Sen. John G. Mulroe

Filed: 3/7/2017

 

 


 

 


 
10000SB1297sam001LRB100 09657 SMS 22982 a

1
AMENDMENT TO SENATE BILL 1297

2    AMENDMENT NO. ______. Amend Senate Bill 1297 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Insurance Code is amended by
5changing Sections 189 and 204 as follows:
 
6    (215 ILCS 5/189)  (from Ch. 73, par. 801)
7    Sec. 189. Injunction. The court shall have jurisdiction,
8upon, or at any time after the filing of the complaint to issue
9an injunction restraining such company and its officers,
10agents, directors, employees and all other persons from
11transacting any company business or disposing of its property
12until the further order of the court. The court may also
13restrain all persons, companies, and entities from bringing or
14further prosecuting all actions and proceedings at law or in
15equity or otherwise, whether in this State or elsewhere,
16against the company or its assets or property or the Director

 

 

10000SB1297sam001- 2 -LRB100 09657 SMS 22982 a

1except insofar as those actions or proceedings arise in or are
2brought in the conservation, rehabilitation, or liquidation
3proceeding. The court may issue such other injunctions or enter
4such other orders as may be deemed necessary to prevent
5interference with the proceedings, or with the Director's
6possession and control or title, rights or interests as herein
7provided or to prevent interference with the conduct of the
8business by the Director, and may issue such other injunctions
9or enter such other orders as may be deemed necessary to
10prevent waste of assets or the obtaining, asserting, or
11enforcing of preferences, judgments, attachments, or other
12like liens, including common law retaining liens, or the making
13of any levy against such company or its property and assets
14while in the possession and control of the Director. The court
15may issue any other injunctions or enter any other orders that
16are necessary to protect enrollees in accordance with
17subsection (c) of Section 5-6 of the Health Maintenance
18Organization Act. Any injunction issued under this article may
19be served and enforced as in other civil proceedings, but no
20bond or other security shall be required of the plaintiff,
21either for costs or for any injunction. The provisions of this
22Section are subject to the exclusion set forth in subsection
23(o) of Section 204 of this Article.
24(Source: P.A. 88-297; 89-206, eff. 7-21-95.)
 
25    (215 ILCS 5/204)  (from Ch. 73, par. 816)

 

 

10000SB1297sam001- 3 -LRB100 09657 SMS 22982 a

1    Sec. 204. Prohibited and voidable transfers and liens.
2    (a)(1) A preference is a transfer of any of the property of
3a company to or for the benefit of a creditor, for or on
4account of an antecedent debt, made or suffered by the company
5within 2 years before the filing of a complaint under this
6Article, the effect of which may be to enable the creditor to
7obtain a greater percentage of this debt than another creditor
8of the same class would receive.
9    (2) Any preference may be avoided by the Director as
10rehabilitator, liquidator, or conservator if:
11        (A) the company was insolvent at the time of the
12    transfer; and
13        (B) the transfer was made within 4 months before the
14    filing of the complaint; or the creditor receiving it was
15    (i) an officer, or any employee or attorney or other person
16    who was in fact in a position of comparable influence in
17    the company to an officer whether or not that person held
18    such a position, (ii) any shareholder holding, directly or
19    indirectly, more than 5% of any class of any equity
20    security issued by the company, or (iii) any other person,
21    firm, corporation, association, or aggregation of
22    individuals with whom the company did not deal at arm's
23    length.
24    (3) Where the preference is voidable, the Director as
25rehabilitator, liquidator, or conservator may recover the
26property or, if it has been converted, its value from any

 

 

10000SB1297sam001- 4 -LRB100 09657 SMS 22982 a

1person who has received or converted the property; except where
2a bona fide purchaser or lienor has given less than fair
3equivalent value, the purchaser or lienor shall have a lien
4upon the property to the extent of the consideration actually
5given. Where a preference by way of lien or security title is
6voidable, the court may on due notice order the lien or title
7to be preserved for the benefit of the estate, in which event
8the lien or title shall pass to the Director as rehabilitator
9or liquidator.
10    (b) (1) A transfer of property other than real property
11shall be deemed to be made or suffered when it becomes so far
12perfected that no subsequent lien obtainable by legal or
13equitable proceedings on a simple contract could become
14superior to the rights of the transferee.
15    (2) A transfer of real property shall be deemed to be made
16or suffered when it becomes so far perfected that no subsequent
17bona fide purchaser from the company could obtain rights
18superior to the rights of the transferee.
19    (3) A transfer that creates an equitable lien shall not be
20deemed to be perfected if there are available means by which a
21legal lien could be created.
22    (4) A transfer not perfected before the filing of a
23complaint shall be deemed to be made immediately before the
24filing of the complaint.
25    (5) The provisions of this subsection apply whether or not
26there are or were creditors who might have obtained liens or

 

 

10000SB1297sam001- 5 -LRB100 09657 SMS 22982 a

1persons who might have become bona fide purchasers.
2    (c) For purposes of this Section:
3        (1) A lien obtainable by legal or equitable proceedings
4    upon a simple contract is one arising in the ordinary
5    course of the proceedings upon the entry or docketing of a
6    judgment or decree, or upon attachment, garnishment,
7    execution, or like process, whether before, upon, or after
8    judgment or decree and whether before or upon levy. It does
9    not include liens that, under applicable law, are given a
10    special priority over other liens that are prior in time.
11        (2) A lien obtainable by legal or equitable proceedings
12    could become superior to the rights of a transferee, or a
13    purchaser could obtain rights superior to the rights of a
14    transferee within the meaning of subsection (b) of this
15    Section, if such consequences would follow only from the
16    lien or purchase itself, or from the lien or purchase
17    followed by any step wholly within the control of the
18    respective lienholder or purchaser, with or without the aid
19    of ministerial action by public officials. A lien could
20    not, however, become superior and a purchase could not
21    create superior rights for the purpose of subsection (b) of
22    this Section through any acts subsequent to an obtaining of
23    the lien or subsequent to a purchase that requires the
24    agreement or concurrence of any third party or that
25    requires any further judicial action or ruling.
26    (d) A transfer of property for or on account of a new and

 

 

10000SB1297sam001- 6 -LRB100 09657 SMS 22982 a

1contemporaneous consideration which is deemed under subsection
2(b) of this Section to be made or suffered after the transfer
3because of delay in perfecting it does not thereby become a
4transfer for or on account of an antecedent debt if any acts
5required by the applicable law to be performed in order to
6perfect the transfer as against liens or bona fide purchasers'
7rights are performed within 21 days or any period expressly
8allowed by the law, whichever is less. A transfer to secure a
9future loan, if the loan is actually made, or a transfer that
10becomes security for a future loan, shall have the same effect
11as a transfer for or on account of a new and contemporaneous
12consideration.
13    (e) If any lien deemed voidable under part (2) of
14subsection (a) of this Section has been dissolved by the
15furnishing of a bond or other obligation, the surety on which
16has been indemnified directly or indirectly by the transfer of
17or the creation of a lien upon any property of a company before
18the filing of a complaint under this Article, the indemnifying
19transfer or lien shall also be deemed voidable.
20    (f) The property affected by any lien deemed voidable under
21subsections (a) and (e) of this Section shall be discharged
22from the lien, and that property and any of the indemnifying
23property transferred to or for the benefit of a surety shall
24pass to the Director as rehabilitator or liquidator, except
25that the court may, on due notice, order any such lien to be
26preserved for the benefit of the estate and the court may

 

 

10000SB1297sam001- 7 -LRB100 09657 SMS 22982 a

1direct that such conveyance be executed as may be proper or
2adequate to evidence the title of the Director as rehabilitator
3or liquidator.
4    (g) The court shall have summary jurisdiction over any
5proceeding by the Director as rehabilitator, liquidator, or
6conservator to hear and determine the rights of any parties
7under this Section. Reasonable notice of any hearings in the
8proceeding shall be given to all parties in interest, including
9the obligee of a releasing bond or other life obligation. Where
10an order is entered for the recovery of indemnifying property
11in kind or for the avoidance of an indemnifying lien, the
12court, upon application of any party in interest, shall in the
13same proceeding ascertain the value of the property or lien,
14and if the value is less than the amount for which the property
15is indemnity or than the amount of the lien, the transferee or
16lienholder may elect to retain the property or lien upon
17payment of its value, as ascertained by the court, to the
18Director as rehabilitator, liquidator, or conservator, within
19such reasonable times as the court shall fix.
20    (h) The liability of the surety under the releasing bond or
21other similar obligation shall be discharged to the extent of
22the value of the indemnifying property recovered or the
23indemnifying lien nullified and avoided by the Director as
24rehabilitator, liquidator, or conservator. Where the property
25is retained under subsection (g) of this Section, the liability
26shall be discharged to the extent of the amount paid to the

 

 

10000SB1297sam001- 8 -LRB100 09657 SMS 22982 a

1Director as rehabilitator, liquidator, or conservator.
2    (i) If a creditor has been preferred and thereafter in good
3faith gives the company further credit without security of any
4kind, for property which becomes a part of the company's
5estate, the amount of the new credit remaining unpaid at the
6time of the petition may be set off against the preference
7which would otherwise be recoverable from the creditor.
8    (j) If a company shall, directly or indirectly, within 4
9months before the filing of a complaint under this Article, or
10at any time in contemplation of such a proceeding, pay money or
11transfer property to any attorney for services rendered or to
12be rendered, the transactions may be examined by the court on
13its own motion or shall be examined by the court on petition of
14the Director as rehabilitator, liquidator, or conservator and
15shall be held valid only to the extent of a reasonable amount
16to be determined by the court, and the excess may be recovered
17by the Director as rehabilitator, liquidator, or conservator
18for the benefit of the estate provided that where the attorney
19is in a position of influence in the company or an affiliate
20thereof payment of any money or the transfer of any property to
21the attorney for services rendered or to be rendered shall be
22governed by item (B) of part (2) of subsection (a) of this
23Section.
24    (k) (1) An officer, director, manager, employee,
25shareholder, member, subscriber, attorney, or other person
26acting on behalf of the company who knowingly participates in

 

 

10000SB1297sam001- 9 -LRB100 09657 SMS 22982 a

1giving any preference when that officer, director, manager,
2employee, shareholder, member, subscriber, attorney, or other
3person has reasonable cause to believe the company is or is
4about to become insolvent at the time of the preference shall
5be personally liable to the Director as rehabilitator,
6liquidator, or conservator for the amount of the preference.
7There is a reasonable cause to so believe if the transfer was
8made within 4 months before the date of filing of the
9complaint.
10    (2) A person receiving any property from the company or the
11benefit thereof as a preference voidable under subsection (a)
12of this Section shall be personally liable therefor and shall
13be bound to account to the Director as rehabilitator,
14liquidator, or conservator.
15    (3) Nothing in this Section shall prejudice any other claim
16by the Director as rehabilitator, liquidator, or conservator
17against any person.
18    (l) For purposes of this Section, the company is presumed
19to have been insolvent on and during the 4 month period
20immediately preceding the date of the filing of the complaint.
21    (m) The Director as rehabilitator, liquidator, or
22conservator may not avoid a transfer under this Section to the
23extent that the transfer was:
24        (A) Intended by the company and the creditor to or for
25    whose benefit the transfer was made to be a contemporaneous
26    exchange for new value given to the company, and was in

 

 

10000SB1297sam001- 10 -LRB100 09657 SMS 22982 a

1    fact a substantially contemporaneous exchange; or
2        (B) In payment of a debt incurred by the company in the
3    ordinary course of business or financial affairs of the
4    company and the transferee; made in the ordinary course of
5    business or financial affairs of the company and the
6    transferee; and made according to ordinary business terms;
7    or
8        (C) In the case of a transfer by a company where the
9    Director has determined that an event described in Section
10    35A-25 or 35A-30 has occurred, specifically approved by the
11    Director in writing pursuant to this subsection, whether or
12    not the company is in receivership under this Article. Upon
13    approval by the Director, such a transfer cannot later be
14    found to constitute a prohibited or voidable transfer based
15    solely upon a deviation from the statutory payment
16    priorities established by law for any subsequent
17    receivership; or .
18        (D) Of money or other property arising under or in
19    connection with any Federal Home Loan Bank security
20    agreement or any pledge, security, collateral or guarantee
21    agreement, or any other similar arrangement or credit
22    enhancement relating to a Federal Home Loan Bank security
23    agreement.
24    (n) The Director as rehabilitator, liquidator, or
25conservator may avoid any transfer of or lien upon the property
26of a company that the estate of the company or a policyholder,

 

 

10000SB1297sam001- 11 -LRB100 09657 SMS 22982 a

1creditor, member, or stockholder of the company may have
2avoided, and the Director as rehabilitator, liquidator, or
3conservator may recover and collect the property so transferred
4or its value from the person to whom it was transferred unless
5the property was transferred to a bona fide holder for value
6before the filing of the complaint. The Director as
7rehabilitator, liquidator, or conservator shall be deemed a
8creditor for purposes of pursuing claims under the Uniform
9Fraudulent Transfer Act.
10    (o) Notwithstanding any provision of this Article to the
11contrary, a Federal Home Loan Bank shall not be stayed,
12enjoined, or prohibited from exercising or enforcing any right
13or cause of action regarding collateral pledged under any
14security agreement or any pledge, security, collateral or
15guarantee agreement, or any other similar arrangement or credit
16enhancement relating to a Federal Home Loan Bank security
17agreement.
18(Source: P.A. 93-1083, eff. 2-7-05.)
 
19    Section 99. Effective date. This Act takes effect upon
20becoming law.".