Notwithstanding any other provision of this subtitle or statute to the contrary: (1) As used in this section: (a) 1. "Netting agreement": a. Means an agreement, including a master agreement or bridge agreement for one (1) or more master agreements, that: i. Documents one (1) or more transactions between parties to the agreement for or involving one (1) or more qualified financial contracts; and ii. Provides for the netting or liquidation of qualified financial contracts among the parties to the agreement; and b. Except as provided in subparagraph 2. of this paragraph, includes any security agreement or arrangement or other credit enhancement or guarantee or reimbursement obligation related to any contract or agreement described in this paragraph. 2. Any contract or agreement described in this paragraph relating to agreements or transactions that are not qualified financial contracts shall be deemed a netting agreement only with respect to those agreements or transactions that are qualified financial contracts. 3. A master agreement, or bridge agreement for one (1) or more master agreements, together with all schedules, confirmations, definitions, addenda thereto, and transactions under any thereof, shall be treated as one (1) agreement. 4. As used in this paragraph: a. "Agreement" includes any terms and conditions incorporated by reference in the agreement; and b. "Netting or liquidation of qualified financial contracts" includes netting or liquidation of: i. Present or future payment obligations or payment entitlements under qualified financial contracts; and ii. Liquidation or closeout values relating to present or future payment obligations or payment entitlements under qualified financial contracts; and (b) "Qualified financial contract" means any: 1. Commodity contract; 2. Forward contract; 3. Repurchase agreement; 4. Securities contract; 5. Swap agreement; or 6. Similar agreement specified by the commissioner in an administrative regulation promulgated in accordance with KRS Chapter 13A; (2) A person shall not be stayed or prohibited from exercising any of the following rights: (a) 1. A contractual right to terminate, liquidate, close out, or accelerate any netting agreement or qualified financial contract with an insurer due to: a. The insolvency, financial cond ition, or default of the insurer, if such right is enforceable under applicable law other than this subtitle; or b. The commencement of a formal delinquency proceeding under this subtitle. 2. As used in this paragraph, "contractual right" includes any righ t arising under: a. Statutory or common law; b. Rules or bylaws of a national securities exchange, clearing organization, or securities clearing agency; c. Rules, bylaws, or resolutions of the governing body of a swap execution facility, designated contrac t market, board of trade, or any clearing organization relating to any of the foregoing; or d. The law merchant; (b) The right to enforce any pledge, security, collateral, guarantee agreement, or other credit support document related to a netting agreement or qualified financial contract; or (c) Subject to subsection (3) of this section, the right to setoff or net any termination value, payment amount, or other transfer obligation arising under a netting agreement or qualified financial contract if the coun terparty or its guarantor is organized under the laws of the United States, a state of the United States, or a foreign jurisdiction approved by the Securities Valuation Office of the National Association of Insurance Commissioners as eligible for netting; (3) (a) Upon termination of a netting agreement or qualified financial contract: 1. The net or settlement amount owed by a nondefaulting party to an insurer against which a delinquency proceeding has been initiated shall be transferred to, or on the order of, the receiver, even if the insurer is the defaulting party; 2. Any limited two-way payment provision in a netting agreement or qualified financial contract with an insurer that has defaulted shall be deemed a full two-way payment provision as against th e defaulting insurer; and 3. Any amount referenced in subparagraph 1. of this paragraph, except to the extent it is subject to secondary liens or encumbrances, shall be considered a general asset of the insurer. (b) If a counterparty to a netting agreement or a qualified financial contract with an insurer against which a delinquency proceeding has been initiated terminates, liquidates, closes out, or accelerates the agreement or contract: 1. Damages shall be measured as of the date or dates of termination, liquidation, close out, or acceleration; and 2. The amount of the claim for damages shall be actual direct compensatory damages calculated in accordance with subsection (7) of this section; (4) A receiver shall not transfer a netting agreement or qualified financial contract of an insurer unless the receiver transfers to one (1) counterparty, other than an insurer subject to a delinquency proceeding, all: (a) Netting agreements and qualified financial contracts between that counterparty, or any affiliate of the counterparty, and the insurer; and (b) Rights, obligations, guarantees, collateral, and credit support documents related to the agreements and contracts referenced in paragraph (a) of this subsection; (5) (a) If a receiver transfers a netting agreement or qualified financial contract, the receiver shall make best efforts to notify all counterparties to the agreement or contract by noon, local time, of the next business day following the transfer. (b) As used in this subsection, "business day" means any day that is not a Saturday, a Sunday, or a day on which the New York Stock Exchange or the Federal Reserve Bank of New York is closed; (6) (a) Except as provided in paragraph (b) of this subsection, a transfer of money or other property made under a netting agreement or qualified financial contract, including under any pledge, security, collateral, guarantee arrangement, or other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract, before the commencement of a delinquency proceeding shall not be: 1. Deemed fraudulent under this subtitle; or 2. Avoided by the receiver. (b) A transfer may be deemed fraudulent and may be avoided by the receiver under KRS 304.33-290 if the transfer is made with actual intent to hinder, delay, or defraud the insurer, the receiver, or any creditor; (7) (a) If a receiver elects to disavow, reject, or repudiate a netting agreement or qualified financial contract of an insurer under KRS 304.33-240 or any other section of this subtitle, the receiver shall disavow, reject, or repudiate the entire netting agreement or qualified financial contract between the insurer and a counterparty, or any affiliate of the counterparty, including all related transactions in their entirety. (b) If the receiver disavows, rejects, or repudiates a netting agreement or qualified financial contract, a counterparty's claim against the estate of the insurer shall be: 1. Determined as if the claim arose before the date of: a. Except as provided in subdivision b. of this subparagraph, the petition for liquidation; or b. If a rehabilitation proceeding was converted to a liquidation, the petition for rehabilitation; and 2. Limited to actual direct compensatory damages, determined as of the date of disavowal, rejection, or repudiation. (c) As used in paragraph (b) of this subsection, "actual direct compensatory damages": 1. Includes normal and reasonable costs of cover or industry-standard damages calculations that are applicable in the derivatives, securities, or other applicable market; and 2. Does not include punitive damages, lost profits, lost opportunities, or pain and suffering; (8) This section shall not apply to netting agreements and qualified financial contracts between an insurer and any of its affiliates; and (9) All rights of a counterparty under this section shall apply to netting agreements and qualified financial contracts entered into on behalf of: (a) The general account of the insurer; and (b) Any separate account of the insurer, if the assets of the separate account are available only to a counterparty to the netting agreements and qualified financial contracts entered into on behalf of that separate account. Effective: June 27, 2025 History: Created 2025 Ky. Acts ch. 67, sec. 3, effective June 27, 2025.

KRS 304.33-060 Costs and expenses of litigation

304.33-060. Costs and expenses of litigation In any proceeding under this subtitle in which the receiver is the prevailing party, the court shall award the receiver, in addition to such other relief as may be appropriate, all costs and expenses, including, but not limited to, attorneys' fees incurred in pursuing that litigation, without regard to the limitations otherwise prescribed by law. Effective: July 13, 1990 History: Amended 1990 Ky. Acts ch. 422, sec. 6, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 6, effective June 18, 1970.

KRS 304.33-070 Cooperation of officers and employees

304.33-070. Cooperation of officers and employees (1) Duty to cooperate. Any officer, manager, trustee, or agent of any insurer, and any other person with executive authority over or in charge of any segment of the insurer's affairs or in possession of property to which the commissioner has a claim shall cooperate with the commissioner, or anyone acting on behalf of the commissioner, in any delinquency proceeding. "To cooperate" includes but is not limited to the following: (a) To reply promptly in writing to any inquiry from the commissioner requesting such a reply; and (b) To make available and deliver to the commissioner any books, accounts, documents, or other records, or information or property of or pertaining to the insurer and in his or her possession, custody, or control. (2) Duty not to obstruct. No person shall obstruct or interfere with the commissioner in the conduct of any delinquency proceeding. (3) Any person who fails to cooperate with or obstructs the efforts of the commissioner in the conduct of any delinquency proceeding shall have denied any claims the person has filed pursuant to KRS 304.33-360 and shall also be subject to such other sanctions as the court may impose. (4) Right to defend. This section shall not render it illegal to resist by legal proceedings the petition for liquidation or other delinquency proceedings, or other orders. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1431, effective July 15, 2010. -- Amended 1990 Ky. Acts ch. 422, sec. 7, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 7, effective June 18, 1970.

KRS 304.33-075 Activities prohibited until repayment

304.33-075. Activities prohibited until repayment An insurer that is subject to any delinquency proceedings, whether formal or informal or administrative or judicial, shall not: (1) Be released from such proceeding, unless such proceeding is converted into a judicial rehabilitation or liquidation proceeding; (2) Be permitted to solicit or accept new business or request or accept the restoration of any suspended or revoked license or certificate of authority; (3) Be returned to the control of its shareholders or private management; or (4) Have any of its assets returned to the control of its shareholders or private management; until all payments of or on account of the insurer's contractual obligations by all guaranty associations, along with all expenses thereof and interest on all such payments and expenses, shall have been repaid to the guaranty associations or a plan of repayment by the insurer shall have been approved by the guaranty association. Effective: July 13, 1990 History: Created 1990 Ky. Acts ch. 422, sec. 25, effective July 13, 1990.

KRS 304.33-080 Bonds

304.33-080. Bonds In any proceeding under this subtitle the commissioner and his or her deputies shall be responsible on their official bonds for the faithful performance of their duties. If the court deems it desirable for the protection of the assets, it may at any time require an additional bond from the commissioner or his or her deputies. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1432, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 8, effective June 18, 1970.

KRS 304.33-100 Continuation of delinquency proceedings

304.33-100. Continuation of delinquency proceedings Every proceeding commenced before June 18, 1970, is deemed to have commenced under this subtitle for the purpose of conducting the proceeding thereafter, except that in the discretion of the commissioner the proceeding may be continued, in whole or in part, as it would have been continued had this subtitle not been enacted. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1433, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 10, effective June 18, 1970.

KRS 304.33-105 Application to proceedings commenced before July 13, 1990

304.33-105. Application to proceedings commenced before July 13, 1990 Every proceeding heretofore commenced under the laws in effect before July 13, 1990, shall be deemed to have commenced under this subtitle for the purpose of conducting the proceeding henceforth, except that in the discretion of the commissioner the proceeding may be continued, in whole or in part, as it would have been continued had this subtitle not been enacted. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1434, effective July 15, 2010. -- Created 1990 Ky. Acts ch. 422, sec. 26, effective July 13, 1990.

KRS 304.33-110 Commissioner's emergency orders

304.33-110. Commissioner's emergency orders (1) Whenever the commissioner has reasonable cause to believe, and determines that any insurer has committed or engaged in, or is committing or engaging in or is about to commit or engage in any act, practice, or transaction that would subject it to formal delinquency proceedings under this subtitle, the commissioner may make and serve upon the insurer and any other persons involved an emergency order in accordance with KRS 13B.125, other than seizure orders under KRS 304.33-120, as is reasonably necessary to correct, eliminate, or remedy the conduct, condition, or ground. If the emergency order is for a restoration of or addition to capital, it shall be carried out as provided in KRS 304.24-350. (2) The commissioner may apply for and any court of general jurisdiction may grant, restraining orders, temporary and permanent injunctions, and other orders as are deemed necessary to enforce an emergency order. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1435, effective July 15, 2010. -- Amended 2004 Ky. Acts ch. 24, sec. 41, effective July 13, 2004. -- Amended 1996 Ky. Acts ch. 318, sec. 243, effective July 15, 1996. -- Amended 1980 Ky. Acts ch. 114, sec. 73, effective July 15, 1980. -- Amended 1974 Ky. Acts ch. 315, sec. 52, effective June 21, 1974. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 11, effective June 18, 1970.

KRS 304.33-115 Liability of commissioner and others

304.33-115. Liability of commissioner and others The commissioner, the commissioner's special deputies, and all others appointed to act on the commissioner's behalf in connection with any delinquency proceedings under this subtitle shall not be liable for any acts or omissions done in good faith and within the scope of their authority during the course of the delinquency proceedings, including but not limited to the settlement of disputed claims, and shall be immune from any civil or criminal liability that might otherwise be incurred or imposed based upon the acts or omissions. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1436, effective July 15, 2010. -- Created 1990 Ky. Acts ch. 422, sec. 8, effective July 13, 1990.

KRS 304.33-120 Court's seizure order

304.33-120. Court's seizure order (1) Issuance. Upon the filing by the commissioner in any Circuit Court in this state of a verified petition alleging any ground that would justify a court order for a formal delinquency proceeding against an insurer under this subtitle and that the interests of policyholders or creditors will be endangered by delay, and setting out the order deemed necessary by the commissioner, the court may issue forthwith, ex parte and without a hearing, the requested order which may (a) direct the commissioner to take possession and control of all or a part of the property, books, accounts, documents, and other records of an insurer and of the premises occupied by it for the transaction of its business, and (b) until further order of the court, enjoin the insurer and its officers, managers, agents, and employees from disposition of its property and from transaction of its business except with the written consent of the commissioner. (2) Duration. The court shall specify in the order what its duration shall be, which shall be such time as the court deems necessary for the commissioner to ascertain the condition of the insurer. On motion of either party or on its own motion, the court may hold such hearings as it deems desirable after such notice as it deems appropriate, and may extend, shorten or modify the terms of the seizure order. The court shall vacate the seizure order if the commissioner fails to commence a formal proceeding under this subtitle after having had a reasonable opportunity to do so. The issuance of an order of the court pursuant to a formal proceeding under this subtitle vacates the seizure order. (3) Anticipatory breach. Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the insurer. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1437, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 12, effective June 18, 1970.

KRS 304.33-130 Conduct of hearings in summary proceedings

304.33-130. Conduct of hearings in summary proceedings (1) Confidentiality of commissioner's hearings. The commissioner shall hold all hearings in summary proceedings privately unless the insurer requests a public hearing, in which case the hearing shall be public. (2) Confidentiality of court hearings. The court may hold all hearings in summary proceedings and judicial reviews thereof privately in chambers, and shall do so on request of the insurer proceeded against. (3) Records. In all summary proceedings and judicial reviews thereof, all records of the company, other documents, and all Department of Insurance files and court records and papers, so far as they pertain to or are a part of the record of the summary proceedings, shall be and remain confidential except as is necessary to obtain compliance therewith, unless the court, after hearing arguments from the parties in chambers, shall order otherwise, or unless the insurer requests that the matter be made public. Until such court order, all papers filed with the clerk of the court shall be held by him or her in a confidential file. (4) Parties. If at any time it appears to the court that any person whose interest is or will be substantially affected by an order did not appear at the hearing and has not been served, the court may order that notice be given and the proceedings be adjourned to give him or her opportunity to appear on such terms as may be just. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1438, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 13, effective June 18, 1970.

KRS 304.33-140 Grounds for rehabilitation

304.33-140. Grounds for rehabilitation (1) The commissioner may apply by verified petition to the court for an order directing the commissioner to rehabilitate a domestic insurer or an alien insurer domiciled in this state on any one (1) or more of the following grounds: (a) Any ground on which the commissioner may apply for an order of liquidation under KRS 304.33-190, whenever the commissioner believes that the insurer may be successfully rehabilitated without substantial increase in the risk of loss to creditors of the insurer or to the public; (b) That the commissioner has reasonable cause to believe that there has been embezzlement from the insurer, wrongful sequestration or diversion of the insurer's assets, forgery or fraud affecting the insurer, or other illegal conduct in, by, or with respect to the insurer, that if established would endanger assets in an amount threatening the solvency of the insurer; (c) That any one (1) of the following circumstances has occurred and the commissioner has reasonable cause to believe that the insurer is insolvent or that assets are endangered in an amount threatening the solvency of the insurer: 1. That information coming into the commissioner's possession has disclosed substantial and not adequately explained discrepancies between the insurer's records and the most recent annual report or other official company reports; 2. That the insurer has failed to remove any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, employee, or other person, if the person has been found by the commissioner after notice and hearing to be dishonest or untrustworthy in a way affecting the insurer's business; 3. That control of the insurer, whether by stock ownership or otherwise, and whether direct or indirect, is in one (1) or more persons found by the commissioner after notice and hearing to be dishonest or untrustworthy; 4. That any person who in fact has executive authority in the insurer, whether an officer, manager, general agent, employee, or other person, has refused to be examined under oath by the commissioner concerning its affairs, whether in this state or elsewhere, and after reasonable notice of the fact the insurer has failed promptly and effectively to terminate the employment and status of the person and all his or her influence on management; 5. That the insurer has refused to submit its books, accounts, documents, or other records to the reasonable examination or inspection of the commissioner or the commissioner's authorized representative; (d) That the insurer is or is about to become insolvent; (e) That the insurer is engaging in a systematic practice of reaching settlements with and obtaining releases from policyholders or third-party claimants and then unreasonably delaying payment of or failing to pay the agreed upon settlements; (f) That the insurer is in such condition that the further transaction of business would be hazardous, financially or otherwise, to its policyholders, its creditors, or the public; (g) That within the previous twelve (12) months the insurer has systematically attempted to compromise with its creditors on the ground that it is financially unable to pay its claims in full; (h) That without first obtaining the written consent of the commissioner, the insurer has transferred, or attempted to transfer, substantially its entire property or business, or has entered into any transaction the effect of which is to merge, consolidate, or reinsure substantially its entire property or business in or with the property or business of any other person; (i) That the insurer or its property has been or is the subject of an application for the appointment of a receiver, trustee, custodian, conservator, or sequestrator or similar fiduciary of the insurer or its property otherwise than as authorized under this subtitle, and that such appointment has been made or is imminent, and that such appointment might oust the courts of this state of jurisdiction or prejudice orderly delinquency proceedings under this subtitle; (j) That within the previous year the insurer has willfully violated its charter or articles of incorporation or any insurance law or regulation of this state, or having become aware within the previous year of an unintentional violation has failed to take all reasonable steps to remedy the situation resulting from the violation and to prevent future violations; (k) That the directors of the insurer are deadlocked in the management of the insurer's affairs and that the members or shareholders are unable to break the deadlock and that irreparable injury to the insurer, its creditors or its policyholders is threatened by reason thereof; (l) That the insurer has failed to file its annual report or other report within the time allowed by law, and after written demand by the commissioner has failed to give an adequate explanation immediately; and (m) That two-thirds (2/3) of the board of directors, or the holders of a majority of the shares entitled to vote, or a majority of members or policyholders of an insurer subject to control by its members or policyholders, consent to rehabilitation under this subtitle. (2) Upon the issuance of an order directing the commissioner to rehabilitate a domestic insurer, the court shall have exclusive jurisdiction over all matters relating to the rehabilitation, including, but not limited to, the proper scope and application of the provisions of this subtitle to the rehabilitation as well as all interpretation and enforceability of all contracts of insurance to which the insurer is a party. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1439, effective July 15, 2010. -- Amended 1990 Ky. Acts ch. 422, sec. 9, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 14, effective June 18, 1970.

KRS 304.33-150 Rehabilitation orders

304.33-150. Rehabilitation orders (1) Appointment of rehabilitator. An order to rehabilitate the business of a domestic insurer, or an alien insurer domiciled in this state, shall appoint the commissioner and his or her successors in office rehabilitator and shall direct the rehabilitator forthwith to take possession of the assets of the insurer and to administer them under the orders of the court. The filing or recording of the order with any county clerk in the state shall impart the same notice as a deed, bill of sale, or other evidence of title duly filed or recorded with that county clerk. (2) Any order issued under this section shall require accountings to the court by the rehabilitator. Accountings shall be at such intervals as the court specifies in its order, but no less frequently than semiannually. Each accounting shall include a report concerning the rehabilitator's opinion as to the likelihood that a plan under KRS 304.33-160(5) will be prepared by the rehabilitator and the timetable for doing so. (3) Anticipatory breach. Entry of an order of rehabilitation shall not constitute an anticipatory breach of any contracts of the insurer, and it shall not be grounds for revocation or cancellation of any contracts of the insurer. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1440, effective July 15, 2010. -- Amended 1990 Ky. Acts ch. 422, sec. 10, effective July 13, 1990. -- Amended 1978 Ky. Acts ch. 384, sec. 469, effective June 17, 1978. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 15, effective June 18, 1970.

KRS 304.33-160 Powers and duties of the rehabilitator

304.33-160. Powers and duties of the rehabilitator (1) Special deputy. The commissioner as rehabilitator shall appoint one (1) or more special deputies, who are active or retired senior executives from a successful insurer, and who shall have all the powers and responsibilities of the rehabilitator granted under this section, and the commissioner may employ such counsel, clerks, and assistants as deemed necessary. The compensation of the special deputy, counsel, clerks, and assistants and all expenses of taking possession of the insurer and of conducting the proceedings shall be fixed by the commissioner, with the approval of the court and shall be paid out of the funds or assets of the insurer. The persons appointed under this section shall serve at the pleasure of the commissioner. If the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the commissioner may advance the costs so incurred out of any appropriation for the maintenance of the Department of Insurance. Any amounts so advanced for expenses of administration shall be repaid to the commissioner for the use of the Department of Insurance out of the first available money of the insurer. (2) General power. The rehabilitator may take action as he or she deems necessary or appropriate to reform and revitalize the insurer. He or she shall have all the powers of the directors, officers, and managers, whose authority shall be suspended, except as they are redelegated by the rehabilitator. He or she shall have full power to direct and manage, to hire and discharge employees subject to any contract rights they may have, and to deal with the property and business of the insurer. (3) Advice from experts. The rehabilitator may consult with and obtain formal or informal advice and aid of insurance experts. (4) Pursuit of insurer's claims against insiders. If the rehabilitator finds that there has been criminal or tortious conduct or breach of any contractual or fiduciary obligation detrimental to the insurer by any officer, manager, agent, employee, or other person, he or she may pursue all appropriate legal remedies on behalf of the insurer. (5) Reorganization plan. The rehabilitator may prepare a plan for the reorganization, consolidation, conversion, reinsurance, merger, or other transformation of the insurer. Upon application of the rehabilitator for approval of the plan, and after the notice and hearing as the court prescribes, the court may either approve or disapprove the plan proposed, or may modify it and approve it as modified. If it is approved, the rehabilitator shall carry out the plan. In the case of a life insurer, the plan proposed may include the imposition of liens upon the equities of policyholders of the insurer, if all rights of shareholders are first extinguished. A plan for a life insurer may also propose imposition of a moratorium upon loan and cash surrender rights upon policies, for such period and to such an extent as are necessary. (6) Fraudulent transfers. The rehabilitator shall have the power to avoid fraudulent transfers under KRS 304.33-290 and 304.33-300. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1441, effective July 15, 2010. -- Amended 1994 Ky. Acts ch. 496, sec. 15, effective July 15, 1994. -- Amended 1990 Ky. Acts ch. 422, sec. 11, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 16, effective June 18, 1970.

KRS 304.33-165 Appearances of rehabilitator before committee

304.33-165. Appearances of rehabilitator before committee (1) The rehabilitator shall appear before the committee no more than two (2) weeks after he has disclosed his final recommendation, unless the chairman has designated a date beyond the two (2) week period, to disclose his recommendation to the committee and to hear the comments of the committee members. (2) After the recommendation of the rehabilitator has been filed with the court, all confidentiality agreements entered into regarding the insurer in receivership shall be null and void. (3) If any insurer is placed in receivership prior to or after the enactment of this section, and if, after a two (2) year period, the insurer's receivership status remains unchanged, the rehabilitator shall appear before the Interim Joint Committee on Banking and Insurance or the Standing Committees on Banking and Insurance to update the members of the committee regarding the insurer. Effective: July 15, 1994 History: Created 1994 Ky. Acts ch. 496, sec. 16, effective July 15, 1994. Legislative Research Commission Note (7/15/94). The drafter advises, and it appears from context to be the case, that the committee referred to in subsection (1) of this statute is the committee or committees indicated in subsection (3).

KRS 304.33-170 Actions by and against rehabilitator

304.33-170. Actions by and against rehabilitator (1) Stays in pending litigation. Except as provided in KRS 304.33-052 and 304.33-055, any court in this state before which any action or proceeding by or against an insurer is pending when a rehabilitation order against the insurer is entered shall, upon request of the rehabilitator, stay the action or proceeding for such time as is necessary for the rehabilitator to obtain proper representation and prepare for further proceedings. The court that entered the rehabilitation order shall order the rehabilitator to take such action respecting the pending litigation as the court deems necessary in the interests of justice and for the protection of creditors and policyholders. The rehabilitator shall immediately consider all litigation pending outside this state and shall petition the courts having jurisdiction over that litigation for stays whenever necessary to protect the estate of the insurer. (2) Statutes of limitations on claims by insurer. The time between the filing of a petition for rehabilitation against an insurer and denial of the petition or an order of rehabilitation shall not be considered to be a part of the time within which any action may be commenced by the insurer. Any action by the insurer that might have been commenced when the petition was filed may be commenced for at least sixty (60) days after the order of rehabilitation is entered. (3) Statutes of limitations on claims against insurer. The time between the filing of a petition for rehabilitation against an insurer and the denial of the petition or an order of rehabilitation shall not be considered to be a part of the time within which any action may be commenced against the insurer. Any action against the insurer that might have been commenced when the petition was filed may be commenced for at least sixty (60) days after the order of rehabilitation is entered or the petition is denied. (4) A guaranty association or a foreign guaranty association shall have standing to appear in any court proceeding concerning the rehabilitation of an insurer if such association is or may become liable to act as a result of the rehabilitation. Effective: June 27, 2025 History: Amended 2025 Ky. Acts ch. 67, sec. 5, effective June 27, 2025. -- Amended 2022 Ky. Acts ch. 61, sec. 4, effective July 14, 2022. -- Amended 1990 Ky. Acts ch. 422, sec. 12, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 17, effective June 18, 1970.

KRS 304.33-180 Termination of rehabilitation

304.33-180. Termination of rehabilitation (1) Transformation to liquidation. Whenever he believes that further attempts to rehabilitate an insurer would substantially increase the risk of loss to creditors or policyholders, or would be futile, the rehabilitator may petition the court for an order of liquidation. A petition under this subsection shall have the same effect as a petition under KRS 304.33-190. The court shall permit the directors to defend against the petition and shall order payment from the estate of the insurer of such costs and other expenses of defense as justice requires. (2) Order to return to insurer. The rehabilitator may at any time petition the court for an order terminating rehabilitation of an insurer. If the court finds that rehabilitation has been accomplished and that grounds for rehabilitation under KRS 304.33-140 no longer exists, it shall order that the insurer be restored to possession of its property and the control of its business. The court may also make that finding and issue that order at any time upon its own motion. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 18, effective June 18, 1970.

KRS 304.33-190 Grounds for liquidation

304.33-190. Grounds for liquidation (1) The commissioner may apply by petition to the Circuit Court for Franklin County or for the county in which the principal office of the insurer is located for an order directing him or her to liquidate a domestic insurer or an alien insurer domiciled in this state on any one (1) or more of the following grounds: (a) Any ground on which the commissioner may apply for an order of rehabilitation under KRS 304.33-140, whenever he or she believes that attempts to rehabilitate the insurer would substantially increase the risk of loss to its creditors, its policyholders or the public, or would be futile, or that rehabilitators would serve no useful purpose; (b) That the insurer has commenced, or within the previous year has attempted to commence, voluntary liquidation otherwise than under the insurance laws of this state; (c) That the holders of two-thirds (2/3) of the shares entitled to vote, or two-thirds (2/3) of the members or policyholders entitled to vote in an insurer controlled by its members or policyholders, have consented to a petition. (2) Upon the issuance of an order directing the commissioner to liquidate a domestic insurer, the court shall have exclusive jurisdiction over all matters relating to the liquidation, including but not limited to, the proper scope and application of the provisions of this subtitle to the liquidation as well as all interpretation and enforceability of all contracts of insurance to which the insurer is a party. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1442, effective July 15, 2010. -- Amended 1990 Ky. Acts ch. 422, sec. 13, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 19, effective June 18, 1970.

KRS 304.33-200 Liquidation orders

304.33-200. Liquidation orders (1) Order to liquidate. An order to liquidate the business of a domestic insurer shall appoint the commissioner and his or her successors in office liquidator and shall direct the liquidator forthwith to take possession of the assets of the insurer and to administer them under the orders of the court. The liquidator shall be vested by operation of law with the title to all of the property, contracts, and rights of action and all of the books and records of the insurer ordered liquidated, wherever located, as of the date of the filing of the petition for liquidation. He or she may recover and reduce the same to possession except that ancillary receivers in reciprocal states shall have, as to assets located in their respective states, the rights and powers which are prescribed in subsection (3) of KRS 304.33-540 for ancillary receivers appointed in this state as to assets located in this state. The filing or recording of the order with any county clerk in this state shall impart the same notice as a deed, bill of sale, or other evidence of title duly filed or recorded with that county clerk. (2) Fixing of rights. (a) Upon issuance of the order, the rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members, and all other persons interested in its estate are fixed as of the date of filing of the petition for liquidation, except as provided in KRS 304.33-210 and 304.33-380. (b) Entry of an order of liquidation shall not constitute an anticipatory breach of any contracts of the insurer, and it shall not be grounds for rescission, revocation, or cancellation of any contracts of the insurer in force as of the date of liquidation, except as provided in KRS 304.33-210. (3) Alien insurer. An order to liquidate the business of an alien insurer domiciled in this state shall be in the same terms and have the same legal effect as an order to liquidate a domestic insurer, except that the assets and the business in the United States shall be the only assets and business included under the order. (4) Declaration of insolvency. At the time of petitioning for an order of liquidation, or at any time thereafter, the commissioner may petition the court to declare the insurer insolvent, and after such notice and hearing as it deems proper, the court may make the declaration. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1443, effective July 15, 2010. -- Amended 1990 Ky. Acts ch. 422, sec. 14, effective July 13, 1990. -- Amended 1978 Ky. Acts ch. 384 Ky. Acts ch. 470, effective June 17, 1978. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 20, effective June 18, 1970.

KRS 304.33-210 Continuance of coverage

304.33-210. Continuance of coverage (1) All policies, other than life or health insurance or annuities, in effect at the time of issuance of an order of liquidation shall continue in force only for the lesser of: (a) A period of thirty (30) days from the date of entry of the liquidation order; (b) The expiration of the policy coverage; (c) The date when the insured has replaced the insurance coverage with equivalent insurance in another insurer or otherwise terminated the policy; or (d) The date when the liquidator has effected a transfer of the policy obligation pursuant to KRS 304.33-240(9). (2) An order or liquidation under KRS 304.33-200 shall terminate coverages at the time specified in subsection (1) of this section for purposes of any other statute. (3) Policies of life or health insurance or annuity contracts shall continue in force for such period and under such terms as are provided for by the Kentucky Life and Health Insurance Guaranty Association or any similar foreign guaranty association. (4) Policies of life or health insurance or annuity contracts or any period or coverage of such policies or contracts not covered by the Kentucky Life and Health Insurance Guaranty Association or any similar foreign guaranty association shall terminate under subsections (1) and (2) of this section. Effective: July 13, 1990 History: Amended 1990 Ky. Acts ch. 422, sec. 15, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 21, effective June 18, 1970.

KRS 304.33-215 Obligation for unpaid premiums

304.33-215. Obligation for unpaid premiums (1) An agent, broker, premium finance company, or any other person, other than the insured, responsible for collection and payment of premium shall be obligated to pay any collected unpaid premium, whether earned or unearned, less any commissions on the earned portion of the premiums, due to the insurer at the time policies are terminated pursuant to KRS 304.33-210, except as expressly provided in KRS 304.33-240(6). Credits, setoffs, or both shall not be allowed to an agent, broker, or premium finance company for any amounts advanced to the insurer by the agent, broker, or premium finance company on behalf of, but in the absence of payment by, the insured. (2) An insured shall be obligated to pay any unpaid earned premiums due to the insurer at the time his policy is terminated pursuant to KRS 304.33-210, subject further to any additional earned premium payable in the future which may be calculated by the liquidator representing unbilled audit premiums, experience rated premium adjustments, or any other similar deferred premium adjustments provided for under the terms of the insured's policy and which premiums have been apportioned and billed by the liquidator. Effective: July 13, 1990 History: Amended 1990 Ky. Acts ch. 422, sec. 22, effective July 13, 1990.

KRS 304.33-220 Dissolution of insurer

304.33-220. Dissolution of insurer The commissioner may petition for an order dissolving the corporate existence of a domestic insurer or the United States branch of an alien insurer domiciled in this state at the time the commissioner applies for a liquidation order. If the court issues a liquidation order, it also shall order dissolution if the commissioner has petitioned for it. The court shall order dissolution of the corporation upon petition by the commissioner at any time after a liquidation order has been granted. If the dissolution has not previously occurred, it shall be effected by operation of law upon the discharge of the liquidator. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1444, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 22, effective June 18, 1970.

KRS 304.33-230 Federal receivership

304.33-230. Federal receivership (1) Petition for federal receiver. Whenever in the commissioner's opinion, liquidation of a domestic insurer or an alien insurer domiciled in this state would be facilitated by a federal receivership, and when any ground exists upon which the commissioner might petition the court for an order of rehabilitation or liquidation under KRS 304.33-140 or 304.33-190, or if an order of rehabilitation or liquidation has already been entered, the commissioner may request the insurance commissioner or other willing resident of another state to petition any appropriate federal District Court for the appointment of a federal receiver. The commissioner may intervene in any such action to support or oppose the petition, and may accept appointment as the receiver if he or she is so designated. So much of this subtitle shall apply to the receivership as can be made applicable and is appropriate. Upon motion of the commissioner, the courts of this state shall relinquish all jurisdiction over the insurer for purposes of rehabilitation or liquidation. (2) Compliance with federal requirements. If the commissioner is appointed receiver under this section, he or she shall comply with any requirements necessary to give him or her title to and control over the assets and affairs of the insurer. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1445, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 23, effective June 18, 1970.

KRS 304.33-240 Powers of liquidator

304.33-240. Powers of liquidator The liquidator shall report to the court monthly, or at other intervals specified by the court, on the progress of the liquidation in whatever detail the court orders. Subject to KRS 304.33-055, the liquidator may: (1) Appoint a special deputy to act for him or her under this subtitle, and, subject to the court's approval, determine his or her compensation. The special deputy shall have all powers of the liquidator granted by this section. The special deputy shall serve at the pleasure of the liquidator; (2) Appoint or engage employees and agents, legal counsel, actuaries, accountants, appraisers, consultants, and other personnel he or she deems necessary to assist in the liquidation; (3) Fix the compensation of persons under subsection (2) of this section, subject to the control of the court; (4) Defray all expenses of taking possession of, conserving, conducting, liquidating, disposing of, or otherwise dealing with the business and property of the insurer. If the property of the insurer does not contain suf ficient cash or liquid assets to defray the costs incurred, the liquidator may advance the costs so incurred out of any available appropriation. Any amounts so paid shall be deemed expense of administration and shall be repaid for the credit of the Departm ent of Insurance out of the first available moneys of the insurer; (5) Hold hearings, subpoena witnesses and compel their attendance, administer oaths, examine any person under oath, and compel any person to subscribe to his or her testimony after it has been correctly reduced to writing, and in connection therewith require the production of any books, papers, record, or other documents which he or she deems relevant to the inquiry; (6) Collect all debts and moneys due and claims belonging to the insurer, w herever located, and for this purpose institute timely action in other jurisdictions to marshal the assets of the insurer; forestall garnishment and attachment proceedings against such debts; do such other acts as are necessary or expedient to collect, con serve or protect its assets or property, including sell, compound, compromise, or assign for purposes of collection, subject to court approval and upon such terms and conditions as the liquidator deems best, any disputed claims; and pursue any creditor's remedies available to enforce his or her claims. In lieu of collecting funds representing unearned premium of a policyholder which are in the possession of the insurer's agent with respect to the kinds of direct insurance protected under KRS 304.36-030, the liquidator may authorize the use of such funds to replace the insurance coverage terminated pursuant to KRS 304.33 -210, upon receipt from the agent of appropriate notice of such replacement of the insurance coverage with an insurer within sixty (60) days after the date of the liquidation order; (7) Audit the books and records of all agents of the insurer insofar as these records relate to the business activities of the insurer; (8) Conduct public and private sales of the property of the insurer in a manner prescribed by the court; (9) Use assets of the estate to transfer policy obligations to a solvent assuming insurer, if the transfer can be arranged without prejudice to applicable priorities under KRS 304.33-430; (10) Acquire, hypothecate, encumber, lease, improve, sell, transfer, abandon, or otherwise dispose of or deal with any property of the insurer at its market value or upon such terms and conditions as are fair and reasonable, except that no transaction involving property the market value of which exceeds ten thousand dollars ($10,000) shall be concluded without express permission of the court. The liquidator also may execute, acknowledge, and deliver any deeds, assignments, releases, and other instruments necessary or proper to effectuate any sale of property or other transaction in connection with the liquidation. In cases where real property sold by the liquidator is located other than in the county where the liquidation is pending, the liquidator shall cause to be filed with the county clerk for the county in which the property is located a certified copy of the order appointing him or her; (11) Borrow money, subject to court approval, on the security of the insurer's assets or without security and execute and deliver all documents necessary to that transaction for the purpose of facilitating the liquidation; (12) Enter into such contracts as are necessary to carry out the order to liquidate, and affirm or disavow any contracts to which the insurer is a party, except the liquidator shall not disavow, reject, or repudiate a federal home loan bank security agreement or any pledge agreement, security agreement, collateral agreement, guarantee agreement, or other similar arrangement or credit enhancement relating to a security agreement to which a federal home loan bank is a party; (13) Continue to prosecute and institute in the name of the insurer or in his or her own name any suits and other legal proceedings, in this state or elsewhere, and abandon the prosecution of claims he or she deems unprofitable to pursue further. If the insurer is dissolved under KRS 304.33-220, he or she may apply to any court in this state or elsewhere for leave to substitute himself or herself for the insurer as plaintiff; (14) Prosecute any action which may exist on behalf of the creditors, members, policyholders, or shareholders of the insurer against any officer of the insurer, or any other person; (15) Remove any records and property of the insurer to the offices of the commissioner or to such other place as is convenient for the purposes of efficient and orderly execution of the liquidation; (16) Deposit in one (1) or more banks in this state such sums as are required for meeting current administration expenses and dividend distributions; (17) File any necessary documents for record in the office of any county clerk or record office in this state or elsewhere where property of the insurer is located; (18) Assert all defenses available to the insurer as against third persons, including statutes of limitations, statutes of frauds, and the defense of usury. A waiver of any defense by the insurer after a petition for liquidation has been filed shall not bind the liquidator; (19) 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 given by law and that is not included within KRS 304.33-290 to 304.33-310, inclusive; (20) 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; (21) Enter into agreements with any receiver or commissioner of any other state relating to the rehabilitation, liquidation, conservation, or dissolution of an insurer doing business in both states; (22) Exercise all powers now held or hereafter conferred upon receivers by the laws of this state not inconsistent with this subtitle; and (23) The enumeration in this section of the powers and authority of the liquidator is not a limitation upon him or her, nor does it exclude his or her right to do such other acts not herein specifically enumerated or otherwise provided for as are necessary or expedient for the accomplishment of or in aid of the purpose of liquidation. Effective: June 27, 2025 History: Amended 2025 Ky. Acts ch. 67, sec. 6, effective June 27, 2025. -- Amended 2022 Ky. Acts ch. 61, sec. 5, effective July 14, 2022. -- Amended 2010 Ky. Acts ch. 24, sec. 1446, effective July 1 5, 2010. -- Amended 1990 Ky. Acts ch. 422, sec. 16, effective July 13, 1990. -- Amended 1978 Ky. Acts ch. 384, sec. 471, effective June 17, 1978. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 24, effective June 18, 1970.

KRS 304.33-250 Notice to creditors and others

304.33-250. Notice to creditors and others (1) (a) Notice required; General requirements. The liquidator shall give notice of the liquidation order as soon as possible by first-class mail and either by telegram or telephone to the insurance commissioner of each jurisdiction in which the insurer is licensed to do business, by first-class mail and by telephone to the commissioner of the Department of Workers' Claims of this state if the insurer is or has been an insurer of workers' compensation, by first-class mail to all insurance agents having a duty under KRS 304.33-260, and by first-class mail at the last known address to all persons known or reasonably expected to have claims against the insurer, including all policyholders. He or she also shall publish a notice, under KRS Chapter 424, in a newspaper of general circulation in the county in which the liquidation is pending and in Franklin County, the last publication to be not less than three (3) months before the earliest deadline specified in the notice under subsection (2) of this section. (b) Special requirements. Notice to agents shall inform them of their duties under KRS 304.33-260 and inform them what information they must communicate to insureds. Notice to policyholders shall include notice of impairment and termination of coverage under KRS 304.33-210. When it is applicable, notice to policyholders shall include: 1. Notice of withdrawal of the insurer from the defense of any case in which the insured is interested; and 2. Notice of the right to file a claim under subsection (2) of KRS 304.33- 390. (c) Notice under subsection (1)(a) of this section to agents of the insurer and to potential claimants who are policyholders or insureds shall include, where applicable, notice that guaranty association or foreign guaranty association coverage may be available for all or part of certain claims, and that policyholders or certificate holders may be entitled to continuation of coverage through the guaranty association. The notice shall also include as an insert a separate notice from any guaranty association or foreign guaranty association obligated to provide coverage, if the notice is made available to the liquidator on a timely basis. (d) Reports and further notice. Within fifteen (15) days of the date of entry of the order, the liquidator shall report to the court what notice has been given. The court may order such additional notice as it deems appropriate. (2) Notice respecting claims filing. Except as otherwise established by the liquidator with approval of the court, notice to potential claimants under subsection (1) of this section shall require claimants to file with the liquidator their claims together with proper proofs thereof under KRS 304.33-370, on or before a date the liquidator specifies in the notice, which shall be not less than six (6) months nor more than a reasonable time specified in the court's order, except that the liquidator need not require persons claiming unearned premium and persons claiming cash surrender values or other investment values in life insurance and annuities to file a claim. The liquidator may specify different dates for the filing of different kinds of claims. (3) Notice conclusive. If notice is given in accordance with this section, all persons to whom this notice is directed shall be bound by the terms and provisions of the liquidation order and all further orders and notices similarly served on them, and the distribution of the assets of the insurer under this subtitle shall be conclusive with respect to all claimants, whether or not they received notice. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1447, effective July 15, 2010. -- Amended 1990 Ky. Acts ch. 422, sec. 17, effective July 13, 1990. -- Amended 1986 Ky. Acts ch. 437, sec. 23, effective July 15, 1986. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 25, effective June 18, 1970.

KRS 304.33-260 Duties of agents

304.33-260. Duties of agents (1) Written notice. Every person who receives notice in the form prescribed in KRS 304.33-250 that an insurer for which he or she has acted as agent is the subject of a liquidation order shall as soon as practicable give notice of the liquidation order. The notice shall be sent by first-class mail to the last address contained in the agent's records to each policyholder or other person named in any policy issued through the agent by the company, if he or she has a record of the address of the policyholder or other person. A policy shall be deemed issued through an agent if the agent has a property interest in the expiration of the policy; or if the agent has had in his or her possession a copy of the declarations of the policy at any time during the life of the policy, except where the ownership of the expiration of the policy has been transferred to another. The written notice shall include the name and address of the insurer, the name and address of the agent, identification of the policy impaired, and the nature of the impairment under KRS 304.33-210. Notice by a general agent shall satisfy the notice requirement for any agents under contract to him or her. (2) Oral notice. So far as practicable, every insurance agent subject to subsection (1) of this section shall give immediate oral notice, by telephone or otherwise, of the liquidation order to the same persons to whom he or she is obligated to give written notice. The oral notice shall include substantially the same information as the written notice. (3) The liquidator may waive the duties imposed by this section if he or she determines that other notice to the policyholders of the insurer under liquidation is adequate. (4) Transfer of assets. Every agent subject to subsection (1) of this section shall, immediately upon receiving notice pursuant to KRS 304.33-250, and not later than thirty (30) days thereafter, except as otherwise provided under or KRS 304.33-055 or 304.33-240(6), transfer all assets of the insurer in possession of the agent as of the date of liquidation or any time thereafter to the liquidator. If there is any dispute as to whether assets which an agent is holding are assets of the insurer, the agent shall petition the court for an order determining the ownership thereof. Effective: June 27, 2025 History: Amended 2025 Ky. Acts ch. 67, sec. 7, effective June 27, 2025. -- Amended 1990 Ky. Acts ch. 422, sec. 18, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 26, effective June 18, 1970.

KRS 304.33-270 Actions by and against liquidator

304.33-270. Actions by and against liquidator (1) Termination of actions against insurer by order appointing liquidator. Upon issuance of any order appointing the commissioner liquidator of a domestic insurer or of an alien insurer domiciled in this state, no actions may be instituted against the insurer or the liquidator without approval of the court and all actions and all proceedings against the insurer whether in this state or elsewhere shall be abated and the liquidator shall not intervene in them, except as provided in this subsection. Whenever in the liquidator's judgment an action in this state has proceeded to a point where fairness or convenience would be served by its continuation to judgment, he or she may apply to the court for leave to defend or to be substituted for the insurer, and if the court gives him or her leave, the action shall not be abated. Whenever in the liquidator's judgment, protection of the estate of the insurer necessitates intervention in an action against the insurer that is pending outside this state, with approval of the court the liquidator may intervene in the action. The liquidator may defend any action in which he or she intervenes under this section at the expense of the estate of the insurer. (2) Statute of limitations on claims by insurer. The liquidator may, within two (2) years subsequent to the entry of an order for liquidation or within such further time as applicable law permits, institute an action or proceeding on behalf of the estate of the insurer upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of the filing of the petition upon which such order is entered. Where, by any agreement, a period of limitation is fixed for instituting a suit or proceeding upon any claim or for filing any claim, proof of claim, proof of loss, demand, notice or the like, or where in any proceeding, judicial or otherwise, a period of limitation is fixed, either in the proceeding or by applicable law, for taking any action, filing any claim or pleading or doing any act, and where in any such case the period had not expired at the date of the filing of the petition, the liquidator may, for the benefit of the estate, take any such action or do any such act, required of or permitted to the insurer, within a period of sixty (60) days subsequent to the entry of an order for liquidation, or within such further period as is permitted by the agreement, or in the proceeding or by applicable law, or within such further period as is shown to the satisfaction of the court not to be unfairly prejudicial to the other party. (3) Statutes of limitations on claims against insurer. The time between the filing of a petition for liquidation against an insurer and the denial of the petition shall not be considered to be a part of the time within which any action may be commenced against the insurer. Any action against the insurer that might have been commenced when the petition was filed may be commenced for at least sixty (60) days after the petition is denied. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1448, effective July 15, 2010. -- Amended 1990 Ky. Acts ch. 422, sec. 19, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 27, effective June 18, 1970.

KRS 304.33-280 List of assets -- Liquidation of assets

304.33-280. List of assets -- Liquidation of assets (1) List of assets required. As soon as practicable after the liquidation order, the liquidator shall prepare in duplicate a list of the insurer's assets. The list shall be amended or supplemented as the court requires. One (1) copy shall be filed in the office of the clerk of the court having jurisdiction over the liquidation proceedings and one (1) copy shall be retained for the liquidator's files. All amendments and supplements shall be similarly filed. (2) Liquidation of assets. The liquidator shall reduce the assets to a degree of liquidity that is consistent with the effective execution of the liquidation as rapidly and economically as he can. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 28, effective June 18, 1970.

KRS 304.33-290 Fraudulent transfer prior to petition -- Exceptions

304.33-290. Fraudulent transfer prior to petition -- Exceptions (1) Definition and effect. Except as provided in subsection (5) of this section and KRS 304.33-055: (a) Every transfer made or suffered and every obligation incurred by an insurer within one (1) year prior to the filing of a successful petition for rehabilitation or liquidation under this subtitle 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; (b) A transfer made or an obligation incurred by an insurer ordered to be rehabilitated or liquidated under this subtitle, which is fraudulent under this section, may be avoided by the receiver, except as to a person who in good faith is a purchaser, lienor, or obligee for a present fair equivalent value; and except that any purchaser, lienor, or obligee, who in good faith has given a consideration less than fair for such transfer, lien, or obligation , may retain the property, lien, or obligation as security for repayment; and (c) 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, lienor, or obligee. (2) Perfection of transfers. (a) Personal property. 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 (3) of KRS 304.33-310. (b) Real property. 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. (c) Equitable liens. 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. (d) Transfer not perfected prior to petition. 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. (e) Actual creditors unnecessary. This subsection shall apply whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers. (3) Fraudulent reinsurance transactions. Any transaction of the insurer with a reinsurer shall be deemed fraudulent and may be avoided by the receiver under subsection (1) of this section if: (a) 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 transaction, unless the reinsurer gives a present fair equivalent value for the release; and (b) Any part of the transaction took place within one (1) year prior to the date of filing of the petition through which the receivership was commenced. (4) Every person receiving any property from the insurer or any benefit thereof which is a fraudulent transfer under this section shall be personally liable therefor and shall be bound to account to the liquidator. (5) (a) Except as provided in paragraph (b) of this subsection, any transfer of, and any obligation to transfer, money or other property from an insurer-member to the federal home loan bank under a federal home loan bank security, pledge, collateral, or guarantee agreement, or other similar arrangement or credit enhancement, shall not be deemed fraudulent and shall not be avoided by the receiver under subsection (1) of this section if the agreement, arrangement, or enhancement is: 1. Made in the ordinary course of business; and 2. Made in compliance with the applicable federal home loan bank agreement. (b) A transfer may be deemed fraudulent and may be avoided by the receiver under subsection (1) of this section if the transfer is made with the intent to hinder, delay, or defraud: 1. An insurer-member; 2. The receiver of the insurer-member; or 3. Existing or future creditors of the insurer-member. Effective: June 27, 2025 History: Amended 2025 Ky. Acts ch. 67, sec. 8, effective June 27, 2025. -- Amended 2022 Ky. Acts ch. 61, sec. 6, effective July 14, 2022. -- Amended 1990 Ky. Acts ch. 422, sec. 20, effective July 13, 1990. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 29, effective June 18, 1970.

KRS 304.33-300 Fraudulent transfers after petition

304.33-300. Fraudulent transfers after petition Except as provided in KRS 304.33-055: (1) Effect of petition: real property. After a petition for rehabilitation or liquidation, a transfer of any of the real property of the insurer made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred. The recording of a copy of the petition for or order of rehabilitation or liquidation with the county clerk in the county where any real property in question is located shall be constructive notice of the commencement of a proceeding in rehabilitation or liquidation. The exercise by a court of the United States or any state of jurisdiction to authorize or effect a judicial sale of real property of the insurer within any county in any state shall not be impaired by the pendency of such a proceeding unless the copy is recorded in the county prior to the consummation of the judicial sale; (2) Effect of petition: personal property. After a petition for rehabilitation or liquidation and before either the receiver takes possession of the property of the insurer or an order of rehabilitation or liquidation is granted: (a) A transfer of any of the property of the insurer, other than real property, made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred; (b) A person indebted to the insurer or holding property of the insurer may, if acting in good faith, pay the indebtedness or deliver the property or any part thereof to the insurer or upon his or her order, with the same effect as if the petition were not pending; (c) A person having actual knowledge of the pending rehabilitation or liquidation shall be deemed not to act in good faith unless he or she has reasonable cause to believe that the petition is not well founded; and (d) A person asserting the validity of a transfer under this section shall have the burden of proof. Except as elsewhere provided in this section, no transfer by or in behalf of the insurer after the date of the petition for liquidation by any person other than the liquidator shall be valid against the liquidator; (3) Every person receiving any property from the insurer or any benefit thereof which is a fraudulent transfer under this section shall be personally liable therefor and shall be bound to account to the liquidator; and (4) Negotiability. Nothing in this subtitle shall impair the negotiability of currency or negotiable instruments. Effective: June 27, 2025 History: Amended 2025 Ky. Acts ch. 67, sec. 9, effective June 27, 2025. -- Amended 2010 Ky. Acts ch. 24, sec. 1449, effective July 15, 2010. -- Amended 1990 Ky. Acts ch. 422, sec. 21, effective July 13, 1990. -- Amended 1978 Ky. Acts ch. 384, sec. 472, effective Ju ne 17, 1978. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 30, effective June 18, 1970.

KRS 304.33-310 Voidable preferences and liens

304.33-310. Voidable preferences and liens Except as provided in KRS 304.33-055: (1) Preferences. (a) Preference defined. A preference is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt made or suffered by the insurer within one (1) year before the filing of a successful petition for liquidation under this subtitle, the effect of which transfer may be to enable the creditor to obtain a greater percentage of his or her debt than another creditor of the same class would receive. If a liquidation order is entered while the insurer is already subject to a rehabilitation order, transfers otherwise qualifying shall be deemed preferences if made or suffered within one (1) year before the filing of the successful petition for rehabilitation or within two (2) years before the filing of the successful petition for liquidation, whichever time is shorter. (b) Invalidation of preferences. Except as provided in subsection (10) of this section, any preference may be avoided by the liquidator, if: 1. The insurer was insolvent at the time of the transfer; 2. The transfer was made within four (4) months before the filing of the petition; 3. The creditor receiving it or to be benefited thereby or his or her agent acting with reference thereto had reasonable cause to believe at the time when the transfer was made that the insurer was insolvent or was about to become insolvent; or 4. The creditor receiving it was an officer, employee, attorney or other person who was in fact in a position of comparable influence in the insurer to an officer whether or not he or she held such position, or any shareholder holding directly or indirectly more than five percent (5%) of any class of any equity security issued by the insurer, or any other person with whom the insurer did not deal at arm's length. Where the preference is voidable, the liquidator may recover the property or, if it has been converted, its value from any person who has received or converted the property, except a bona fide purchaser from or lienor of the debtor's transferee for a present fair equivalent value. Where the bona fide purchaser or lienor has given less than fair equivalent value, he or she shall have a lien upon the property to the extent of the consideration actually given by him or her. 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 liquidator; (2) Perfection of transfers. (a) Personal property. A transfer of property other than real property is 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. (b) Real property. A transfer of real property is 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 transferee. (c) Equitable liens. A transfer which creates an equitable lien is not deemed to be perfected if there are available means by which a legal lien could be created. (d) Transfers not perfected prior to petition. A 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. (e) Actual creditors unnecessary. This subsection applies whether or not there were creditors who might have obtained liens or persons who might have become bona fide purchasers; (3) Liens by legal or equitable proceedings. (a) Definition. A lien obtainable by legal or equitable proceedings upon a simple contract is one arising in the ordinary course of such proceedings upon the entry or docketing of a judgment or decree, or upon att achment, garnishment, execution or like process, whether before, upon or after judgment or decree and whether before or upon levy. It does not include liens which under applicable law are given a special priority over other liens which are prior in time. (b) When liens are superior. 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 (2) 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 off icials. Such a lien could not, however, become superior and such a purchase could not create superior rights for the purpose of subsection (2) of this section through any acts subsequent to the obtaining of such a lien or subsequent to such a purchase which require the agreement or concurrence of any third party or which require any further judicial action, or ruling; (4) Twenty-one day rule. A transfer of property for or on account of a new and contemporaneous consideration which is deemed under subsection (2) 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 t ransfer as against liens or bona fide purchasers' rights are performed within twenty -one (21) days or any period expressly allowed by the law, whichever is less. A transfer to secure a future loan, if such a loan is actually made, or a transfer which becom es security for a future loan shall have the same effect as a transfer for or on account of a new and contemporaneous consideration; (5) Indemnifying transfers also voidable. If any lien deemed voidable under paragraph (b) of subsection (1) 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 an insurer before the filing of a petition under this subtitle which results in a liquidation order, the indemnifying transfer or lien shall also be deemed voidable; (6) Avoidance of lien. The property affected by any lien deemed voidable under paragraph (b) of subsection (1) of this section and subsection (5) of this section is 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 liquidator, except that the court may on due notice order the lien to be preserved for the benefit of the estate and the court may direct that a conveyance be executed which is adequate to evidence the title of the liquidator; (7) Hearings to determine rights. The court shall have summary jurisdiction of any proceeding by the liquidator to hear and determine the rights of any parties under this section. Reasonable notice of any hearing in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other like 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 liquidator within such reasonable times as the court fixes; (8) Surety's liability discharged. The liability of a surety under a releasing bond or other like obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and avoided or, where the property is retained under subsection (7) of this section to the extent of the amount paid to the liquidator; (9) Setoff of new advances. If a creditor has been preferred and afterward in good faith gives the insurer further credit without security of any kind, for property which becomes a part of the insurer'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 him or her; and (10) Federal home loan bank preferences. A liquidator shall not avoid any preference arising under, or in connection with, a federal home loan bank security agreement or any pledge agreement, security agreement, collateral agreement, guarantee agreement, or other similar arrangement or credit enhancement relating to a security agreement to which a federal home loan bank is a party. Effective: June 27, 2025 History: Amended 2025 Ky. Acts ch. 67, sec. 10, effective June 27, 2025. -- Amended 2022 Ky. Acts ch. 61, sec. 7, effective July 14, 2022. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 31, effective June 18, 1970.

KRS 304.33-320 Claims of holders of void or voidable rights

304.33-320. Claims of holders of void or voidable rights (1) Disallowance for failure to surrender property. No claims of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment or encumbrance, voidable under this subtitle, shall be allowed unless he surrenders the preference, lien, conveyance, transfer, assignment or encumbrance. If the avoidance is effected by a proceeding in which a final judgment has been entered, the claim shall not be allowed unless the money is paid or the property is delivered to the liquidator within thirty (30) days from the date of the entering of the final judgment, except that the court having jurisdiction over the liquidation may allow further time if there is an appeal or other continuation of the proceeding. (2) Time for filing. A claim allowable under subsection (1) of this section by reason of the avoidance, whether voluntary or involuntary, of a preference, lien, conveyance, transfer, assignment or encumbrance may be filed as an excused late filing under KRS 304.33-360 if filed within thirty (30) days from the date of the avoidance or within the further time allowed by the court under subsection (1) of this section. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 32, effective June 18, 1970.

KRS 304.33-330 Set-offs and counterclaims

304.33-330. Set-offs and counterclaims (1) Set-offs allowed in general. Mutual debt or mutual credits between the insurer and another person in connection with any action or proceeding under this subtitle shall be set off and the balance only shall be allowed or paid, except as provided in subsection (2) of this section. (2) Exceptions. Except as provided in KRS 304.33-055, no set-off or counterclaim shall be allowed in favor of any person where: (a) The obligation of the insurer to the person would not at the date of the filing of a petition for liquidation entitle him or her to share as a claimant in the assets of the insurer; (b) The obligation of the insurer to the person was purchased by or transferred to the person with a view to its being used as a set-off; (c) The obligation of the person is to pay an assessment levied against the members or subscribers of the insurer, or is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution; or (d) The obligation of the person is to pay earned premiums to the insurer. However, the provisions of this paragraph shall only apply to reinsurance contracts entered into prior to July 13, 2004. Effective: June 27, 2025 History: Amended 2025 Ky. Acts ch. 67, sec. 11, effective June 27, 2025. -- Amended 2004 Ky. Acts ch. 125, sec. 2, effective July 13, 2004. -- Amended 1996 Ky. Acts ch. 169, sec. 1, effective July 15, 1996. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 33, effective June 18, 1970.

KRS 304.33-340 Assessments

304.33-340. Assessments (1) Report to court. As soon as practicable but not more than two (2) years from the date of an order of liquidation under KRS 304.33-200 of an insurer issuing assessable policies, the liquidator shall make a report to the court setting forth: (a) The reasonable value of the assets of the insurer; (b) The insurer's probable total liabilities; and (c) The probable aggregate amount of the assessment necessary to pay all claims of creditors and expenses in full, including expenses of administration and costs of collecting the assessment. (2) Levy of assessment. (a) Upon the basis of the report provided in subsection (1) of this section, including any supplements and amendments thereto, the court may levy ex parte one (1) or more assessments against all members of the insurer who are subject to assessment. (b) Subject to any applicable legal limits on assessability, the aggregate assessment shall be for the amount that the sum of the probable liabilities, the expenses of administration and the estimated cost of collection of the assessment exceeds the value of existing assets, with due regard being given to assessments that cannot be collected economically. (3) Order to show cause. After levy of assessment under subsection (2) of this section, the court shall issue an order directing each member who has not paid the assessment pursuant to the order to show cause why the liquidator shall not have a judgment therefor. If a member of the insurer also appears to be indebted to the insurer apart from the assessment, the court, upon application of the liquidator, may also direct the member to show cause why he should not pay the other indebtedness. Liability for such indebtedness shall be determined in the same manner and at the same time as the liability to pay the assessment. (4) Notice. The liquidator shall give notice of the order to show cause, by publication if so directed by the court and by first-class mail to each member liable thereunder, mailed at least twenty (20) days before the return day of the order to show cause, to his last known address as it appears on the records of the insurer. (5) Orders and hearings. (a) If a member does not appear and serve objections upon the liquidator upon the return day of the order to show cause under subsection (3) of this section, the court shall make an order adjudging the member liable for the amount of the assessment against him and other indebtedness, pursuant to subsection (3) of this section, together with costs, and the liquidator shall have a judgment against the member therefor. (b) If on such return day, the member appears and serves objections upon the liquidator, the court may hear and determine the matter or may appoint a referee to hear it and make such order as the facts warrant. Any order made by a referee under this paragraph shall have the same force and effect as if it were a judgment of the court, subject to review by the court upon application within thirty (30) days. (6) Collection. The liquidator may enforce any order or collect any judgment under subsection (5) of this section by any lawful means. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 34, effective June 18, 1970.

KRS 304.33-350 Reinsurer's liability

304.33-350. Reinsurer's liability The amount recoverable by the liquidator from a reinsurer shall not be reduced as a result of delinquency proceedings unless the reinsurance contract provides, in substance, that in the event of the insolvency of the ceding insurer the reinsurance shall be payable under a contract reinsured by the assuming insurer on the basis of reported claims allowed by the liquidation court, without diminution because of the insolvency of the ceding insurer. Such payments shall be made directly to the ceding insurer or to its domiciliary liquidator, except: (1) Where the contract or other written agreement specifically provides another payee of such reinsurance in the event of the insolvency of the ceding insurer; or (2) Where the assuming insurer, with the consent of the direct insured, has assumed such policy obligations of the ceding insurer as direct obligations of the assuming insurer to the payees under such policies and in substitution for the obligations of the ceding insurer to such payees. Effective: July 13, 2004 History: Amended 2004 Ky. Acts ch. 125, sec. 3, effective July 13, 2004. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 35, effective June 18, 1970.

KRS 304.33-360 Filing of claims

304.33-360. Filing of claims (1) Deadline for filing. Proof of all claims must be filed with the court in the form required by KRS 304.33-370 on or before the last day for filing specified in the notice required under KRS 304.33-250, except that proof of preferred ownership claims and proprietary claims under subsections (9) and (10) of KRS 304.33-430, need not be filed at all, and proof of claims for unearned premiums and claims for cash surrender values or other investment values in life insurance and annuities need not be filed unless the liquidator expressly so requires. (2) Excused late filings. For good cause shown, the liquidator shall recommend, and the court shall permit, a claimant making a late filing to share in dividends, whether past or future, as if he were not late, to the extent that any such payment will not prejudice the orderly administration of the liquidation. Good cause includes but is not limited to the following: (a) That existence of a claim was not known to the claimant and that he filed within thirty (30) days after he learned of it; (b) That a claim for unearned premiums or for cash surrender values or other investment values in life insurance or annuities which was not required to be filed was omitted from the liquidator's recommendations to the court under KRS 304.33-440, and that it was filed within thirty (30) days after the claimant learned of the omission; (c) That a transfer to a creditor was avoided under KRS 304.33-290 to 304.33- 330, inclusive, or was voluntarily surrendered under KRS 304.33-320 and that the filing satisfies the conditions of KRS 304.33-320; (d) That valuation under KRS 304.33-420 of security held by a secured creditor shows a deficiency, which is filed within thirty (30) days after the valuation; and (e) That a claim was contingent and became absolute, and was filed within thirty (30) days after it became absolute. (3) Unexcused late filings. The liquidator may consider any claim filed late which is not covered by subsection (2) of this section, and permit it to receive dividends, other than the first dividend, which are subsequently declared on any claims of the same or lower priority if the payment does not prejudice the orderly administration of the liquidation. The late-filing claimant shall receive, at each distribution, the same percentage of the amount allowed on his claim as is then being paid to other claimants of the same priority plus the same percentage of the amount allowed on his claim as is then being paid to claimants of any lower priority. This shall continue until his claim has been paid in full. Effective: July 14, 2000 History: Amended 2000 Ky. Acts ch. 255, sec. 5, effective July 14, 2000. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 36, effective June 18, 1970.

KRS 304.33-370 Proof of claim

304.33-370. Proof of claim (1) Contents of proof of claim. (a) Proof of claim shall consist of a verified statement that includes all of the following that are applicable: 1. The particulars of the claim, including the consideration given for it. 2. The identity and amount of the security on the claim. 3. The payments made on the debt, if any. 4. That the sum claimed is justly owing and that there is no setoff, counterclaim or defense to the claim. 5. Any right of priority of payment or other specific right asserted by the claimant. 6. A copy of any written instrument which is the foundation of the claim. 7. In the case of any third-party claim based on a liability policy issued by the insurer, a conditional release of the insured pursuant to subsection (1) of KRS 304.33-390. 8. The name and address of the claimant and the attorney who represents him, if any. (b) No claim need be considered or allowed if it does not contain all the information under paragraph (a) of this subsection which may be applicable. The liquidator may require that a prescribed form be used and may require that other information and documents be included. (2) Supplementary information. At any time the liquidator may request the claimant to present information or evidence supplementary to that required under subsection (1) of this section, and may take testimony under oath, require production of affidavits or depositions or otherwise obtain additional information or evidence. (3) Conclusiveness of judgments. No judgment or order against an insured or the insurer entered after the filing of a successful petition for liquidation and no judgment or order against an insured or the insurer entered at any time by default or by collusion need be considered as evidence of liability or of quantum of damages. No judgment or order against an insured or the insurer entered within four (4) months before the filing of the petition need be considered as evidence of liability or of the quantum of damages. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 37, effective June 18, 1970.

KRS 304.33-380 Special claims

304.33-380. Special claims (1) Claims contingent on judgments. The claim of a third party which is contingent only on his first obtaining a judgment against the insured shall be considered and allowed as if there were no such contingency. (2) Claims under terminated policies. Any claim that would have become absolute if there had been no termination of coverage under KRS 304.33-120, and which was not covered by insurance acquired to replace the terminated coverage, shall be allowed as if the coverage had remained in effect, unless at least ten (10) days before the insured event occurred either the claimant had actual notice of the termination or notice was mailed to him as prescribed by subsection (1) of KRS 304.33-250, or subsection (1) of KRS 304.33-260. If allowed, the claim shall share in distributions under subsection (9) of KRS 304.33-430. (3) Other contingent claims. A claim may be allowed even if contingent, if it is filed in accordance with subsection (2) of KRS 304.33-360. It may be allowed and may participate in all dividends declared after it is filed, to the extent that it does not prejudice the orderly administration of the liquidation. (4) Immature claims. Claims that are due except for the passage of time shall be treated as absolute claims are treated, except that where justice requires the court may order them discounted at the legal rate of interest. (5) (a) Nothing in this section or any other section in this subtitle shall be construed as authorizing the receiver, or any other entity, to compel payment from a reinsurer on the basis of estimated incurred but not reported losses or outstanding reserves. (b) Notwithstanding the provisions of this section or any other section of this subtitle to the contrary, the liquidator may negotiate a voluntary commutation and release of all obligations arising from reinsurance contracts or other agreements. Effective: July 13, 2004 History: Amended 2004 Ky. Acts ch. 125, sec. 4, effective July 13, 2004. -- Amended 2000 Ky. Acts ch. 255, sec. 6, effective July 14, 2000. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 38, effective June 18, 1970.

KRS 304.33-390 Special provision for third-party claims

304.33-390. Special provision for third-party claims (1) Third-party's claim. Whenever any third party asserts a cause of action against an insured of an insurer in liquidation, the third party may file a claim with the liquidator. The filing of the claim shall release the insured's liability to the third party on that cause of action in the amount of the applicable policy limit, but the liquidator shall also insert in any form used for the filing of third-party claims appropriate language to constitute such a release. The release shall be void if the insurance coverage is avoided by the liquidator. (2) Insured's claim. Whether or not the third party files a claim, the insured may file a claim on his own behalf in the liquidation. If the insured fails to file a claim by the date for filing claims specified in the order of liquidation or within sixty (60) days after mailing of the notice required by paragraph (b) of subsection (1) of KRS 304.33-250, whichever is later, he is an unexcused late filer. (3) Procedure for insured's claim. The liquidator shall make his recommendations to the court under KRS 304.33-440 for the allowance of an insured's claim under subsection (2) of this section after consideration of the probable outcome of any pending action against the insured on which the claim is based, the probable damages recoverable in the action and the probable costs and expenses of defense. After allowance by the court, the liquidator shall withhold any dividends payable on the claim, pending the outcome of litigation and negotiation with the insured. Whenever it seems appropriate, he shall reconsider the claim on the basis of additional information and amend his recommendations to the court. The insured shall be afforded the same notice and opportunity to be heard on all changes in the recommendation as in its initial determination. The court may amend its allowance as it thinks appropriate. As claims against the insured are settled or barred, the insured shall be paid from the amount withheld, the same percentage dividend as was paid on the other claims of like priority, based on the lesser of (a) the amount actually recovered from the insured by action or paid by agreement plus the reasonable costs and expenses of defense, or (b) the amount allowed on the claims by the court. After all claims are settled or barred, any sum remaining from the amount withheld shall revert to the undistributed assets of the insurer. Delay in final payment under this subsection shall not be a reason for unreasonable delay of final distribution and discharge of the liquidator. (4) Multiple claims. If several claims founded upon one (1) policy are filed, whether by third parties or as claims by the insured under this section, and the aggregate allowed amount of the claims to which the same limit of liability in the policy is applicable exceeds that limit, each claim as allowed shall be reduced in the same proportion so that the total equals the policy limit. Claims by the insured shall be evaluated as in subsection (3) of this section. If any insured's claim is subsequently reduced under subsection (3) of this section, the amount thus freed shall be apportioned ratably among the claims which have been reduced under this subsection. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 39, effective June 18, 1970.

KRS 304.33-400 Disputed claims

304.33-400. Disputed claims (1) Notice of rejection and request for hearing. When a claim is denied in whole or in part by the liquidator, written notice of the determination shall be given to the claimant and his attorney by first-class mail at the address shown in the proof of claim. Within sixty (60) days from the mailing of the notice, the claimant may file his objections with the court. If no such filing is made, the claimant may not further object to the determination. (2) Notice of hearing. Whenever objections are filed with the court, the liquidator shall ask the court for a hearing as soon as practicable and give notice of the hearing by first-class mail to the claimant or his attorney and to any other persons directly affected, not less than ten (10) nor more than twenty (20) days before the date of the hearing. The matter may be heard by the court or by a court-appointed referee. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 40, effective June 18, 1970.

KRS 304.33-410 Claims of surety

304.33-410. Claims of surety Whenever a creditor whose claim against an insurer is secured in whole or in part by the undertaking of another person fails to prove and file that claim, the other person may do so in the creditor's name, and shall be subrogated to the rights of the creditor, whether the claim has been filed by the creditor or by the other person in the creditor's name, to the extent that he discharges the undertaking. In the absence of an agreement with the creditor to the contrary, the other person shall not be entitled to any dividend until the amount paid to the creditor on the undertaking plus the dividends paid on the claim from the insurer's estate to the creditor equals the amount of the entire claim of the creditor. Any excess received by the creditor shall be held by him in trust for such other person. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 41, effective June 18, 1970.

KRS 304.33-420 Secured creditor's claims

304.33-420. Secured creditor's claims (1) The value of any security held by a secured creditor shall be determined in one (1) of the following ways, as the court directs: (a) By converting the same into money according to the terms of the agreement pursuant to which the security was delivered to such creditor; (b) By agreement, arbitration, compromise or litigation between the creditor and the liquidator. (2) The determination shall be under the supervision and control of the court. The amount so determined shall be credited upon the secured claim, and any deficiency shall be treated as an unsecured claim. If the claimant surrenders his security to the liquidator, the entire claim shall be allowed as if unsecured. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 42, effective June 18, 1970.

KRS 304.33-430 Order of distribution

304.33-430. Order of distribution The order of distribution of claims from the insurer's estate shall be as stated in this section. The first fifty dollars ($50) of the amount allowed on each claim in the classes under subsections (3) to (7), inclusive, of this section, shall be deducted from the claim and included in the class under subsection (9) of this section. Claims may not be cumulated by assignment to avoid application of the fifty dollars ($50) deductible provision. Subject to the fifty dollars ($50) deductible provision, every claim in each class shall be paid in full or adequate funds retained for the payment before the members of the next class receive any payment. No subclasses shall be established within any class. No claim by a shareholder, policyholder, or other creditor shall be permitted to circumvent the priority classes through the use of equitable remedies. (1) Administration costs. The costs and expenses of administration, including but not limited to the following: the actual and necessary costs of preserving or recovering the assets of the insurer; compensation for all services rendered in the liquidation; any necessary filing fees; the fees and mileage payable to witnesses; and reasonable attorney's fees. (2) Health maintenance organization and limited health service organization out-of- network claims. In a liquidation of a health maintenance organization or limited health service organization, any claims for health plan benefits or for limited health service contract benefits for out-of-network claims that would have otherwise been covered. (3) Loss and unearned premium claims. Claims by policyholders, beneficiaries, and insureds arising from and within the coverage of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the company, and liability claims against insureds which claims are within the coverage of and not in excess of the applicable limits of insurance policies and insurance contracts issued by the company, and claims of guaranty associations or foreign guaranty associations. Notwithstanding the foregoing, the following claims shall be excluded from Class 2 priority: (a) Obligations of the insolvent insurer arising out of reinsurance contracts; (b) Obligations incurred after the expiration date of the insurance policy or after the policy has been replaced by the insured or canceled at the insured's request or after the policy has been canceled as provided in this chapter. Notwithstanding this subsection, earned premium claims on policies, other than reinsurance agreements, shall not be excluded; (c) Obligations to insurers, insurance pools, or underwriting associations and their claims for contribution, indemnity, or subrogation, equitable or otherwise; (d) Any claim which is in excess of any applicable limits provided in the insurance policy issued by the insolvent insurer; (e) Any amount accrued as punitive or exemplary damages unless expressly covered under the terms of the policy; and (f) Tort claims of any kind against the insurer, and claims against the insurer for bad faith or wrongful settlement practices. (4) Claims of the federal government other than those claims included in Class 2. (5) Wages. (a) Debts due to employees for services performed, not to exceed one thousand dollars ($1,000) to each employee which have been earned within one (1) year before the filing of the petition for liquidation. Officers shall not be entitled to the benefit of this priority. (b) This priority shall be in lieu of any other similar priority authorized by law as to wages or compensation of employees. (6) Residual classification. All other claims including claims of the federal or any state or local government, not falling within other classes under this section. Claims, including those of any governmental body, for a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary loss sustained from the act, transaction, or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to the class of claims under subsection (9) of this section. (7) Judgments. Claims based solely on judgments. If a claimant files a claim and bases it both on the judgment and on the underlying facts, the claim shall be considered by the liquidator who shall give the judgment such weight as he deems appropriate. The claim as allowed shall receive the priority it would receive in the absence of the judgment. If the judgment is larger than the allowance on the underlying claim, the remaining portion of the judgment shall be treated as if it were a claim based solely on a judgment. (8) Interest on claims already paid. Interest at the legal rate compounded annually on all claims in the classes under subsections (1) to (7) of this section, inclusive, from the date of the petition for liquidation or the date on which the claim becomes due, whichever is later, until the date on which the dividend is declared. The liquidator, with the approval of the court, may make reasonable classifications of claims for purposes of computing interest, may make approximate computations, and may ignore certain classifications and time periods as de minimis. (9) Miscellaneous subordinated claims. The remaining claims or portions of claims not already paid, with interest as in subsection (8) of this section: (a) The first fifty dollars ($50) of each claim in the classes under subsections (3) to (7), inclusive, of this section, subordinated under this section; (b) Claims under subsection (2) of KRS 304.33-380; (c) Claims subordinated by KRS 304.33-600; (d) Claims filed late; (e) Portions of claims subordinated under subsection (6) of this section; and (f) Claims or portions of claims, payment of which is provided by other benefits or advantages recovered or recoverable by the claimant. (10) Preferred ownership claims. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Interest at the legal rate shall be added to each claim, as in subsections (8) and (9) of this section. (11) Proprietary claims. The claims of shareholders or other owners. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 166, sec. 10, effective July 15, 2010. -- Amended 2002 Ky. Acts ch. 105, sec. 21, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 255, sec. 4, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 287, sec. 1, effective July 15, 1996. -- Amended 1990 Ky. Acts ch. 422, sec. 23, effective July 13, 1990. -- Amended 1978 Ky. Acts ch. 325, sec. 1, effective June 17, 1978. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 43, effective June 18, 1970.

KRS 304.33-431 Applicability of KRS 304.33-430 in liquidation proceedings

304.33-431. Applicability of KRS 304.33-430 in liquidation proceedings KRS 304.33-430 shall apply to and govern the priority of the distribution of assets in any proceeding to liquidate an insurer pending on or commenced on or after July 15, 1996. Effective: July 15, 1996 History: Created 1996 Ky. Acts ch. 287, sec. 2, effective July 15, 1996.

KRS 304.33-440 Liquidator, disbursement of assets, recommendations to the court

304.33-440. Liquidator, disbursement of assets, recommendations to the court (1) Immediate Access. Within one hundred twenty (120) days of a final determination of insolvency of a company by a court of competent jurisdiction of this state, the liquidator shall make application to the court for approval of a proposal to disburse assets out of such company's marshalled assets, from time to time as such assets become available, to guaranty associations or foreign guaranty associations having obligations because of the insolvency. Such proposal shall at least include provision for: (a) Reserving amounts for the payment of the expenses of administration and claims falling within the priorities established in KRS 304.33-430(1) and (3); (b) Disbursement of the assets marshalled to date and subsequent disbursements of assets as they become available; (c) Equitable allocation of disbursements to each of the associations entitled thereto; and (d) The securing by the liquidator from each of the associations entitled to disbursements pursuant to paragraph (e) of an agreement to return to the liquidator such assets previously disbursed as may be required to pay claims of secured creditors and claims falling within the priorities established in KRS 304.33-430(1), (3) and (4) in accordance with such priorities. No bond shall be required of any such association. (e) The liquidator's proposal shall also provide for disbursements to the associations in amounts at least equal to the payments made or to be made thereby for which associations could assert claims against the liquidator, and shall further provide that if the assets available for disbursement from time to time do not equal or exceed the amount of such payments made or to be made by the association then disbursements shall be in the amount of available assets. (f) Notice of such application shall be given to the associations in and to the commissioners of insurance of each of the states in which the company did business. Any such notice shall be deemed to have been given when deposited in the United States certified mails, first class postage prepaid, at least thirty (30) days prior to submission of such application to the court. Action on the application may be taken by the court provided the above required notice has been given and provided further that the liquidator's proposal complies with this subsection. (2) Recommended claims. The liquidator shall review all claims duly filed in the liquidation and shall make such further investigation as he deems necessary. He may compound, compromise or in any other manner negotiate the amount for which claims will be recommended to the court. Unresolved disputes shall be determined under KRS 304.33-400. As often as practicable, he shall present to the court reports of claims against the insurer with his recommendations. The reports shall include the name and address of each claimant, the particulars of the claim and the amount of the claim finally recommended if any. As soon as reasonably possible after the last day for filing claims, he shall present a list of all claims not already reported. If the insurer has issued annuities or life insurance policies, the liquidator shall report the persons to whom, according to the records of the insurer, amounts are owed as cash surrender values or other investment values and the amounts owed. If the insurer has issued policies on the advance premium plan, the liquidator shall report the persons to whom, according to the records of the insurer, unearned premiums are owed and the amounts owed. (3) Allowance of claims. The court may approve, disapprove, or modify any report on claims by the liquidator, except that the liquidator's agreements with other parties shall be final and binding on the court on claims settled for $500 or less. No claim under a policy of insurance shall be allowed for an amount in excess of the applicable policy limits. Effective: July 14, 2000 History: Amended 2000 Ky. Acts ch. 255, sec. 7, effective July 14, 2000. -- Amended 1990 Ky. Acts ch. 422, sec. 24, effective July 13, 1990. -- Amended 1978 Ky. Acts ch. 325, sec. 2, effective June 17, 1978. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 44, effective June 18, 1970.

KRS 304.33-450 Distribution of assets

304.33-450. Distribution of assets Payments to creditors. Under the direction of the court the liquidator shall pay dividends in a manner that will assure the proper recognition of priorities and a reasonable balance between the expeditious completion of the liquidation and the protection of unliquidated and undetermined claims, including third-party claims. Distribution of assets in kind may be made at valuations set by agreement between the liquidator and the creditor and approved by the court. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 45, effective June 18, 1970.

KRS 304.33-460 Unclaimed and withheld funds

304.33-460. Unclaimed and withheld funds (1) Unclaimed funds. All unclaimed funds subject to distribution remaining in the liquidator's hands when the liquidator is ready to apply to the court for discharge, including the amount distributable to any creditor, shareholder, member or other person who is unknown or cannot be found or who is under disability with no person legally competent to receive his or her distributive share, shall be deposited with the State Treasurer, and shall be paid over without interest except in accordance with KRS 304.33-430 to the person entitled thereto or his or her legal representative upon proof satisfactory to the State Treasurer of his or her right thereto. Any amount on deposit not claimed within six (6) years from the discharge of the liquidator is deemed abandoned and shall become property of the state. The State Treasurer shall at the end of each fiscal year transfer these amounts to the common school fund. (2) Withheld funds. All funds withheld under KRS 304.33-390 and not distributed shall upon discharge of the liquidator be deposited with the State Treasurer and paid by him or her in accordance with KRS 304.33-390. Any sums remaining which under KRS 304.33-390 would revert to the undistributed assets of the insurer shall be transferred to the State Treasurer and become the property of the state under subsection (1) of this section unless the commissioner petitions the court to reopen the liquidation under KRS 304.33-480. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1450, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 46, effective June 18, 1970.

KRS 304.33-470 Termination of proceedings

304.33-470. Termination of proceedings (1) Liquidator's application. When all assets justifying the expense of collection and distribution have been collected and distributed under this subtitle, the liquidator shall apply to the court for discharge. The court may grant the discharge and make any other orders deemed appropriate, including an order to transfer to the State Treasury for the common school fund any remaining funds that are uneconomic to distribute. (2) Application by others. Any other person may apply to the court at any time for an order under subsection (1) of this section. If the application is denied, the applicant shall pay the costs and expenses of the liquidator in resisting the application, including a reasonable attorney's fee. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 47, effective June 18, 1970.

KRS 304.33-480 Reopening liquidation

304.33-480. Reopening liquidation After the liquidation proceeding has been terminated and the liquidator discharged, the commissioner or other interested party may at any time petition the court to reopen the proceedings for good cause, including the discovery of additional assets. If the court is satisfied that there is justification for reopening, it shall so order. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1451, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 48, effective June 18, 1970.

KRS 304.33-490 Disposition of records during and after termination of liquidation

304.33-490. Disposition of records during and after termination of liquidation Whenever it appears to the commissioner that the records of any insurer in process of liquidation or completely liquidated are no longer useful, the commissioner may recommend to the court what records should be retained for future reference and what should be disposed of. The court shall enter an order thereon. The commissioner shall keep all records the court orders preserved, in accordance with KRS 304.2-150. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1452, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 49, effective June 18, 1970.

KRS 304.33-500 External audit of receiver's books

304.33-500. External audit of receiver's books The court in which the proceeding is pending may as it deems desirable, cause audits to be made of the books of the commissioner relating to any receivership established under this subtitle, and a report of each audit shall be filed with the commissioner and with the court. The books, records, and other documents of the receivership shall be made available to the auditor at any time without notice. The expense of each audit shall be considered a cost of administration of the receivership. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1453, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 50, effective June 18, 1970.

KRS 304.33-510 Conservation of property of foreign or alien insurers found in this state

304.33-510. Conservation of property of foreign or alien insurers found in this state (1) Grounds for petition. If a domiciliary liquidator has not been appointed, the commissioner may apply to the Franklin Circuit Court by petition for an order directing him or her to conserve the property of an alien insurer not domiciled in this state or a foreign insurer on any one (1) or more of the following grounds: (a) Any of the grounds in KRS 304.33-140; (b) Any of the grounds in KRS 304.33-190; (c) That any of its property has been sequestered by official action in its domiciliary state, or in any other state; (d) That enough of its property has been sequestered in a foreign country to give reasonable cause to fear that the insurer is or may become insolvent; (e) That: 1. Its certificate of authority to do business in this state has been revoked or that none was ever issued; and 2. There are residents of this state with outstanding claims or outstanding policies. (2) Terms of order. The court may issue the order in whatever terms it deems appropriate. The filing or recording of the order with any county clerk in this state imparts the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with that county clerk. (3) Transformation to liquidation or ancillary receivership. The conservator may at any time petition for and the court may grant an order under KRS 304.33-520 to liquidate the assets of a foreign or alien insurer under conservation or, if appropriate, for an order under KRS 304.33-540 to be appointed ancillary receiver. (4) Order to return to insurer. The conservator may at any time petition the court for an order terminating conservation of an insurer. If the court finds that the conservation is no longer necessary, it shall order that the insurer be restored to possession of its property and the control of its business. The court may also make such finding and issue such order at any time upon its own motion. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1454, effective July 15, 2010. -- Amended 1978 Ky. Acts ch. 384, sec. 473, effective June 17, 1978. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 51, effective June 18, 1970.

KRS 304.33-520 Liquidation of property of foreign or alien insurers found in this state

304.33-520. Liquidation of property of foreign or alien insurers found in this state (1) Ground for petition. If no domiciliary receiver has been appointed, the commissioner may apply to the Franklin Circuit Court by petition for an order directing the commissioner to liquidate the assets found in this state of a foreign insurer or an alien insurer not domiciled in this state, on any of the following grounds: (a) Any of the grounds in KRS 304.33-140; (b) Any of the grounds in KRS 304.33-190; and (c) Any of the grounds in KRS 304.33-510. (2) Terms of order. If it appears to the court that the best interests of creditors, policyholders and the public so require, the court may issue an order to liquidate in whatever terms it deems appropriate. The filing or recording of the order with any county clerk in this state imparts the same notice as a deed, bill of sale, or other evidence of title duly filed or recorded with that county clerk. (3) Conversion to ancillary proceeding. If a domiciliary liquidator is appointed in a reciprocal state while a liquidation is proceeding under this section, the liquidator under this section shall thereafter act as ancillary receiver under KRS 304.33-540. If a domiciliary liquidator is appointed in a nonreciprocal state while a liquidation is proceeding under this section, the liquidator under this section may petition the court for permission to act as ancillary receiver under KRS 304.33-540. (4) Federal receivership. On the same grounds as are specified in subsection (1) of this section, the commissioner may petition any appropriate federal District Court to be appointed receiver to liquidate that portion of the insurer's assets and business over which the court will exercise jurisdiction; or any lesser part thereof that the commissioner deems desirable for the protection of the policyholders and creditors in this state. The commissioner may accept appointment as federal receiver if another person files a petition. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1455, effective July 15, 2010. -- Amended 1978 Ky. Acts ch. 384, sec. 474, effective June 17, 1978. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 52, effective June 18, 1970.

KRS 304.33-530 Foreign domiciliary receivers in other states

304.33-530. Foreign domiciliary receivers in other states (1) Property rights and title: reciprocal state. The domiciliary liquidator of an insurer domiciled in a reciprocal state shall be vested by operation of law with the title to all of the property, contracts and rights of action, and all of the books, accounts and other records of the insurer located in this state. The date of vesting shall be the date of the filing of the petition, if that date is specified by the domiciliary law for the vesting of property in the domiciliary state; otherwise, the date of vesting shall be the date of entry of the order directing possession to be taken. The domiciliary liquidator shall have the immediate right to recover balances due from agents and to obtain possession of the books, accounts and other records of the insurer located in this state. The domiciliary liquidator also shall have the right to recover the other assets of the insurer located in this state, subject to subsection (3) of KRS 304.33- 540. (2) Property rights and title: state not a reciprocal state. If a domiciliary liquidator is appointed for an insurer not domiciled in a reciprocal state, the commissioner of this state shall be vested by operation of law with the title to all of the property, contracts and rights of action, and all of the books, accounts and other records of the insurer located in this state, at the same time that the domiciliary liquidator is vested with title in the domiciling state. The commissioner of this state may petition for a conservation or liquidation order under KRS 304.33-510 or 304.33-520, or for an ancillary receivership under KRS 304.33-540, or after approval by the Franklin County Circuit Court, may transfer title to the domiciliary liquidator, as the interests of justice and the equitable distribution of the assets require. (3) Filing claims. Claimants residing in this state may file claims with the liquidator or ancillary receiver, if any, in this state or with the domiciliary liquidator, if the domiciliary law permits. The claims must be filed on or before the last date fixed for the filing of claims in the domiciliary liquidation proceedings. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1456, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 53, effective June 18, 1970.

KRS 304.33-540 Ancillary formal proceedings

304.33-540. Ancillary formal proceedings (1) Appointment of ancillary receiver in this state. If a domiciliary liquidator has been appointed for an insurer not domiciled in this state, the commissioner shall file a petition with the Franklin Circuit Court requesting appointment as ancillary receiver in this state: (a) If the commissioner finds that there are sufficient assets of the insurer located in this state to justify the appointment of an ancillary receiver; (b) If ten (10) or more persons resident in this state having claims against the insurer file a petition with the commissioner requesting appointment of an ancillary receiver; or (c) If the protection of creditors or policyholders in this state so requires. (2) Terms of order. The court may issue an order appointing an ancillary receiver in whatever terms it deems appropriate. The filing or recording of the order with any county clerk in this state imparts the same notice as a deed, bill of sale or other evidence of title duly filed or recorded with that county clerk. (3) Property rights and title: ancillary receivers in this state. When a domiciliary liquidator has been appointed in a reciprocal state the ancillary receiver appointed in this state under subsection (1) of this section shall have the sole right to recover all the assets of the insurer in this state not already recovered by the domiciliary liquidator, except that the domiciliary liquidator shall be entitled to and have the sole right to recover balances due from agents and the books, accounts and other records of the insurer. The ancillary receiver shall have the right to recover balances due from agents and books, accounts and other records of the insurer, if such action is necessary to protect the assets because of inaction by the domiciliary liquidator. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this state, and shall pay the necessary expenses of the proceedings. The ancillary receiver shall promptly transfer all remaining assets to the domiciliary liquidator. Subject to this section, the ancillary receiver and his or her deputies shall have the same powers and be subject to the same duties with respect to the administration of assets as a liquidator of an insurer domiciled in this state. (4) Property rights and title: foreign ancillary receivers. When a domiciliary liquidator has been appointed in this state, ancillary receivers appointed in reciprocal states shall have, as to assets and books, accounts and other records located in their respective states, corresponding rights and powers to those prescribed in subsection (3) of this section for ancillary receivers appointed in this state. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1457, effective July 15, 2010. -- Amended 1978 Ky. Acts ch. 384, sec. 475, effective June 17, 1978. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 54, effective June 18, 1970.

KRS 304.33-550 Ancillary summary proceedings

304.33-550. Ancillary summary proceedings The commissioner in his or her sole discretion may institute proceedings under KRS 304.33-110 or 304.33-120 at the request of the commissioner or other appropriate official of the domiciliary state of any foreign or alien insurer having property located in this state. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1458, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 55, effective June 18, 1970.

KRS 304.33-560 Claims of nonresidents against insurers domiciled in this state

304.33-560. Claims of nonresidents against insurers domiciled in this state (1) Filing claims. In a liquidation proceeding begun in this state against an insurer domiciled in this state, claimants residing in foreign countries or in states not reciprocal states must file claims in this state, and claimants residing in reciprocal states may file claims either with the ancillary receivers, if any, in their respective states, or with the domiciliary liquidator. Claims must be filed on or before the last dates fixed for the filing of claims in the domiciliary liquidation proceeding. (2) Proving claims. Claims belonging to claimants residing in reciprocal states may be proved either in the liquidation proceeding in this state as provided in this subtitle, or in ancillary proceedings, if any, in the reciprocal states. If notice of the claim and opportunity to appear and be heard is afforded the domiciliary liquidator of this state as provided in KRS 304.33-570 with respect to ancillary proceedings in this state, the final allowance of claims by the courts in ancillary proceedings in reciprocal states shall be conclusive as to amount and as to priority against special deposits or other security located in the ancillary states, but shall not be conclusive with respect to priorities against general assets under KRS 304.33-430. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 56, effective June 18, 1970.

KRS 304.33-570 Claims of residents against insurers domiciled in reciprocal states

304.33-570. Claims of residents against insurers domiciled in reciprocal states (1) Filing claims. In a liquidation proceeding in a reciprocal state against an insurer domiciled in that state, claimants against the insurer who reside within this state may file claims either with the ancillary receiver, if any, in this state, or with the domiciliary liquidator. Claims must be filed on or before the last dates fixed for the filing of claims in the domiciliary liquidation proceeding. (2) Proving claims. Claims belonging to claimants residing in this state may be proved either in the domiciliary state under the law of that state or in ancillary proceedings, if any, in this state. If a claimant elects to prove his claim in this state, he shall file his claim with the court in the manner provided in KRS 304.33-360 and 304.33- 370. The ancillary receiver shall make his recommendation to the court as under KRS 304.33-440. He also shall arrange a date for hearing if necessary under KRS 304.33-400 and shall give notice to the liquidator in the domiciliary state, by certified mail, return receipt requested or by personal service at least forty (40) days prior to the date set for hearing. If the domiciliary liquidator, within thirty (30) days after the giving of such notice, gives notice in writing to the ancillary receiver and to the claimant, either by certified mail or by personal service, of his intention to contest the claim, he shall be entitled to appear or to be represented in any proceeding in this state involving the adjudication of the claim. The final allowance of the claim by the courts of this state shall be accepted as conclusive as to amount and as to priority against special deposits or other security located in this state. Effective: July 15, 1980 History: Amended 1980 Ky. Acts ch. 114, sec. 74, effective July 15, 1980. -- Amended 1974 Ky. Acts ch. 315, sec. 53, effective June 21, 1974. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 57, effective June 18, 1970.

KRS 304.33-580 Attachment, garnishment and levy of execution

304.33-580. Attachment, garnishment and levy of execution During the pendency in this or any other state of a liquidation proceeding, whether called by that name or not, no action or proceeding in the nature of an attachment, garnishment or levy of execution shall be commenced or maintained in this state or elsewhere against the delinquent insurer or its assets. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 58, effective June 18, 1970.

KRS 304.33-590 Interstate priorities

304.33-590. Interstate priorities (1) Priorities. In a liquidation proceeding in this state involving one or more reciprocal states the order of distribution of the domiciliary state shall control as to all claims of residents of this and reciprocal states. All claims of residents of reciprocal states shall be given equal priority of payment from general assets regardless of where such assets are located. (2) Priority of special deposit claims. The owners of special deposit claims against an insurer for which a liquidator is appointed in this or any other state shall be given priority against the special deposits in accordance with the statutes governing the creation and maintenance of the deposits. If there is a deficiency in any deposit so that the claims secured by it are not fully discharged from it the claimants may share in the general assets, but the sharing shall be deferred until general creditors, and also claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit. (3) Priority of secured claims. The owners of a secured claim against an insurer for which a liquidator has been appointed in this or any other state may surrender his security and file his claim as a general creditor, or the claim may be discharged by resort to the security in accordance with KRS 304.33-420, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 59, effective June 18, 1970.

KRS 304.33-600 Subordination of claims for noncooperation

304.33-600. Subordination of claims for noncooperation If an ancillary receiver in another state or foreign country, whether called by that name or not, fails to transfer to the domiciliary liquidator in this state any assets within his control other than special deposits, diminished only by the expenses of the ancillary receivership, if any, the claims filed in the ancillary receivership, other than special deposit claims or secured claims, shall be placed in the class of claims under subsection (8) of KRS 304.33- 430. Effective: July 14, 2000 History: Amended 2000 Ky. Acts ch. 255, sec. 8, effective July 14, 2000. -- Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 60, effective June 18, 1970.

Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=38748Fetched: 10/20/2026