Full Text of SB1297 100th General Assembly
SB1297eng 100TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Insurance Code is amended by | 5 | | changing 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, | 8 | | upon, or at any time after the
filing
of the complaint to issue | 9 | | an injunction restraining such company and its
officers, | 10 | | agents, directors, employees and all other persons from
| 11 | | transacting any company business or disposing of its property | 12 | | until the
further order of the court. The court may also | 13 | | restrain all persons,
companies, and
entities from bringing or | 14 | | further prosecuting all actions and proceedings at
law or in | 15 | | equity or otherwise, whether in this State or elsewhere, | 16 | | against the
company or its assets or property or the Director | 17 | | except insofar as those
actions or proceedings arise in or are | 18 | | brought in the conservation,
rehabilitation, or liquidation | 19 | | proceeding. The court may issue such other
injunctions or
enter | 20 | | such other orders as may be deemed necessary to prevent | 21 | | interference
with the proceedings, or with the Director's | 22 | | possession and control or
title, rights or interests as herein | 23 | | provided or to prevent interference
with the conduct of the |
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| 1 | | business by the Director, and may issue such other
injunctions | 2 | | or enter such other orders as may be deemed necessary to
| 3 | | prevent waste of assets or the obtaining, asserting, or | 4 | | enforcing of
preferences, judgments,
attachments, or other | 5 | | like liens, including common law retaining
liens, or
the making | 6 | | of any levy against such
company or its property and assets | 7 | | while in the possession and control of
the Director. The court | 8 | | may issue any other injunctions or enter any other
orders that | 9 | | are necessary to protect enrollees in accordance with | 10 | | subsection
(c) of Section 5-6 of the Health Maintenance | 11 | | Organization Act. Any
injunction
issued under this article may | 12 | | be served and
enforced as in other civil proceedings, but no | 13 | | bond or other security shall
be required of the plaintiff, | 14 | | either for costs or for any injunction. The provisions of this | 15 | | Section are subject to the exclusion set forth in subsection | 16 | | (o) of Section 204 of this Article.
| 17 | | (Source: P.A. 88-297; 89-206, eff. 7-21-95.)
| 18 | | (215 ILCS 5/204) (from Ch. 73, par. 816)
| 19 | | Sec. 204. Prohibited and voidable transfers and liens.
| 20 | | (a)(1) A preference is a transfer of any of the property of | 21 | | a company
to or for the benefit of a creditor, for or on | 22 | | account of an antecedent
debt, made or suffered by the company | 23 | | within 2 years before
the
filing of
a complaint under this | 24 | | Article, the effect of which may be to
enable the creditor to | 25 | | obtain a greater percentage of this debt than
another creditor |
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| 1 | | of the same class would receive.
| 2 | | (2) Any preference may be avoided by the Director as | 3 | | rehabilitator,
liquidator, or conservator if:
| 4 | | (A) the company was insolvent at the time of the | 5 | | transfer; and
| 6 | | (B) the transfer was made within 4 months before the | 7 | | filing of the
complaint; or
the creditor receiving it was | 8 | | (i) an officer, or any employee or
attorney or other person | 9 | | who was in fact in a position of comparable
influence in | 10 | | the company to an officer whether or not that person held
| 11 | | such a position, (ii) any shareholder holding, directly or | 12 | | indirectly, more than
5% of any class of any equity | 13 | | security issued by the company, or (iii) any other
person, | 14 | | firm, corporation,
association, or aggregation of | 15 | | individuals with whom the company did not
deal at arm's | 16 | | length.
| 17 | | (3) Where the preference is voidable, the Director as | 18 | | rehabilitator,
liquidator, or conservator may recover the | 19 | | property or, if it has been
converted, its value from any | 20 | | person who has received or converted the
property; except where | 21 | | a bona fide purchaser or lienor has given less than
fair | 22 | | equivalent value, the purchaser or lienor shall have a lien | 23 | | upon the
property to the extent of the consideration actually | 24 | | given. Where a
preference by way of lien or security title is | 25 | | voidable, the court may on
due notice order the lien or title | 26 | | to be preserved for the benefit of the
estate, in which event |
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| 1 | | the lien or title shall pass to the Director as
rehabilitator | 2 | | or liquidator.
| 3 | | (b) (1) A transfer of property other than real property | 4 | | shall be deemed
to be made or suffered when it becomes so far | 5 | | perfected that no subsequent
lien obtainable by legal or | 6 | | equitable proceedings on a simple contract
could become | 7 | | superior to the rights of the transferee.
| 8 | | (2) A transfer of real property shall be deemed to be made | 9 | | or suffered
when it becomes so far perfected that no subsequent | 10 | | bona fide purchaser
from the company could obtain rights | 11 | | superior to the rights of the transferee.
| 12 | | (3) A transfer that creates an equitable lien shall not be | 13 | | deemed to be
perfected if there are available means by which a | 14 | | legal lien could be created.
| 15 | | (4) A transfer not perfected before the filing of a | 16 | | complaint shall
be deemed to be made immediately before the | 17 | | filing of the complaint.
| 18 | | (5) The provisions of this subsection apply whether or not | 19 | | there are or
were creditors who might have obtained liens or | 20 | | persons who might have
become bona fide purchasers.
| 21 | | (c) For purposes of this Section:
| 22 | | (1) A lien obtainable by legal or
equitable proceedings | 23 | | upon a simple contract is one arising in the ordinary
| 24 | | course of the proceedings upon the entry or docketing of a | 25 | | judgment or
decree, or upon attachment, garnishment, | 26 | | execution, or like process,
whether before, upon, or after |
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| 1 | | judgment or decree and whether before or upon
levy. It does | 2 | | not include liens that, under applicable law, are given a
| 3 | | special priority over other liens that are prior in time.
| 4 | | (2) A lien obtainable by legal or equitable proceedings | 5 | | could become
superior to the rights of a transferee, or a | 6 | | purchaser could obtain rights
superior to the rights of a | 7 | | transferee within the meaning of subsection (b)
of this | 8 | | Section, if such consequences would follow only from the | 9 | | lien or
purchase itself, or from the lien or purchase | 10 | | followed by any step wholly
within the control of the | 11 | | respective lienholder or purchaser, with or
without the aid | 12 | | of ministerial action by public officials. A lien
could | 13 | | not, however, become superior and a purchase could not | 14 | | create
superior rights for the purpose of subsection (b) of | 15 | | this Section through any
acts subsequent to an obtaining of | 16 | | the lien or subsequent to a
purchase that requires the | 17 | | agreement or concurrence of any third party or
that | 18 | | requires any further judicial action or ruling.
| 19 | | (d) A transfer of property for or on account of a new and
| 20 | | contemporaneous consideration which is deemed under subsection | 21 | | (b) of this
Section to be made or suffered after the transfer | 22 | | because of delay in
perfecting it does not thereby become a | 23 | | transfer for or on account of an
antecedent debt if any acts | 24 | | required by the applicable law to be performed
in order to | 25 | | perfect the transfer as against liens or bona fide purchasers'
| 26 | | rights are performed within 21 days or any period expressly |
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| 1 | | allowed
by the law, whichever is less. A transfer to secure a | 2 | | future loan, if the
loan is actually made, or a transfer that | 3 | | becomes security for a future
loan, shall have the same effect | 4 | | as a transfer for or on account of a new
and contemporaneous | 5 | | consideration.
| 6 | | (e) If any lien deemed voidable under part (2) of | 7 | | subsection
(a) of this Section has been dissolved by the | 8 | | furnishing of a bond or other
obligation, the surety on which | 9 | | has been indemnified directly or indirectly
by the transfer of | 10 | | or the creation of a lien upon any property of a company
before | 11 | | the filing of a complaint under this Article, the indemnifying
| 12 | | transfer or lien shall also be deemed voidable.
| 13 | | (f) The property affected by any lien deemed voidable under | 14 | | subsections
(a) and (e) of this Section shall be discharged | 15 | | from the lien, and that
property and any of the indemnifying | 16 | | property transferred to or for the
benefit of a surety shall | 17 | | pass to the Director as rehabilitator or
liquidator, except | 18 | | that the court may, on due notice, order any such lien to
be | 19 | | preserved for the benefit of the estate and the court may | 20 | | direct that
such conveyance be executed as may be proper or | 21 | | adequate to
evidence the title of the Director as
rehabilitator | 22 | | or liquidator.
| 23 | | (g) The court shall have summary jurisdiction over any | 24 | | proceeding by the
Director as rehabilitator, liquidator, or | 25 | | conservator to hear and determine
the rights of any parties | 26 | | under this Section. Reasonable notice of any
hearings in the |
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| 1 | | proceeding shall be given to all parties in interest,
including | 2 | | the obligee of a releasing bond or other life obligation. Where | 3 | | an
order is entered for the recovery of indemnifying property | 4 | | in kind
or for the avoidance of
an indemnifying lien, the | 5 | | court, upon application of any party in interest,
shall in the | 6 | | same proceeding ascertain the value of the property or lien,
| 7 | | and if the value is less than the amount for which the property | 8 | | is
indemnity or than the amount of the lien, the transferee or | 9 | | lienholder may
elect to retain the property or lien upon | 10 | | payment of its value, as
ascertained by the court, to the | 11 | | Director as rehabilitator, liquidator, or
conservator, within | 12 | | such reasonable times as the court shall fix.
| 13 | | (h) The liability of the surety under the releasing bond or | 14 | | other similar
obligation shall be discharged to the extent of | 15 | | the value of the
indemnifying property recovered or the | 16 | | indemnifying lien nullified and
avoided by the Director as
| 17 | | rehabilitator, liquidator, or conservator. Where the property | 18 | | is retained
under subsection (g) of this Section, the liability | 19 | | shall be discharged to
the extent of the amount paid to the
| 20 | | Director as rehabilitator, liquidator, or conservator.
| 21 | | (i) If a creditor has been preferred and thereafter in good | 22 | | faith gives
the company further credit without security of any | 23 | | kind, for property which
becomes a part of the company's | 24 | | estate, the amount of the new credit
remaining unpaid at the | 25 | | time of the petition may be set off against the
preference | 26 | | which would otherwise be recoverable from the creditor.
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| 1 | | (j) If a company shall, directly or indirectly, within 4 | 2 | | months
before the filing of a complaint under this Article, or | 3 | | at any time in
contemplation of such a proceeding, pay money or | 4 | | transfer property to any
attorney for services rendered or to | 5 | | be rendered, the transactions may be
examined by the court on | 6 | | its own motion or shall be examined by the court
on petition of | 7 | | the
Director as rehabilitator, liquidator, or conservator and | 8 | | shall be held
valid only to the extent of a reasonable amount | 9 | | to be determined by the
court, and the excess may be recovered | 10 | | by the Director as rehabilitator,
liquidator, or conservator | 11 | | for the benefit of the estate provided that where
the attorney | 12 | | is in a position of influence in the company or an affiliate
| 13 | | thereof payment of any money or the transfer of any property to | 14 | | the
attorney for services rendered or to be rendered shall be | 15 | | governed by
item (B) of part (2) of subsection (a) of this | 16 | | Section.
| 17 | | (k) (1) An officer, director, manager, employee,
| 18 | | shareholder,
member, subscriber,
attorney, or other person | 19 | | acting on behalf of the company who
knowingly
participates in | 20 | | giving any preference when that officer, director, manager,
| 21 | | employee,
shareholder, member, subscriber, attorney, or other | 22 | | person has reasonable
cause to believe the company is or is | 23 | | about to become insolvent at the time
of the preference shall | 24 | | be personally liable to the Director as
rehabilitator, | 25 | | liquidator, or conservator for the amount of the preference.
| 26 | | There is a reasonable cause to so believe
if the transfer was |
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| 1 | | made within 4 months before the date of filing of the
| 2 | | complaint.
| 3 | | (2) A person receiving any property from the company or the
| 4 | | benefit
thereof as a preference voidable under subsection (a) | 5 | | of this Section
shall be personally liable therefor and shall | 6 | | be bound to account to the
Director as rehabilitator, | 7 | | liquidator, or conservator.
| 8 | | (3) Nothing in this Section shall prejudice any other claim | 9 | | by the
Director as rehabilitator, liquidator, or conservator | 10 | | against any person.
| 11 | | (l) For purposes of this Section, the company is presumed | 12 | | to have been
insolvent on and during the 4 month period | 13 | | immediately preceding the date
of the filing of the complaint.
| 14 | | (m) The Director as rehabilitator, liquidator, or | 15 | | conservator may not
avoid a transfer under this Section to the | 16 | | extent that the transfer was:
| 17 | | (A) Intended by the company and the creditor to or for | 18 | | whose benefit
the transfer was made to be a contemporaneous | 19 | | exchange for new value given
to the company, and was
in | 20 | | fact a substantially contemporaneous exchange; or
| 21 | | (B) In payment of a debt incurred by the company in the | 22 | | ordinary course
of business or financial affairs of the | 23 | | company and the transferee;
made in the ordinary course of | 24 | | business or financial affairs of the
company and the | 25 | | transferee; and
made according to ordinary business terms; | 26 | | or
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| 1 | | (C) In the case of a transfer by a company where the | 2 | | Director has determined that an event described in Section | 3 | | 35A-25 or 35A-30 has occurred, specifically approved by the | 4 | | Director in writing pursuant to this subsection, whether or | 5 | | not the company is in receivership under this Article. Upon | 6 | | approval by the Director, such a transfer cannot later be | 7 | | found to constitute a prohibited or voidable transfer based | 8 | | solely upon a deviation from the statutory payment | 9 | | priorities established by law for any subsequent | 10 | | receivership ; or .
| 11 | | (D) Of money or other property arising under or in | 12 | | connection with any Federal Home Loan Bank security | 13 | | agreement or any pledge, security, collateral or guarantee | 14 | | agreement, or any other similar arrangement or credit | 15 | | enhancement relating to a Federal Home Loan Bank security | 16 | | agreement. | 17 | | (n) The Director as rehabilitator, liquidator, or | 18 | | conservator may avoid
any transfer of or lien upon the property | 19 | | of a company that the estate of the
company or a policyholder, | 20 | | creditor, member, or stockholder of the company
may have | 21 | | avoided, and the Director as rehabilitator, liquidator, or | 22 | | conservator
may recover and collect the property so transferred | 23 | | or its value from the
person to whom it was transferred unless | 24 | | the property was transferred to a
bona fide holder for value | 25 | | before the filing of the complaint. The Director
as | 26 | | rehabilitator, liquidator, or conservator shall be deemed a |
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| 1 | | creditor for
purposes of pursuing claims under the Uniform | 2 | | Fraudulent Transfer Act.
| 3 | | (o) Notwithstanding any provision of this Article to the | 4 | | contrary, a Federal Home Loan Bank shall not be stayed, | 5 | | enjoined, or prohibited from exercising or enforcing any right | 6 | | or cause of action regarding collateral pledged under any | 7 | | security agreement or any pledge, security, collateral or | 8 | | guarantee agreement, or any other similar arrangement or credit | 9 | | enhancement relating to a Federal Home Loan Bank security | 10 | | agreement. | 11 | | (Source: P.A. 93-1083, eff. 2-7-05.)
| 12 | | Section 99. Effective date. This Act takes effect upon | 13 | | becoming law.
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