1999 Minnesota Statutes

CHAPTER 60B. Insurers rehabilitation and liquidation

     60B.01 Title, construction and purpose. 

    Subdivision 1.    Short title.  Sections 60B.01 to 
 60B.61 may be cited as the "Insurers Rehabilitation and 
 Liquidation Act" and shall appear in the next edition of 
 Minnesota Statutes as chapter 60B but subject to the provisions 
 of section 3C.10, subdivision 1.  

    Subd. 2.    Construction; no limitation of powers.  
 Sections 60B.01 to 60B.61 shall not be interpreted to limit the 
 powers granted the commissioner by other provisions of the law.  

    Subd. 3.    Liberal construction.  Sections 60B.01 to 
 60B.61 shall be liberally construed to effect the purpose stated 
 in subdivision 4.  

    Subd. 4.    Purpose.  The purpose of sections 60B.01 to 
 60B.61 is the protection of the interests of insureds, 
 creditors, and the public generally, with minimum interference 
 with the normal prerogatives 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 
 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; and 

    (f) Regulation of the insurance business by the impact of 
 the law relating to delinquency procedures and substantive rules 
 on the entire insurance business.  

    HIST: 1969 c 708 s 1; 1984 c 480 s 16; 1984 c 655 art 2 s 19 
 subd 4 

     60B.02 Persons covered. 

    The proceedings authorized by sections 60B.01 to 60B.61 may 
 be applied to: 

    (1) 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; 

    (2) All insurers who purport to do an insurance business in 
 this state; 

    (3) All insurers who have insureds resident in this state; 

    (4) All other persons organized or in the process of 
 organizing with the intent to do an insurance business in this 
 state; and 

    (5) All nonprofit service plan corporations incorporated or 
 operating under the Nonprofit Health Service Plan Corporation 
 Act, any health plan incorporated under chapter 317A, all 
 fraternal benefit societies operating under chapter 64B, except 
 those associations enumerated in section 64B.38, all township 
 mutual or other companies operating under chapter 67A, and all 
 reciprocals or interinsurance exchanges operating under chapter 
 71A. 

    HIST: 1969 c 708 s 2; 1971 c 568 s 24; 1985 c 49 s 41; 1989 c 
 304 s 137; 1992 c 564 art 1 s 54; 1995 c 186 s 16; 1995 c 234 
 art 1 s 1; 1997 c 225 art 2 s 62 

     60B.03 Definitions. 

    Subdivision 1.    Scope.  For the purposes of sections 
 60B.01 to 60B.61, the following terms have the meanings given in 
 this section. 

    Subd. 2.    Commissioner.  "Commissioner" means the 
 commissioner of commerce of the state of Minnesota and, in that 
 commissioner's absence or disability, a deputy or other person 
 duly designated to act in that commissioner's place.  In the 
 context of rehabilitation or liquidation of a health maintenance 
 organization, "commissioner" means the commissioner of health of 
 the state of Minnesota and, in that commissioner's absence or 
 disability, a deputy or other person duly designated to act in 
 that commissioner's place. 

    Subd. 3.    Receiver.  "Receiver" means receiver, 
 liquidator, rehabilitator, or conservator, as the context 
 requires. 

    Subd. 4.    Insurer.  "Insurer" means any person who is 
 doing, has done, purports to do or is licensed to do an 
 insurance business and is or has been subject to the authority 
 of, or to liquidation, rehabilitation, reorganization, or 
 conservation by, a commissioner.  For purposes of sections 
 60B.01 to 60B.61, all other persons included under section 
 60B.02 shall be deemed to be insurers. 

    Subd. 5.    Delinquency proceeding.  "Delinquency 
 proceeding" means any proceeding commenced under sections 60B.01 
 to 60B.61 against an insurer for the purpose of liquidating, 
 rehabilitating, reorganizing, or conserving such insurer, and 
 any summary proceeding under sections 60B.11 to 60B.14. 

    Subd. 6.    State.  "State" means any state of the 
 United States, the District of Columbia, the Commonwealth of 
 Puerto Rico, the Panama Canal Zone, and any other possession of 
 the United States. 

    Subd. 7.    Foreign country.  "Foreign country" means 
 territory not in any state. 

    Subd. 8.    Domiciliary state.  "Domiciliary state" or 
 "state of domicile" 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. 

    Subd. 9.    Ancillary state.  "Ancillary state" means 
 any state other than a domiciliary state. 

    Subd. 10.    Reciprocal state.  "Reciprocal state" means 
 any state other than this state in which in substance and effect 
 sections 60B.21, subdivision 1; 60B.54, subdivisions 1 and 3; 
 60B.55; and 60B.57 to 60B.60; 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. 

    Subd. 11.    General assets.  "General assets" means all 
 property, real, personal, or otherwise, not specifically 
 mortgaged, pledged, deposited, or held in a separate account in 
 connection with contracts on a variable basis, 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.  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. 

    Subd. 12.    Preferred claim.  "Preferred claim" means 
 any claim with respect to which the law accords priority of 
 payment from the general assets of the insurer. 

    Subd. 13.    Special deposit claim.  "Special deposit 
 claim" means any claim secured by a deposit made pursuant to law 
 for the security or benefit of one or more limited classes of 
 persons, but not including any claim secured by general assets. 

    Subd. 14.    Secured claim.  "Secured claim" means any 
 claim secured by mortgage, trust deed, pledge, deposit as 
 security, escrow, or otherwise, and any claims against a 
 separate account in connection with a contract on a variable 
 basis, but not including special deposit claims, or claims 
 against general assets.  The term also includes claims which 
 have become liens upon specific assets by reason of judicial 
 process, except where they have been invalidated. 

    Subd. 15.    Insolvency.  "Insolvency" means: 

    (a) For an insurer organized under sections 67A.01 to 
 67A.26, the inability to pay any uncontested debt as it becomes 
 due or any other loss within 30 days after the due date 
 specified in the first assessment notice issued pursuant to 
 section 67A.17. 

    (b) For any other insurer, that it 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 (1) any 
 capital and surplus required by law to be constantly maintained, 
 or (2) its authorized and issued capital stock. For purposes of 
 this subdivision, "assets" includes one-half 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 100 percent collection of an assessment 
 at the rate of ten mills per dollar of insurance written by it 
 and in force. 

    Subd. 16.    Fair consideration.  "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. 

    Subd. 17.    Creditor.  "Creditor" is a person having 
 any claim, whether matured or unmatured, liquidated or 
 unliquidated, secured or unsecured, absolute, fixed or 
 contingent. 

    Subd. 18.    Transfer.  "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. 

    Subd. 19.    Alien insurer.  "Alien insurer" means an 
 insurer incorporated or organized in a foreign country. 

    Subd. 20.    Affiliate or affiliated.  An "affiliate" 
 of, or a person "affiliated" with, a specific person is a person 
 that directly, or indirectly through one or more intermediaries, 
 controls, or is controlled by, or is under common control with, 
 the person specified.  

    HIST: 1969 c 708 s 3; 1983 c 289 s 114 subd 1; 1984 c 655 art 
 1 s 92; 1986 c 444; 1990 c 538 s 1; 1992 c 564 art 1 s 24; 1995 
 c 234 art 1 s 2; 1997 c 225 art 2 s 62 

     60B.04 Jurisdiction and venue. 

    Subdivision 1.    Actions by commissioner.  Except as 
 provided in subdivision 2, no delinquency proceeding shall be 
 commenced under sections 60B.01 to 60B.61 by anyone other than 
 the commissioner, including an acting commissioner, of this 
 state and no court shall have jurisdiction to entertain, hear, 
 or determine any proceeding under sections 60B.01 to 60B.61 
 commenced by any other person. 

    Subd. 2.    Actions by judgment creditors.  (a) The 
 judgment creditors of three or more unrelated judgments may 
 commence proceedings under the conditions and in the manner 
 prescribed in this subdivision by serving notice upon the 
 commissioner and the insurer of intention to file a petition for 
 liquidation under section 60B.20 or 60B.53.  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 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 of the judgments in favor of a petitioning 
 creditor remains unpaid for 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 section 60B.20 or 60B.53 alleging the conditions stated in 
 this subdivision.  The commissioner shall be served and joined 
 in the action.  

    Subd. 3.    Exclusiveness of proceedings.  No court of 
 this state shall have jurisdiction to entertain, hear, or 
 determine any complaint praying for the dissolution, 
 liquidation, rehabilitation, sequestration, conservation, or 
 receivership of any insurer, or praying for an injunction or 
 restraining order or other relief preliminary to, incidental to, 
 or relating to such proceedings other than in accordance with 
 sections 60B.01 to 60B.61, except that the voluntary dissolution 
 or liquidation of a solvent insurer may occur as otherwise 
 permitted by law, and any court of this state shall have 
 jurisdiction to entertain, hear and determine a petition for 
 voluntary dissolution or liquidation where otherwise permitted 
 by law upon it being established to the satisfaction of the 
 court, after notice to the commissioner, that the insurer is 
 solvent.  

    Subd. 4.    Change of venue.  Venue for proceedings 
 arising under sections 60B.01 to 60B.61 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 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 district court in this state, as the 
 convenience of the parties and witnesses and the ends of justice 
 may require.  This subdivision relates only to venue and is not 
 jurisdictional.  

    Subd. 5.    Personal jurisdiction, grounds.  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 has jurisdiction over a person served pursuant to 
 rule 4 of Minnesota rules of civil procedure 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 an 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 
 written a policy of reinsurance for 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; or 

    (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.  

    Subd. 6.    Forum non conveniens.  If the court on 
 motion of any party finds that any action commenced under 
 subdivision 5 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.  

    HIST: 1969 c 708 s 4; 1994 c 465 art 2 s 5 

     60B.05 Injunctions and orders.  

    Subdivision 1.    Injunctions in this state.  Any 
 receiver appointed in a proceeding under sections 60B.01 to 
 60B.61 may at any time apply for and any court of general 
 jurisdiction in this state may grant, under the relevant 
 sections of rules of Minnesota rules of civil procedure, such 
 restraining orders, temporary and permanent injunctions, and 
 other orders as are deemed necessary and proper to prevent: 

    (a) The transaction of further business; 

    (b) The transfer of property; 

    (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; 

    (g) The obtaining of preferences, judgments, attachments, 
 garnishments, or liens against the insurer or its assets; 

    (h) The levying of execution against the insurer or its 
 assets; 

    (i) The making of any sale or deed for nonpayment of taxes 
 or assessments that would lessen the value of the assets of the 
 insurer; 

    (j) The withholding from the receiver of books, accounts, 
 documents, or other records relating to the business of the 
 insurer; or 

    (k) 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.  

    Subd. 2.    Injunctions elsewhere.  The receiver may 
 apply to any court outside of this state for the relief 
 described in subdivision 1.  

    HIST: 1969 c 708 s 5 

     60B.06 Costs and expenses of litigation.  

    In any proceeding under sections 60B.01 to 60B.61, the 
 court may award such costs and other expenses of litigation as 
 justice requires, without regard to the limitations otherwise 
 prescribed by law. If costs and expenses are taxed against the 
 commissioner, they shall be paid from funds appropriated to the 
 department of commerce.  

    HIST: 1969 c 708 s 6; 1983 c 289 s 114 subd 1; 1984 c 655 art 
 1 s 92 

     60B.07 Cooperation of officers and employees.  

    Subdivision 1.    Duty to cooperate.  Any officer, 
 manager, trustee, agent or general agent of any insurer and any 
 other person with executive authority over or in charge of any 
 segment of the insurer's affairs having notice of the 
 proceedings shall cooperate with the commissioner in any 
 proceeding under sections 60B.01 to 60B.61 or any investigation 
 preliminary or incidental to the 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 that person's 
 possession, custody, or control.  

    Subd. 2.    Duty not to obstruct.  No person shall 
 obstruct or interfere with the commissioner in the conduct of 
 any delinquency proceeding or any investigation preliminary or 
 incidental thereto.  

    Subd. 3.    Right to defend.  This section shall not 
 render it illegal to resist by legal proceedings the petition 
 for liquidation or other delinquency proceedings, other orders 
 or the request or demand for cooperation under subdivision 1.  

    Subd. 4.    Sanction.  Any person included within 
 subdivision 1 who fails to cooperate with the commissioner, or 
 any person who obstructs or interferes with the commissioner in 
 the conduct of any delinquency proceeding or any investigation 
 preliminary or incidental thereto, may be fined not more than 
 $10,000 or imprisoned in the county jail not more than one year 
 or both.  

    HIST: 1969 c 708 s 7; 1984 c 628 art 3 s 11; 1986 c 444 

  60B.08 Repealed, 1991 c 326 s 27 

     60B.09 Commissioner's reports. 

    Subdivision 1.    General report of proceedings.  The 
 commissioner shall include in a biennial report: 

    (a) The names of the insurers proceeded against under 
 sections 60B.15, 60B.20, 60B.52, 60B.53, and 60B.55, and such 
 other facts as indicate in reasonable detail formal proceedings 
 under sections 60B.01 to 60B.61; and 

    (b) Such facts as generally indicate the utilization and 
 effectiveness of proceedings under sections 60B.11, 60B.12, and 
 60B.13. 

    Subd. 2.    Special reports.  (a) The commissioner shall 
 include in the biennial report, not later than the second 
 biennial report following the initiation of any formal 
 proceedings under sections 60B.01 to 60B.61, a detailed analysis 
 of the basic causes and the contributing factors making the 
 initiation of formal proceedings necessary, and shall make 
 recommendations for remedial legislation if any.  For this 
 purpose the commissioner may appoint and determine the 
 compensation of a special assistant who shall be in the 
 unclassified service, qualified to conduct the study and prepare 
 the analysis. 

    (b) The commissioner shall include in the biennial report, 
 not later than the biennial report following discharge of the 
 receiver, a detailed study of the delinquency proceeding for 
 each insurer subjected to a formal proceeding, with an analysis 
 of the problems faced and their solutions.  The commissioner 
 shall also suggest alternative solutions, as well as other 
 material of interest, for the purpose of assisting and guiding 
 liquidators or rehabilitators in the future.  

    Subd. 3.    Reports on insurers subject to proceedings.  
 The commissioner as receiver shall make and file annual reports 
 and any other required reports for the companies proceeded 
 against under sections 60B.15, 60B.20, 60B.52, 60B.53, and 
 60B.55 in the manner and form and within the time required by 
 law of insurers authorized to do business in this state, and 
 under the same penalties for failure to do so. 

    HIST: 1969 c 708 s 9; 1982 c 560 s 40; 1986 c 444; 1994 c 465 
 art 2 s 6,7 

     60B.10 Continuation of delinquency proceedings.  

    Every proceeding commenced before May 25, 1969 is deemed to 
 have commenced under sections 60B.01 to 60B.61 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 
 sections 60B.01 to 60B.61 not been enacted.  

    HIST: 1969 c 708 s 10 

     60B.11 Commissioner's summary orders. 

    Subdivision 1.    Summary order after hearing.  
 Whenever the commissioner has reasonable cause to believe, and 
 determines, after a hearing held as prescribed in subdivision 3, 
 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 sections 60B.01 to 60B.61, the 
 commissioner may make and serve upon the insurer and any other 
 persons involved such orders other than seizure orders under 
 sections 60B.12 and 60B.13 as are reasonably necessary to 
 correct, eliminate, or remedy such conduct, condition, or ground.

    Subd. 2.    Summary order before hearing.  If the 
 conditions of subdivision 1 are satisfied, and if it appears to 
 the commissioner that irreparable harm to the property or 
 business of the insurer or to the interests of its 
 policyholders, creditors, or the public may occur unless the 
 commissioner issues with immediate effect the orders described 
 in subdivision 1, the commissioner may make and serve such 
 orders without notice and before hearing, simultaneously serving 
 upon the insurer notice of the hearing upon such order. 

    Subd. 3.    Service, notice, hearing.  The notice of 
 hearing under subdivision 1 or 2 and the summary order issued 
 under subdivision 1 or 2 shall be served personally or by 
 sending a copy of such notice of order by prepaid certified 
 mail.  The notice of hearing under subdivision 1 shall state the 
 time and place of hearing, and the conduct, condition, or ground 
 upon which the commissioner would base an order; the notice of 
 hearing under subdivision 2 shall state the time and place of 
 hearing.  Unless mutually agreed between the commissioner and 
 the insurer, the hearing shall occur not less than ten days nor 
 more than 30 days after notice is served and shall be either in 
 Ramsey county or in some other place convenient to the parties 
 to be designated by the commissioner. 

    Subd. 4.    Judicial relief.  If the commissioner 
 issues a summary order before hearing under subdivision 2, the 
 insurer may at any time waive the commissioner's hearing and the 
 summary decision shall be treated as a final decision in a 
 contested case under chapter 14, and the insurer may apply for 
 immediate judicial relief by means of any remedy afforded by law 
 without first exhausting administrative remedies.  Subsequent to 
 a hearing the insurer or any person whose interests are 
 substantially affected shall be entitled to judicial review in 
 accordance with chapter 14 of any order issued by the 
 commissioner. 

    Subd. 5.    Sanction.  If any person has violated any 
 order issued under this section which as to that person was then 
 still in effect, that person shall be liable to forfeit a sum 
 not to exceed $10,000.  The penalty shall be imposed and 
 collected in an action brought by the attorney general and shall 
 be paid into the state treasury to the credit of the general 
 fund. 

    Subd. 6.    Enforcement by injunction.  The 
 commissioner may apply for and any court of general jurisdiction 
 may grant, under the relevant sections of Minnesota rules of 
 civil procedure, such restraining orders, temporary and 
 permanent injunctions, and other orders as are deemed necessary 
 to enforce a summary order. 

    HIST: 1969 c 399 s 1; 1969 c 708 s 11; 1978 c 674 s 60; 1982 c 
 424 s 130; 1986 c 444 

     60B.12 Court's seizure order.  

    Subdivision 1.    Issuance.  Upon the filing by the 
 commissioner in any district court in this state of a verified 
 petition establishing to the satisfaction of the court that 
 sufficient grounds exist for a formal delinquency proceeding 
 against an insurer under sections 60B.01 to 60B.61 and that the 
 interests of policyholders, creditors, or the public will be 
 endangered by delay, and setting out the order deemed necessary 
 by the commissioner, the court shall issue forthwith, ex parte 
 and without a hearing, an order which may (a) authorize 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, and (c) provide such other terms as the court 
 deems appropriate for the protection of the insurer, its 
 policyholders, its creditors, and the public during the duration 
 of the order.  The order shall also direct the service of a copy 
 of the order forthwith upon the insurer and all persons in 
 possession of any property seized under the order.  

    Subd. 2.    Duration.  The court shall specify in the 
 order what its duration shall be and order the insurer to appear 
 at a specified time within the duration of the order and show 
 cause why the order should not be continued in effect.  The 
 duration of the order may 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 set aside, 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 sections 60B.01 to 60B.61 
 after having had a reasonable opportunity to do so.  The 
 issuance of an order of the court pursuant to a formal 
 proceeding under sections 60B.01 to 60B.61 vacates the seizure 
 order.  

    Subd. 3.    Anticipatory breach.  Entry of a seizure 
 order under this section shall not constitute an anticipatory 
 breach of any contract of the insurer.  

    HIST: 1969 c 708 s 12 

     60B.13 Commissioner's seizure order.  

    Subdivision 1.    Issuance.  If it appears to the 
 commissioner that an emergency exists whereby the interests of 
 the creditors, policyholders, or the public will be endangered 
 by the delay incident to applying for a court seizure order, 
 then on any ground that would justify a court seizure order 
 under section 60B.12, without notice and without applying to the 
 court, the commissioner may issue a seizure order which must 
 contain a verified statement of the grounds of action.  As 
 directed by the seizure order, the commissioner or any 
 representatives of the commissioner shall forthwith take 
 possession and control of all or any part of the property, 
 books, accounts, documents, and other records of the insurer, 
 and of the premises occupied by the insurer for the transaction 
 of its business.  The commissioner shall retain possession and 
 control until the order is vacated by the commissioner, is set 
 aside by order of court, is replaced by an order of the court 
 pursuant to a proceeding commenced under subdivision 2, a formal 
 proceeding under sections 60B.01 to 60B.61, or until the 
 expiration of ten days without a filing by the commissioner of a 
 petition for a court order as required by subdivision 2.  

    Subd. 2.    Judicial review.  Within ten days after the 
 issuance of a seizure order under subdivision 1, the 
 commissioner shall file with a district court a petition under 
 section 60B.12, subdivision 1, for a court order of seizure, 
 with written or oral notice of such petition to the insurer to 
 the extent feasible; otherwise, the commissioner shall state to 
 the court in writing the efforts made to give notice or the 
 reasons why notice is not feasible.  Thereafter, the matter 
 shall proceed as provided in section 60B.12, except that the 
 commissioner's seizure order shall remain in effect as provided 
 in subdivision 1.  

    Subd. 3.    Duty to assist commissioner.  Every law 
 enforcement officer shall assist the commissioner in making and 
 enforcing any such seizure, and every sheriff and police 
 department shall furnish such deputies, patrol officers, or 
 officers as are necessary to assist the commissioner.  

    Subd. 4.    Anticipatory breach.  Entry of a seizure 
 order under this section shall not constitute an anticipatory 
 breach of any contract of the insurer.  

    HIST: 1969 c 708 s 13; 1986 c 444 

     60B.14 Conduct of hearings in summary proceedings.  

    Subdivision 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.  

    Subd. 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.  

    Subd. 3.    Records.  In all summary proceedings and 
 judicial reviews thereof, all records of the company, other 
 documents, and all department of commerce 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 court administrator shall 
 be held in a confidential file.  

    Subd. 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 that person opportunity to 
 appear on such terms as may be just.  

    Subd. 5.    Sanctions.  Any person having possession or 
 custody of and refusing to deliver any of the property, books, 
 accounts, documents, or other records of an insurer against 
 which a seizure order or a summary order has been issued by the 
 commissioner or by the court, may be fined not more than $20,000 
 or imprisoned in the county jail for not more than one year or 
 both.  

    HIST: 1969 c 708 s 14; 1983 c 289 s 114 subd 1; 1984 c 628 art 
 3 s 11; 1984 c 655 art 1 s 92; 1986 c 444; 1Sp1986 c 3 art 1 s 
 82 

     60B.15 Grounds for rehabilitation. 

    The commissioner may apply by verified petition to the 
 district court for Ramsey county or for the county in which the 
 principal office of the insurer is located for an order 
 directing the commissioner to rehabilitate a domestic insurer or 
 an alien insurer domiciled in this state on any one or more of 
 the following grounds: 

    (1) Any ground on which the commissioner may apply for an 
 order of liquidation under section 60B.20, whenever the 
 commissioner believes that the insurer may be successfully 
 rehabilitated without substantial increase in the risk of loss 
 to creditors of the insurer, its policyholders or to the public; 

    (2) That the commissioner has reasonable cause to believe 
 that there has been theft 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, which endanger assets in an amount 
 threatening insolvency of the insurer; 

    (3) That substantial and unexplained discrepancies exist 
 between the insurer's records and the most recent annual report 
 or other official company reports; 

    (4) That the insurer, after written demand by the 
 commissioner, 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 such as is the basis for action under section 60A.052; 

    (5) That control of the insurer, whether by stock ownership 
 or otherwise, and whether direct or indirect, is in one or more 
 persons found by the commissioner after notice and hearing to be 
 dishonest or untrustworthy such as is the basis for action under 
 section 60A.052; 

    (6) That the insurer, after written demand by the 
 commissioner, has failed within a reasonable period of time to 
 terminate the employment and status and all influences on 
 management of 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 refused to submit to 
 lawful examination under oath by the commissioner concerning the 
 affairs of the insurer, whether in this state or elsewhere; 

    (7) That after lawful written demand by the commissioner 
 the insurer has failed to submit promptly any of its own 
 property, books, accounts, documents, or other records, or those 
 of any subsidiary or related company within the control of the 
 insurer, or those of any person having executive authority in 
 the insurer so far as they pertain to the insurer, to reasonable 
 inspection or examination by the commissioner or an authorized 
 representative.  If the insurer is unable to submit the 
 property, books, accounts, documents, or other records of a 
 person having executive authority in the insurer, it shall be 
 excused from doing so if it promptly and effectively terminates 
 the relationship of the person to the insurer; 

    (8) That without first obtaining the written consent of the 
 commissioner, or if required by law, the written consent of the 
 attorney general, 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 of any other person; 

    (9) 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 sections 60B.01 to 60B.61, and that such 
 appointment has been made or is imminent, and that such 
 appointment might divest the courts of this state of 
 jurisdiction or prejudice orderly delinquency proceedings under 
 sections 60B.01 to 60B.61; 

    (10) That within the previous year the insurer has 
 willfully violated its charter or articles of incorporation or 
 its bylaws or any applicable insurance law or regulation of any 
 state, or of the federal government, or any valid order of the 
 commissioner under section 60B.11 in any manner or as to any 
 matter which threatens substantial injury to the insurer, its 
 creditors, it policyholders or the public, or having become 
 aware within the previous year of an unintentional or willful 
 violation has failed to take all reasonable steps to remedy the 
 situation resulting from the violation and to prevent the same 
 violations in the future; 

    (11) 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, its 
 policyholders, or the public is threatened by reason thereof; 

    (12) That the insurer has failed to pay for 60 days after 
 due date any obligation to this state or any political 
 subdivision thereof or any judgment entered in this state, 
 except that such nonpayment shall not be a ground until 60 days 
 after any good faith effort by the insurer to contest the 
 obligation or judgment has been terminated, whether it is before 
 the commissioner or in the courts; 

    (13) 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; 

    (14) That two-thirds 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 sections 60B.01 to 60B.61; 

    (15) 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; 

    (16) 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; 

    (17) That within the previous 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; 

    (18) In the context of a health maintenance organization, 
 "insurer" when used in clauses (1) to (17) means "health 
 maintenance organization."  In addition to the grounds in 
 clauses (1) to (17), any one of the following constitutes 
 grounds for rehabilitation of a health maintenance organization: 

    (a) the health maintenance organization is unable or is 
 expected to be unable to meet its debts as they become due; 

    (b) grounds exist under section 62D.042, subdivision 7; 

    (c) the health maintenance organization's liabilities 
 exceed the current value of its assets, exclusive of intangibles 
 and, where the guaranteeing organization's financial condition 
 no longer meets the requirements of sections 62D.041 and 
 62D.042, exclusive of any deposits, letters of credit, or 
 guarantees provided by any guaranteeing organization under 
 chapter 62D; 

    (d) in addition to grounds under clause (16), within the 
 last year the health maintenance organization has failed, and 
 the commissioner of health expects such failure to continue in 
 the future, to make comprehensive medical care adequately 
 available and accessible to its enrollees and the health 
 maintenance organization has not successfully implemented a plan 
 of corrective action pursuant to section 62D.121, subdivision 7; 
 and 

    (e) in addition to grounds under clause (16), within the 
 last year the directors or officers of the health maintenance 
 organization willfully violated the requirements of section 
 317A.251, or having become aware within the previous year of an 
 unintentional or willful violation of section 317A.251, have 
 failed to take all reasonable steps to remedy the situation 
 resulting from the violation and to prevent the same violation 
 in the future; 

    (19) An affiliate of the insurer has been placed in 
 conservatorship, rehabilitation, liquidation, or other court 
 supervision such that the insurer's financial condition may be 
 jeopardized.  

    HIST: 1969 c 708 s 15; 1971 c 568 s 25; 1986 c 444; 1990 c 538 
 s 2; 1992 c 564 art 1 s 25; 1993 c 13 art 2 s 1 

     60B.16 Rehabilitation orders. 

    Subdivision 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 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 
 recorder in the state imparts the same notice as a deed, bill of 
 sale, or other evidence of title duly filed or recorded with 
 that county recorder. 

    Subd. 2.    Anticipatory breach.  Entry of an order of 
 rehabilitation shall not constitute an anticipatory breach of 
 any contracts of the insurer. 

    HIST: 1969 c 708 s 16; 1976 c 181 s 2; 1986 c 444 

     60B.17 Powers and duties of the rehabilitator. 

    Subdivision 1.    Special deputy commissioner.  The 
 commissioner as rehabilitator shall employ a special deputy 
 commissioner to rehabilitate the insurer.  The special deputy 
 shall have all of the powers of the rehabilitator granted under 
 this section.  Subject to court approval, the commissioner shall 
 make arrangements for compensation as are necessary to obtain a 
 special deputy of proven ability.  The special deputy shall 
 serve at the pleasure of the commissioner. 

    Subd. 2.    General power.  Subject to court approval, 
 the rehabilitator may take such action as that person deems 
 necessary or expedient to reform and revitalize the insurer.  
 The rehabilitator shall have all the powers of the officers and 
 managers, whose authority shall be suspended, except as they are 
 redelegated by the rehabilitator and 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. 

    The power of the rehabilitator of a health maintenance 
 organization includes the power to transfer coverage obligations 
 to a solvent and voluntary health maintenance organization, 
 insurer, or nonprofit health service plan, and to assign 
 provider contracts of the insolvent health maintenance 
 organization to an assuming health maintenance organization, 
 insurer, or nonprofit health service plan permitted to enter 
 into such agreements.  The rehabilitator shall not be required 
 to meet the notice requirements of section 62D.121.  Transferees 
 of coverage obligations or provider contracts shall have no 
 liability to creditors or obligees of the health maintenance 
 organization except those liabilities expressly assumed. 

    Subd. 3.    Advice from experts.  The rehabilitator may 
 consult with and obtain formal or informal advice and aid of 
 insurance experts. 

    Subd. 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, broker, employee, or other person, the rehabilitator may 
 pursue all appropriate legal remedies on behalf of the insurer. 

    Subd. 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 such 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 
 company, if all rights of shareholders are first relinquished.  
 A plan for a life insurer may also propose imposition of a 
 moratorium upon loan and cash surrender rights under policies, 
 for such period and to such an extent as are necessary. 

    Subd. 6.    Fraudulent transfers.  The rehabilitator 
 shall have the power to avoid fraudulent transfers under 
 sections 60B.30 and 60B.31. 

    Subd. 7.    Coordination of activities with guaranty 
 associations.  The rehabilitator shall coordinate activities 
 with those of each guaranty association having an interest in 
 the rehabilitation and shall submit a report detailing how 
 coordination will be achieved to the court for its approval 
 within 30 days following appointment, or within the time the 
 court, in its discretion, may establish. 

    Subd. 8.    Plan of rehabilitation for a health 
 maintenance organization.  (a) The rehabilitator of a health 
 maintenance organization, after consultation with the board of 
 directors of the health maintenance organization, has the sole 
 authority to propose a plan of rehabilitation. 

    (b) The court shall approve a plan of rehabilitation of a 
 health maintenance organization if it meets the following 
 criteria: 

    (1) the plan provides for payments to lien claimants equal 
 to the value of each lien claim on the date of approval of the 
 plan and may provide for payment of lien claims beyond the 
 effective date of the plan and beyond the original repayment 
 period for the obligation underlying the claim where the plan 
 provides sufficient protection for the lien claim during the 
 period for such claim under the rehabilitation plan; 

    (2) the plan provides for payment in full of each prior 
 class of claims before payment of the next class; 

    (3) the plan provides for payment in full of all claims for 
 taxes of the United States government, except for claims for 
 interest accruing during the rehabilitation or claims for 
 penalties.  The plan may provide for payment of the claims over 
 any period of time up to ten years after the effective date of 
 the plan; and 

    (4) the plan is fair and equitable as to each class of 
 claims for which the plan does not provide full payment.  In 
 determining whether the plan is fair and equitable to these 
 claimants, the court shall consider the feasibility of the plan, 
 the health maintenance organization's ability to generate a 
 significant surplus, the health maintenance organization's need 
 to expend money to change or expand its business, and the injury 
 to enrollees through loss of coverage if such a plan is not 
 approved. 

    (c) The plan may provide for transfer of the health 
 maintenance contracts and liquidation of the health maintenance 
 organization. 

    (d) The court's approval of a plan of rehabilitation 
 discharges the health maintenance organization from all claims 
 except to the extent provided in the plan. 

    HIST: 1969 c 708 s 17; 1977 c 273 s 17; 1986 c 444; 1990 c 538 
 s 3,4; 1992 c 564 art 1 s 26 

     60B.171 Use, sale, or transfer of assets during 
  rehabilitation. 

    Subdivision 1.    Rehabilitator authority to use, sell, or 
 transfer assets.  In addition to the powers of the 
 rehabilitator provided in this chapter, during rehabilitation of 
 a health maintenance organization, the rehabilitator may use, 
 sell, or transfer assets as provided in this section. 

    Subd. 2.    Ordinary course of business.  (a) The 
 rehabilitator may use, sell, or transfer assets in which a 
 person has a lien, which are not cash or cash equivalents, in 
 the ordinary course of business without approval of the court, 
 except that the rehabilitator must provide sufficient protection 
 for that lien unless the lienholder consents. 

    (b) The rehabilitator may use, sell, or transfer cash or 
 cash equivalents in which any person has a lien in the ordinary 
 course of business only if: 

    (1) each person who has a lien in the assets consents; or 

    (2) after notice and a hearing, the court finds that the 
 rehabilitator has or will provide the person who has a lien with 
 sufficient protection for that lien. 

    Subd. 3.    Out of the ordinary course of business.  (a) 
 The rehabilitator may use, sell, or transfer assets in which any 
 person has a lien out of the ordinary course of business with 
 court approval where: 

    (1) the person that has a lien consents; or 

    (2) the rehabilitator provides sufficient protection for 
 that lien.  Sufficient protection includes, but is not limited 
 to, equivalent substitute collateral or payments in the amount 
 approximately equal to decrease in value or amount of collateral.

    (b) Any sale or transfer shall be free and clear of all 
 lien interests if: 

    (1) all persons with liens in the assets to be sold or 
 transferred consent to the sale or transfer; 

    (2) the consideration for the sale or transfer exceeds the 
 total amount of all liens in the assets to be transferred; 

    (3) the rehabilitator provides sufficient protection for 
 all lien claims in the assets; or 

    (4) other law permits a sale or transfer free and clear of 
 any lien.  

    HIST: 1990 c 538 s 5 

     60B.18 Actions by and against rehabilitator.  

    Subdivision 1.    Stays in pending litigation.  On 
 request of the rehabilitator, 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 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, policyholders, and the public.  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.  

    Subd. 2.    Statute 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 60 days after 
 the order of rehabilitation is entered.  

    Subd. 3.    Statute 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 60 days after the order of rehabilitation is 
 entered or the petition is denied.  

    HIST: 1969 c 708 s 18 

     60B.181 Notice regarding rehabilitation or liquidation 
  proceeding. 

    In an insolvency proceeding against a health maintenance 
 organization, at the time the rehabilitator or liquidator gives 
 notice to creditors and enrollees according to section 60B.26, 
 the rehabilitator or liquidator shall also give notice that any 
 interested party may request in writing notice of subsequent 
 actions or hearings in the proceeding.  After the initial 
 notice, the rehabilitator or liquidator may give notice only to 
 those with a direct stake in any action or hearing and to those 
 who have requested notice in writing.  However, the 
 rehabilitator or liquidator must give all claimants who timely 
 file proofs of claims notice of any plan of rehabilitation or 
 liquidation. 

    HIST: 1990 c 538 s 6 

     60B.19 Termination of rehabilitation.  

    Subdivision 1.    Transformation to liquidation.  
 Whenever the rehabilitator believes that further attempts to 
 rehabilitate an insurer would substantially increase the risk of 
 loss to creditors, policyholders, or the public, or would be 
 futile, the rehabilitator may petition the court for an order of 
 liquidation.  A petition under this subdivision shall have the 
 same effect as a petition under section 60B.20.  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.  

    Subd. 2.    Order to return to company.  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 section 60B.15 no longer exist, 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.  

    HIST: 1969 c 708 s 19; 1986 c 444 

     60B.191 Claims regarding rehabilitation and liquidation 
  of health maintenance organizations. 

    Subdivision 1.    Priority of claims.  The rehabilitator 
 or liquidator of a health maintenance organization shall, in 
 lieu of the classification otherwise provided in this chapter, 
 classify all approved claims into the following classes: 

    (1) claims for ordinary and necessary expenses of operating 
 and administering the health maintenance organization during 
 rehabilitation or liquidation proceeding.  Administrative 
 expenses of a rehabilitation proceeding shall constitute 
 administrative expenses of the liquidation proceeding; 

    (2) claims of the United States government for unpaid 
 taxes; 

    (3) claims by persons employed by the health maintenance 
 organization for services rendered within the four months before 
 the initiation of any insolvency proceeding, up to $1,000.  
 Employee claimants shall not be entitled to any lien claim or 
 other claim under chapter 514; 

    (4) claims by all providers for health care goods and 
 services to the extent covered under a health maintenance 
 contract between enrollees and the health maintenance 
 organization, and claims by enrollees for coverage under a 
 health maintenance contract with the health maintenance 
 organization; 

    (5) claims which are not secured by any perfected lien or 
 security interest in assets of the health maintenance 
 organization and which are not otherwise classified; or 

    (6) claims subordinated under this chapter, chapter 62D, or 
 by agreement with the health maintenance organization or the 
 commissioner of health. 

    Subd. 2.    Claims for malpractice.  As to a health 
 maintenance organization, a claim shall be classified as an 
 unsecured claim if it is made by an enrollee, a parent or 
 guardian of an enrollee, or a person seeking contribution based 
 on injuries to an enrollee, for damages of any type related to 
 death or bodily illness or injury based on improper provisions 
 or failure to provide health care goods or services by a health 
 maintenance organization and its employees, or a provider and 
 its employees to an enrollee of the health maintenance 
 organization.  However, a claimant who has secured a judgment or 
 settlement shall receive any insurance proceeds received by the 
 health maintenance organization based on the claims or the 
 medical care provided to the enrollee, other than reinsurance 
 payable because the aggregate value of services to an enrollee 
 exceeds a certain amount, less any expenses, including 
 reasonable attorneys' fees the health maintenance organization 
 incurred in defending the claim or prosecuting its claim against 
 the insurer.  This section does not expand the liability of 
 health maintenance organizations on bodily injury to enrollees. 

    HIST: 1990 c 538 s 7 

     60B.193 Liability of enrollees. 

    Upon any Minnesota state district court's order of 
 rehabilitation or liquidation of a health maintenance 
 organization under this chapter, all providers of health care 
 goods or services to enrollees of the health maintenance 
 organization, regardless of whether they have a written contract 
 with the health maintenance organization, are prohibited from 
 attempting to collect or collecting payment for authorized 
 referrals from any enrollee of the health maintenance 
 organization for goods or services to the extent the health 
 maintenance organization is obligated to cover the goods and 
 services under a health maintenance contract with the enrollee.  
 A provider's only recourse is to file a claim against the health 
 maintenance organization in the insolvency proceeding and to 
 receive payment in the proceeding.  

    HIST: 1990 c 538 s 8 

     60B.20 Grounds for liquidation. 

    The commissioner may apply by verified petition to the 
 district court for Ramsey county or for the county in which the 
 principal office of the insurer is located for an order to 
 liquidate a domestic insurer or an alien insurer domiciled in 
 this state on any one or more of the following grounds: 

    (1) Any ground on which the commissioner may apply for an 
 order of rehabilitation under section 60B.15, whenever the 
 commissioner 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 
 rehabilitation would serve no useful purpose; 

    (2) That the insurer is or is about to become insolvent; 

    (3) That the insurer has not transacted the business for 
 which it was organized or incorporated during the previous 12 
 months or has transacted only a token such business during that 
 period, although authorized to do so throughout that period, or 
 that more than 12 months after incorporation it has failed to 
 become authorized to do the business for which it was organized 
 or incorporated; 

    (4) That the insurer has commenced, or within the previous 
 year has attempted to commence, voluntary dissolution or 
 liquidation otherwise than as provided in section 60B.04, 
 subdivision 3 in the case of a solvent insurer; 

    (5) That the insurer has concealed records or assets from 
 the commissioner or improperly removed them from the 
 jurisdiction, or the commissioner believes that the insurer is 
 about to do so; 

    (6) That the insurer does not satisfy the requirements that 
 would be applicable if it were seeking initial authorization in 
 this state to do the business for which it was organized or 
 incorporated, except for: 

    (i) Requirements that are intended to apply only at the 
 time the initial authorization to do business is obtained, and 
 not thereafter; and 

    (ii) Requirements that are expressly made inapplicable by 
 the laws establishing the requirements; 

    (7) That the holders of two-thirds of the shares entitled 
 to vote, or two-thirds of the members or policyholders entitled 
 to vote in an insurer controlled by its members or 
 policyholders, have consented to a petition; 

    (8) In the context of a health maintenance organization, 
 "insurer" when used in clauses (1) to (7) means "health 
 maintenance organization."  In addition to the grounds in 
 clauses (1) to (7), any one of the following constitutes grounds 
 for liquidation of a health maintenance organization: 

    (i) the health maintenance organization is unable or is 
 expected to be unable to meet its debts as they become due; 

    (ii) grounds exist under section 62D.042, subdivision 7; 

    (iii) the health maintenance organization's liabilities 
 exceed the current value of its assets, exclusive of intangibles 
 and, where the guaranteeing organization's financial condition 
 no longer meets the requirements of sections 62D.041 and 
 62D.042, exclusive of any deposits, letters of credit, or 
 guarantees provided by any guaranteeing organization under 
 chapter 62D; 

    (iv) within the last year the health maintenance 
 organization has failed, and the commissioner of health expects 
 failure to continue in the future, to make comprehensive medical 
 care adequately available and accessible to its enrollees and 
 the health maintenance organization has not successfully 
 implemented a plan of corrective action pursuant to section 
 62D.121, subdivision 7; and 

    (v) within the last year the directors or officers of the 
 health maintenance organization willfully violated the 
 requirements of section 317A.251, or having become aware within 
 the previous year of an unintentional or willful violation of 
 section 317A.251, have failed to take all reasonable steps to 
 remedy the situation resulting from the violation and to prevent 
 the same violation in the future. 

    HIST: 1969 c 708 s 20; 1986 c 444; 1990 c 538 s 9 

     60B.21 Liquidation orders. 

    Subdivision 1.    Order to liquidate.  An order to 
 liquidate the business of a domestic insurer shall appoint the 
 commissioner and 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.  The commissioner 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 
 section 60B.55, subdivision 3, for ancillary receivers appointed 
 in this state as to assets located in this state.  The filing or 
 recording of the order with any county recorder 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 
 recorder. 

    Subd. 2.    Fixing of rights.  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 
 sections 60B.22, 60B.25, clause (22), and 60B.39. 

    Subd. 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. 

    Subd. 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. 

    HIST: 1969 c 708 s 21; 1976 c 181 s 2; 1986 c 444; 1999 c 177 
 s 18 

     60B.22 Continuance of coverage. 

    Subdivision 1.    Length of continued coverage.  All 
 insurance policies or similar contracts of coverage issued by 
 the insurer shall continue in force: 

    (a) For a period of 30 days from the date of entry of the 
 liquidation order; 

    (b) Until the normal expiration of the policy or contract 
 coverage; 

    (c) Until the insured has replaced the coverage with 
 equivalent coverage in another insurer; or 

    (d) Until the liquidator has effected a transfer of the 
 policy or contract obligation pursuant to section 60B.25, clause 
 (8), whichever time is less.  

    Subd. 2.    Legal status of continued coverage.  If the 
 coverage continued under this section is replaced by coverage 
 that is not equivalent, the coverage continued under this 
 section shall be excess coverage over the replacement coverage 
 to the extent of the deficiency.  Claims arising during the 
 continuation of coverage shall be treated as if they arose 
 immediately before the petition for liquidation.  Coverage under 
 this subdivision shall not satisfy any legal obligation of the 
 insured to carry insurance protection or other coverage, whether 
 the obligation is created by law or by contract.  

    HIST: 1969 c 708 s 22; 1993 c 299 s 7 

     60B.23 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.  

    HIST: 1969 c 708 s 23; 1986 c 444 

  60B.24 Repealed, 1993 c 299 s 33 

     60B.25 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.  The liquidator 
 shall coordinate activities with those of each guaranty 
 association having an interest in the liquidation and shall 
 submit a report detailing how coordination will be achieved to 
 the court for its approval within 30 days following appointment, 
 or within the time which the court, in its discretion, may 
 establish.  Subject to the court's control, the liquidator may: 

    (1) Appoint a special deputy to act under sections 60B.01 
 to 60B.61 and determine the deputy's 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, actuaries, 
 accountants, appraisers, consultants, and other personnel deemed 
 necessary to assist in the liquidation without regard to chapter 
 14. 

    (3) Fix the compensation of persons under clause (2), 
 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 sufficient cash or 
 liquid assets to defray the costs incurred, the liquidator may 
 advance the costs so incurred out of the appropriation made to 
 the department of commerce.  Any amounts so paid shall be deemed 
 expense of administration and shall be repaid for the credit of 
 the department of commerce out of the first available money 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 testimony after it has been 
 correctly reduced to writing, and in connection therewith 
 require the production of any books, papers, records, or other 
 documents which the liquidator deems relevant to the inquiry. 

    (6) Collect all debts and money due and claims belonging to 
 the insurer, wherever located, and for this purpose institute 
 timely action in other jurisdictions, in order to forestall 
 garnishment and attachment proceedings against such debts; do 
 such other acts as are necessary or expedient to collect, 
 conserve, or protect its assets or property, including sell, 
 compound, compromise, or assign for purposes of collection, upon 
 such terms and conditions as the liquidator deems best, any bad 
 or doubtful debts; and pursue any creditor's remedies available 
 to enforce claims. 

    (7) Conduct public and private sales of the property of the 
 insurer in a manner prescribed by the court. 

    (8) Use assets of the estate to transfer coverage 
 obligations to a solvent assuming insurer, if the transfer can 
 be arranged without prejudice to applicable priorities under 
 section 60B.44. 

    (9) 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 
 $10,000 shall be concluded without express permission of the 
 court.  The liquidator may also 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 recorder for the county 
 in which the property is located a certified copy of the order 
 of appointment. 

    (10) Borrow money 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. 

    (11) 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. 

    (12) Continue to prosecute and institute in the name of the 
 insurer or in the liquidator's own name any suits and other 
 legal proceedings, in this state or elsewhere, and abandon the 
 prosecution of claims the liquidator deems unprofitable to 
 pursue further.  If the insurer is dissolved under section 
 60B.23, the liquidator may apply to any court in this state or 
 elsewhere for leave to be substituted for the insurer as 
 plaintiff. 

    (13) Prosecute any action which may exist in behalf of the 
 creditors, members, policyholders, or shareholders of the 
 insurer against any officer of the insurer, or any other person. 

    (14) 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. 

    (15) Deposit in one or more banks in this state such sums 
 as are required for meeting current administration expenses and 
 dividend distributions. 

    (16) Deposit with the state board of investment for 
 investment pursuant to section 11A.24, all sums not currently 
 needed, unless the court orders otherwise. 

    (17) File any necessary documents for record in the office 
 of any county recorder 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 sections 60B.30 and 
 60B.32. 

    (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) Collect from an insured any unpaid earned premium or 
 retrospectively rated premium due the insurer based on the 
 termination of coverage under section 60B.22.  Premium on surety 
 business is considered earned at inception if no policy term can 
 be determined.  All other premium will be considered earned and 
 will be prorated over the determined policy term, regardless of 
 any provision in the bond, guaranty, contract, or other 
 agreement. 

    (23) Exercise all powers now held or hereafter conferred 
 upon receivers by the laws of this state not inconsistent with 
 sections 60B.01 to 60B.61. 

    (24) The enumeration in this section of the powers and 
 authority of the liquidator is not a limitation, nor does it 
 exclude the 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. 

    (25) The power of the liquidator of a health maintenance 
 organization includes the power to transfer coverage obligations 
 to a solvent and voluntary health maintenance organization, 
 insurer, or nonprofit health service plan, and to assign 
 provider contracts of the insolvent health maintenance 
 organization to an assuming health maintenance organization, 
 insurer, or nonprofit health service plan permitted to enter 
 into such agreements.  The liquidator is not required to meet 
 the notice requirements of section 62D.121.  Transferees of 
 coverage obligations or provider contracts shall have no 
 liability to creditors or obligees of the health maintenance 
 organization except those liabilities expressly assumed. 

    HIST: 1969 c 708 s 25; 1976 c 181 s 2; 1977 c 273 s 18; 1980 c 
 607 art 14 s 46; 1982 c 424 s 130; 1983 c 289 s 114 subd 1; 1984 
 c 655 art 1 s 92; 1986 c 444; 1990 c 538 s 10; 1991 c 199 art 1 
 s 10; 1991 c 325 art 5 s 1; 1999 c 177 s 19 

     60B.26 Notice to creditors and others. 

    Subdivision 1.    Notice required.  (a) 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 
 commissioner of commerce of each jurisdiction in which the 
 insurer is licensed to do business, by first class mail and by 
 telephone to the department of labor and industry of this state 
 if the insurer is or has been an insurer of workers' 
 compensation, by first class mail within this state and by 
 airmail outside this state to all agents of the insurer having a 
 duty under this chapter, by first class mail, if the insurer is 
 a surety company to every district court judge exercising 
 probate jurisdiction and the court administrator of all courts 
 of record in this state and upon receipt of such notice it shall 
 be the duty of those judges and court administrators to notify 
 and require every executor, administrator, guardian, trustee, or 
 other fiduciary having filed a bond on which such company is 
 surety, to forthwith file a new bond with new sureties, and by 
 first class mail within this state and by airmail outside this 
 state at the last known address to all persons known or 
 reasonably expected to have claims against the insurer, 
 including all policyholders.  The liquidator also shall publish 
 a notice three consecutive times in a newspaper of general 
 circulation in the county in which the liquidation is pending or 
 in Ramsey county, the last publication to be not less than three 
 months before the earliest deadline specified in the notice 
 under subdivision 2. 

    (b) Notice to agents shall inform them of their duties 
 under this chapter and inform them what information they must 
 communicate to policyholders.  Notice to policyholders shall 
 include notice of impairment and termination of coverage under 
 section 60B.22.  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 policyholder is interested, and 
 (2) notice of the right to file a claim under section 60B.40, 
 subdivision 2. 

    (c) Within 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. 

    Subd. 2.    Notice respecting claim filing.  Notice to 
 potential claimants under subdivision 1 shall require claimants 
 to file with the court their claims together with proper proofs 
 thereof under section 60B.38, on or before a date the liquidator 
 specifies in the notice, which shall be no less than six months 
 nor more than one year after entry of the order, except that the 
 liquidator need not require persons claiming unearned premiums 
 or subscription rates 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.  Notice to potential 
 claimants shall include notice of the existence of any guaranty 
 association charged by statute with the guaranty of the 
 obligations of the insurer.  Where procedures have been 
 established by the association for the filing of claims this 
 notice shall include an explanation of those procedures. 

    Subd. 3.    Notice conclusive.  If notice is given in 
 accordance with this section, the distribution of the assets of 
 the insurer under sections 60B.01 to 60B.61 shall be conclusive 
 with respect to all claimants, whether or not they received 
 notice. 

    HIST: Ex1967 c 1 s 6; 1969 c 708 s 26; 1975 c 359 s 23; 1977 c 
 273 s 21; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 
 444; 1Sp1986 c 3 art 1 s 82; 1995 c 189 s 8; 1996 c 277 s 1; 
 1999 c 177 s 20 

  60B.27 Repealed, 1996 c 446 art 1 s 72; 1998 c 339 s 72 

     60B.28 Actions by and against liquidator.  

    Subdivision 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, 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 section.  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, the liquidator may apply to the court 
 for leave to defend or to be substituted for the insurer, and if 
 the court gives 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 the liquidator 
 intervenes under this section at the expense of the estate of 
 the insurer.  

    Subd. 2.    Statutes of limitations on claims by insurer.  
  The liquidator may, within two 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 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.  

    Subd. 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 60 days after 
 the petition is denied.  

    HIST: 1969 c 708 s 28; 1986 c 444 

     60B.29 Collection and list of assets.  

    Subdivision 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 
 copy shall be filed in the office of the court administrator of 
 the court having jurisdiction over the liquidation proceedings 
 and one copy shall be retained for the liquidator's files.  All 
 amendments and supplements shall be similarly filed.  

    Subd. 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 the liquidator can.  

    HIST: 1969 c 708 s 29; 1986 c 444; 1Sp1986 c 3 art 1 s 82 

     60B.30 Fraudulent transfers prior to petition. 

    Subdivision 1.    Definition and effect.  Every 
 transfer made or suffered and every obligation incurred by an 
 insurer within one year prior to the filing of a successful 
 petition for rehabilitation or liquidation under sections 60B.01 
 to 60B.61 is 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.  A transfer made or an obligation incurred by an 
 insurer ordered to be rehabilitated or liquidated under sections 
 60B.01 to 60B.61, 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.  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. 

    Subd. 2.    Perfection of transfers.  (a) 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 section 60B.32, subdivision 3. 

    (b) 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) 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) 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) This subdivision applies whether or not there are or 
 were creditors who might have obtained any liens or persons who 
 might have become bona fide purchasers. 

    Subd. 3.    Fraudulent reinsurance transactions.  Any 
 transaction of the insurer with a reinsurer shall be deemed 
 fraudulent and may be avoided by the receiver under subdivision 
 1 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 year 
 prior to the date of filing of the petition through which the 
 receivership was commenced. 

    Subd. 4.    Fraudulent transfers to affiliates.  Any 
 distribution, other than stock dividends paid by the insurer on 
 its capital stock, made by the insurer to an affiliate owning 
 more than 50 percent of the voting stock of the insurer during 
 the five years preceding the filing of a successful petition for 
 rehabilitation or liquidation under sections 60B.01 to 60B.61 
 shall be deemed fraudulent and may be avoided by the receiver; 
 except that: 

    (a) No distribution shall be recoverable if the insurer 
 shows that when paid, it was lawful, reasonable, and that the 
 insurer did not know, and could not reasonably have known, that 
 the distribution might adversely affect the ability of the 
 insurer to fulfill its contractual obligations; 

    (b) Any person who was an affiliate owning more than 50 
 percent of the voting stock of the insurer at the time the 
 distributions were paid shall be liable only up to the amount of 
 distributions received.  Any person who was an affiliate that 
 controlled the insurer at the time the distributions were 
 declared shall be liable up to the amount of distributions that 
 person would have received if they had been paid immediately.  
 If two persons are liable with respect to the same distribution, 
 they shall be jointly and severally liable; 

    (c) The maximum amount recoverable under this subdivision 
 shall be the amount needed in addition to all other available 
 assets of the insurer to pay its contractual obligations; 

    (d) If any person liable under clause (b) is insolvent, all 
 its affiliates that controlled it at the time the distribution 
 was paid shall be jointly and severally liable for any resulting 
 deficiency in the amount recovered from the insolvent affiliate. 

    HIST: 1969 c 708 s 30; 1977 c 273 s 19; 1986 c 444 

     60B.31 Fraudulent transfers after petition. 

    Subdivision 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 recorder in the 
 county where any real property in question is located is 
 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. 

    Subd. 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 the insurer's 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 that person has reasonable cause to believe that 
 the petition is not well founded. 

    (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. 

    Subd. 3.    Negotiability.  Nothing in sections 60B.01 
 to 60B.61 shall impair the negotiability of currency or 
 negotiable instruments. 

    HIST: 1969 c 708 s 31; 1976 c 181 s 2; 1986 c 444 

     60B.32 Voidable preferences and liens.  

    Subdivision 1.    Preferences.  (a) 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 year before the 
 filing of a successful petition for liquidation under sections 
 60B.01 to 60B.61 the effect of which transfer may be to enable 
 the creditor to obtain a greater percentage of 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 year before 
 the filing of the successful petition for rehabilitation or 
 within two years before the filing of the successful petition 
 for liquidation, whichever time is shorter.  

    (b) Any preference may be avoided by the liquidator, if (1) 
 the insurer was insolvent at the time of the transfer, or (2) 
 the transfer was made within four months before the filing of 
 the petition, or (3) the creditor receiving it or to be 
 benefited thereby or an agent of the creditor 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 the creditor held such position, or any 
 shareholder holding directly or indirectly more than five 
 percent 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, that person shall have a lien upon 
 the property to the extent of the consideration actually given.  
 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.  

    Subd. 2.    Perfection of transfers.  (a) 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) 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 the transferee.  

    (c) 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) 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) This subdivision applies whether or not there are or 
 were creditors who might have obtained liens or persons who 
 might have become bona fide purchasers.  

    Subd. 3.    Liens by legal or equitable proceedings.  
 (a) 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 attachment, 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) 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 subdivision 2, 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 officials.  Such 
 a lien could not, however, become superior and such a purchase 
 could not create superior rights for the purpose of subdivision 
 2 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.  

    Subd. 4.    Twenty-one day rule.  A transfer of 
 property for or on account of a new and contemporaneous 
 consideration which is deemed under subdivision 2 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 transfer as against liens or 
 bona fide purchasers' rights are performed within 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 becomes security for a future loan 
 shall have the same effect as a transfer for or on account of a 
 new and contemporaneous consideration.  

    Subd. 5.    Indemnifying transfers also voidable.  If 
 any lien deemed voidable under subdivision 1, clause (b), 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 sections 
 60B.01 to 60B.61 which results in a liquidation order, the 
 indemnifying transfer or lien shall also be deemed voidable.  

    Subd. 6.    Avoidance of lien.  The property affected 
 by any lien deemed voidable under subdivisions 1, clause (b), 
 and 5 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.  

    Subd. 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.  

    Subd. 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 
 subdivision 7 to the extent of the amount paid to the liquidator.

    Subd. 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 the creditor. 

    Subd. 10.    Reexamination of attorney's fees.  If an 
 insurer, directly or indirectly, within four months before the 
 filing of a successful petition for liquidation under sections 
 60B.01 to 60B.61 or at any time in contemplation of a proceeding 
 to liquidate it, pays money or transfers property to an attorney 
 at law for services rendered or to be rendered, the transaction 
 may be examined by the court on its own motion or shall be 
 examined by the court on petition of the liquidator and shall be 
 held valid only to the extent of a reasonable amount to be 
 determined by the court, and the excess may be recovered by the 
 liquidator for the benefit of the estate.  

    Subd. 11.    Personal liability.  (a) Every officer, 
 manager, employee, shareholder, member, subscriber, attorney, or 
 any other person acting on behalf of the insurer who knowingly 
 participates in giving any preference when that person has 
 reasonable cause to believe the insurer to be or about to become 
 insolvent at the time of the preference shall be personally 
 liable to the liquidator for the amount of the preference.  It 
 is permissible to infer that there is reasonable cause to so 
 believe if the transfer was made within four months before the 
 date of filing of the successful petition for liquidation.  

    (b) Every person receiving any property from the insurer or 
 the benefit thereof as a preference voidable under subdivision 
 1, clause (b), shall be personally liable therefor and shall be 
 bound to account to the liquidator.  

    (c) Nothing in this subdivision shall prejudice any other 
 claim by the liquidator against any person.  

    HIST: 1969 c 708 s 32; 1986 c 444 

     60B.33 Claims of holders of void or voidable rights.  

    Subdivision 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 sections 60B.01 to 60B.61, shall 
 be allowed unless the creditor 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 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.  

    Subd. 2.    Time for filing.  A claim allowable under 
 subdivision 1 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 section 60B.37 if filed within 30 days from the 
 date of the avoidance or within the further time allowed by the 
 court under subdivision 1.  

    HIST: 1969 c 708 s 33; 1986 c 444 

     60B.34 Setoffs and counterclaims.  

    Subdivision 1.    Setoffs allowed in general.  Mutual 
 debts or mutual credits between the insurer and another person 
 in connection with any action or proceeding under sections 
 60B.01 to 60B.61 shall be set off and the balance only shall be 
 allowed or paid, except as provided in subdivision 2.  

    Subd. 2.    Exceptions.  No setoff 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 
 that person 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 setoff; 

    (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 premiums, 
 whether earned or unearned, to the insurer.  

    HIST: 1969 c 708 s 34; 1986 c 444 

     60B.35 Assessments.  

    Subdivision 1.    Report to court.  As soon as 
 practicable but not more than two years from the date of an 
 order of liquidation under section 60B.21 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.  

    Subd. 2.    Levy of assessment.  (a) Upon the basis of 
 the report provided in subdivision 1, including any supplements 
 and amendments thereto, the court may levy ex parte one 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.

    Subd. 3.    Order to show cause.  After levy of 
 assessment under subdivision 2, 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 the member 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.  

    Subd. 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 20 days before the return day of the order to 
 show cause to the last known address as it appears on the 
 records of the insurer.  

    Subd. 5.    Orders and hearings.  (a) If a member does 
 not appear and serve duly verified objections upon the 
 liquidator upon the return day of the order to show cause under 
 subdivision 3, the court shall make an order adjudging the 
 member liable for the amount of the assessment against the 
 member and other indebtedness, pursuant to subdivision 3, 
 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 
 duly verified 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 clause 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 30 days.  

    Subd. 6.    Collection.  The liquidator may enforce any 
 order or collect any judgment under subdivision 5 by any lawful 
 means.  

    HIST: 1969 c 708 s 35; 1986 c 444 

  60B.36 Repealed, 1999 c 177 s 88 

     60B.365 Reinsurer's liability. 

    Subdivision 1.    Generally.  The amount recoverable by 
 the liquidator from reinsurers must not be reduced as a result 
 of the delinquency proceedings, regardless of any provision in 
 the reinsurance contract or other agreement, except as provided 
 in subdivision 2. 

    Subd. 2.    Payments.  Payments by the reinsurer must be 
 made directly to the ceding insurer or its receiver, except 
 where the contract of insurance or reinsurance specifically 
 provides for another payee for the reinsurance in the event of 
 insolvency of the ceding insurer according to the applicable 
 requirements of statutes, rules, or orders of the domiciliary 
 state of the ceding insurer.  The receiver and reinsurer are 
 entitled to recover from a person who unsuccessfully makes a 
 claim directly against the reinsurer the receiver's attorneys' 
 fees and expenses incurred in preventing any collection by the 
 person. 

    HIST: 1999 c 177 s 21 

     60B.37 Filing of claims. 

    Subdivision 1.    Deadline for filing.  Proof of all 
 claims must be filed with the court in the form required by 
 section 60B.38 on or before the last day for filing specified in 
 the notice required under section 60B.26, except that proof of 
 preferred ownership claims and proprietary claims under section 
 60B.44, subdivisions 10 and 11, need not be filed at all, and 
 proof of claims for unearned premiums or subscription rates 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.  

    Subd. 2.    Excused late filings.  For a 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 the claimant 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 the claimant filed within 30 days after learning 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 section 
 60B.45, and that it was filed within 30 days after the claimant 
 learned of the omission; 

    (c) That a transfer to a creditor was avoided under 
 sections 60B.30 to 60B.32 or was voluntarily surrendered under 
 section 60B.33, and that the filing satisfies the conditions of 
 section 60B.33; 

    (d) That valuation under section 60B.43 of security held by 
 a secured creditor shows a deficiency, which is filed within 30 
 days after the valuation; 

    (e) That a claim was contingent and became absolute, and 
 was filed within 30 days after it became absolute; and 

    (f) That the claim is for workers' compensation benefits 
 and the time limitations and other requirements of chapter 176 
 have been met. 

    Subd. 3.    Unexcused late filings.  The liquidator may 
 consider any claim filed late which is not covered by 
 subdivision 2, 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 the claim as is then 
 being paid to other claimants of the same priority plus the same 
 percentage of the amount allowed on the claim as is then being 
 paid to claimants of any lower priority.  This shall continue 
 until the claim has been paid in full.  

    HIST: 1969 c 708 s 37; 1986 c 444; 1991 c 325 art 6 s 1 

     60B.38 Proof of claim.  

    Subdivision 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 section 60B.40, subdivision 1.  

    (8) The name and address of the claimant and the claimant's 
 attorney, if any.  

    (b) No claim need be considered or allowed if it does not 
 contain all the information under clause (a) which may be 
 applicable.  The liquidator may require that a prescribed form 
 be used and may require that other information and documents be 
 included.  

    Subd. 2.    Supplementary information.  At any time the 
 liquidator may request the claimant to present information or 
 evidence supplementary to that required under subdivision 1, and 
 may take testimony under oath, require production of affidavits 
 or depositions or otherwise obtain additional information or 
 evidence.  

    Subd. 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 months 
 before the filing of the petition need be considered as evidence 
 of liability or of the quantum of damages.  

    HIST: 1969 c 708 s 38; 1986 c 444 

     60B.39 Special claims. 

    Subdivision 1.    Claims contingent on judgments.  The 
 claim of a third party which is contingent only on that person 
 first obtaining a judgment against the insured shall be 
 considered and may be allowed as if there were no such 
 contingency.  

    Subd. 2.    Claims under terminated policies.  Any claim 
 that would have become absolute if there had been no termination 
 of coverage under section 60B.22, 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 days before the insured event occurred either the 
 claimant had actual notice of the termination or notice was 
 mailed to the claimant as prescribed by section 60B.26, 
 subdivision 1, or this chapter.  If allowed the claim shall 
 share in distributions under section 60B.44, subdivision 9.  

    Subd. 3.    Other contingent claims.  A claim may be 
 allowed even if contingent, if it is filed in accordance with 
 section 60B.37, subdivision 2.  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.  

    Subd. 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.  

    Subd. 5.    Claim by rating bureau.  The rating bureau 
 in carrying out its responsibilities may file a claim with the 
 liquidator for all sums paid or to be paid by it.  

    Subd. 6.    Claims under the Insurance Guaranty 
 Association Act.  The board of directors of the insurance 
 guaranty association may file a claim with the liquidator for 
 all claims to which the association has been subrogated under 
 section 60C.11, subdivision 1. 

    HIST: 1969 c 708 s 39; 1971 c 145 s 22; 1986 c 444; 1996 c 305 
 art 1 s 16; 1999 c 177 s 22 

     60B.40 Special provisions for third party claims.  

    Subdivision 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 or contract 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 coverage is avoided 
 by the liquidator.  

    Subd. 2.    Insured's claim.  Whether or not the third 
 party files a claim, the insured may file a claim on the 
 insured's 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 60 days after mailing of the 
 notice required by section 60B.26, subdivision 1, clause (b), 
 whichever is later, the insured is an unexcused late filer.  

    Subd. 3.    Procedure for insured's claim.  The 
 liquidator shall make recommendations to the court under section 
 60B.45 for the allowance of an insured's claim under subdivision 
 2 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, the liquidator 
 shall reconsider the claim on the basis of additional 
 information and amend the 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 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 subdivision shall not be a reason 
 for unreasonable delay of final distribution and discharge of 
 the liquidator.  

    Subd. 4.    Multiple claims.  If several claims founded 
 upon one policy or contract of coverage 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 or contract is applicable 
 exceeds that limit, each claim as allowed shall be reduced in 
 the same proportion so that the total equals the policy or 
 contract limit.  Claims by the insured shall be evaluated as in 
 subdivision 3.  If any insured's claim is subsequently reduced 
 under subdivision 3, the amount thus freed shall be apportioned 
 ratably among the claims which have been reduced under this 
 subdivision.  

    HIST: 1969 c 708 s 40; 1986 c 444 

     60B.41 Disputed claims.  

    Subdivision 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 the claimant's attorney by first class mail 
 at the address shown in the proof of claim.  Within 60 days from 
 the mailing of the notice, the claimant may file objections with 
 the court.  If no such filing is made, the claimant may not 
 further object to the determination.  

    Subd. 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 the claimant's attorney and 
 to any other persons directly affected, not less than ten nor 
 more than 20 days before the date of the hearing.  The matter 
 may be heard by the court or by a court appointed referee. 

    HIST: 1969 c 708 s 41; 1986 c 444 

     60B.42 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 the person 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 in trust for such other person.  

    HIST: 1969 c 708 s 42; 1986 c 444 

     60B.43 Secured creditors' claims.  

    Subdivision 1.    Determining value of security.  The 
 value of any security held by a secured creditor shall be 
 determined in one 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; or 

    (b) By agreement, arbitration, compromise, or litigation 
 between the creditor and the liquidator; or 

    (c) As to separate account assets, by converting the same 
 into money and allocating the converted assets among the holders 
 of contracts on a variable basis in accordance with the terms of 
 said contracts.  

    Subd. 2.    Treatment of claims.  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 the security to the liquidator, the 
 entire claim shall be allowed as if unsecured.  

    HIST: 1969 c 708 s 43; 1986 c 444 

     60B.44 Order of distribution. 

    Subdivision 1.    Deductible provision.  The 
 distribution of claims from the insurer's estate shall be in the 
 order stated in this section with a descending degree of 
 preference for each subdivision.  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. 

    Subd. 2.    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.  

    Subd. 3. Repealed, 1999 c 177 s 88 

    Subd. 4.    Loss claims; including claims not covered by a 
 guaranty association.  All claims under policies or contracts 
 of coverage for losses incurred including third party claims, 
 and all claims against the insurer for liability for bodily 
 injury or for injury to or destruction of tangible property 
 which are not under policies or contracts.  All claims under 
 life insurance and annuity policies, whether for death proceeds, 
 annuity proceeds, or investment values, shall be treated as loss 
 claims.  That portion of any loss for which indemnification is 
 provided by other benefits or advantages recovered or 
 recoverable by the claimant shall not be included in this class, 
 other than benefits or advantages recovered or recoverable in 
 discharge of familial obligations of support or by way of 
 succession at death or as proceeds of life insurance, or as 
 gratuities.  No payment made by an employer to an employee shall 
 be treated as a gratuity.  Claims not covered by a guaranty 
 association are loss claims.  

    Subd. 4a.    Unearned premiums.  Claims under 
 nonassessable policies or contracts of coverage for unearned 
 premiums or subscription rates or other refunds. 

    Subd. 4b.    Federal government.  Claims of the federal 
 government. 

    Subd. 4c.    Wages.  (a) Debts due to employees for 
 services performed, not to exceed $1,000 to each employee, that 
 have been earned within one year before the filing of the 
 petition for liquidation, subject to payment of applicable 
 federal, state, or local government taxes required by law to be 
 withheld from the debts.  Officers are not entitled to the 
 benefit of this priority.  In cases where there are no claims 
 and no potential claims of the federal government in the estate, 
 these claims will have priority over claims in subdivision 4. 

    (b) The priority in paragraph (a) is in lieu of other 
 similar priority authorized by law as to wages or compensation 
 of employees. 

    Subd. 5. Repealed, 1999 c 177 s 88 

    Subd. 6.    Residual classification.  All other claims 
 including claims of 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 
 subdivision 9.  

    Subd. 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 first by the liquidator on the basis of the 
 underlying facts, giving the judgment such weight as the 
 liquidator deems appropriate.  The claim as allowed on the 
 underlying facts 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.  

    Subd. 8.    Interest on claims already paid.  Interest 
 at the legal rate compounded annually on all claims in the 
 classes under subdivisions 2 to 7 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.  

    Subd. 9.    Miscellaneous subordinated claims.  The 
 remaining claims or portions of claims not already paid, with 
 interest as in subdivision 8.  

    (a) Claims under section 60B.39, subdivision 2; 

    (b) Claims subordinated by section 60B.61; 

    (c) Except to the extent excused or otherwise permitted 
 pursuant to section 60B.37, claims filed late; 

    (d) Portions of claims subordinated under subdivision 6; 
 and 

    (e) Claims or portions of claims payment of which is 
 provided by other benefits or advantages recovered or 
 recoverable by the claimant.  

    Subd. 10.    Preferred ownership claims.  Surplus or 
 contribution notes, or similar obligations, and premium refunds 
 on assessable policies.  Payments to members of domestic mutual 
 insurance companies shall be limited to the amount set forth in 
 section 60B.46, subdivision 2, clause (b).  Interest at the 
 legal rate shall be added to each claim, as in subdivisions 8 
 and 9.  

    Subd. 11.    Proprietary claims.  The claims of 
 shareholders or other owners.  

    HIST: 1969 c 708 s 44; 1985 c 255 s 1; 1986 c 444; 1987 c 337 
 s 27-30; 1999 c 177 s 23-27 

     60B.45 Liquidator's recommendations to the court.  

    Subdivision 1.    Recommended claims.  The liquidator 
 shall review all claims duly filed in the liquidation and shall 
 make such further investigation as the liquidator deems 
 necessary.  The liquidator 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 section 60B.41.  As often as practicable, the 
 liquidator shall present to the court reports of claims against 
 the insurer with 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, the liquidator 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 or contracts 
 of coverage on the advance premium plan, the liquidator shall 
 report the persons to whom, according to the records of insurer, 
 unearned premiums or subscription rates are owed and the amounts 
 owed.  

    Subd. 2.    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.  

    HIST: 1969 c 708 s 45; 1986 c 444 

     60B.46 Distribution of assets. 

    Subdivision 1.    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 
 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.  The 
 court may take into consideration the contributions of the 
 respective parties, including guaranty associations, 
 shareholders, and policyowners, and any other party with a bona 
 fide interest, in making an equitable distribution of the 
 ownership rights of the insurer.  No distribution to 
 stockholders of the insurer shall be permitted by the court 
 unless the total amount of assessments levied by guaranty 
 associations with respect to the insurer have been repaid. 

    Subd. 2.    Excess assets.  (a) Upon liquidation of a 
 domestic mutual insurance company, any assets held in excess of 
 its liabilities and the amounts which may be paid to its members 
 as provided under clause (b) shall be paid into the state 
 treasury to the credit of the general fund. 

    (b) The maximum amount payable upon liquidation to any 
 member for and on account of membership in a domestic mutual 
 insurance company, in addition to the insurance benefits 
 promised in the policy, shall be the total of all premium 
 payments made by the member with interest at the legal rate 
 compounded annually. 

    Subd. 3.    Payments to guaranty associations.  Within 
 120 days of a final determination of insolvency of a company by 
 a court of competent jurisdiction of this state or as soon 
 thereafter as is practical, the liquidator shall make 
 application to the court for approval of a proposal to disburse 
 assets out of the company's marshalled assets, from time to time 
 as the assets become available, to the Minnesota insurance 
 guaranty association, to the Minnesota life and health insurance 
 guaranty association, and to any entity or person performing a 
 similar function in another state.  

    Subd. 4.    Contents of proposal.  The proposal shall at 
 least include provisions for:  

    (1) reserving amounts for the payment of expenses of 
 administration, the payment of claims of secured creditors to 
 the extent of the value of their security, and the payment of 
 claims having a higher priority than those of the guaranty 
 associations; 

    (2) disbursements of the assets marshalled to date and 
 subsequent disbursements of assets as they become available; 

    (3) equitable allocation of disbursements to each of the 
 guaranty associations entitled thereto; 

    (4) the securing by the liquidator from each of the 
 guaranty associations entitled to disbursements pursuant to this 
 section of an agreement to return to the liquidator the assets 
 previously disbursed to them as may be required to pay claims of 
 secured creditors and those claims having a higher priority than 
 those of the guaranty association.  No bond shall be required of 
 a guaranty association; and 

    (5) a full report to be made by the guaranty association to 
 the liquidator accounting for all assets so disbursed to the 
 association, all disbursements made therefrom, any interest 
 earned by the guaranty association on the assets, and any other 
 matter as the court may direct.  

    Subd. 5.    Disbursements.  (a) The proposal shall 
 provide for disbursements to the guaranty associations in 
 amounts estimated to be at least equal to the claim payments 
 made or to be made thereby for which the guaranty association 
 could assess a claim against the liquidator.  The proposal shall 
 further provide that if the assets available for distribution 
 from time to time do not equal or exceed the amount of such 
 claim payments made or to be made by the guaranty association, 
 then disbursements shall be in the amount of the available 
 assets.  

    (b) The liquidator's proposal shall, with respect to an 
 insolvent insurer writing life or health insurance or annuities, 
 provide for disbursements of assets to any guaranty association 
 or any foreign guaranty association covering life or health 
 insurance or annuities or to any other entity or organization 
 reinsuring, assuming, or guaranteeing policies or contracts of 
 insurance under the acts creating these associations.  

    Subd. 6.    Notice of application.  Notice of the 
 application shall be given to the guaranty associations in, and 
 to the commissioners of insurance of, each of the states.  The 
 notice shall be deemed to have been given when deposited in the 
 United States mail, certified first class postage prepaid, at 
 least 30 days prior to submission of the 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 subdivision 
 4, clauses (1) and (2).  

    HIST: 1969 c 399 s 1; 1969 c 708 s 46; 1977 c 273 s 20; 1985 c 
 255 s 2-5; 1986 c 444 

     60B.47 Unclaimed and withheld funds.  

    Subdivision 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 
 that person's distributive share, shall be deposited with the 
 state treasurer to the credit of the general fund, and shall be 
 paid over without interest except in accordance with section 
 60B.44 to the person entitled thereto or a legal representative 
 upon proof satisfactory to the state treasurer of a right 
 thereto.  Any amount on deposit not claimed within six years 
 from the discharge of the liquidator is deemed abandoned and 
 shall become the property of the state.  The state treasurer 
 shall at the end of each fiscal year transfer these amounts to 
 the general fund.  

    Subd. 2.    Withheld funds.  All funds withheld under 
 section 60B.40 and not distributed shall upon discharge of the 
 liquidator be deposited with the state treasurer and paid in 
 accordance with section 60B.40.  Any sums remaining which under 
 section 60B.40 would revert to the undistributed assets of the 
 insurer shall be transferred to the state treasurer and become 
 the property of the state under subdivision 1, unless the 
 commissioner petitions the court to reopen the liquidation under 
 section 60B.49.  

    HIST: 1969 c 399 s 1; 1969 c 708 s 47; 1986 c 444 

     60B.48 Termination of proceedings.  

    Subdivision 1.    Liquidator's application.  When all 
 assets justifying the expense of collection and distribution 
 have been collected and distributed under sections 60B.01 to 
 60B.61, 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 to the credit of the general fund any remaining funds 
 that are uneconomic to distribute.  

    Subd. 2.    Application by others.  Any other person 
 may apply to the court at any time for an order under 
 subdivision 1.  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.  

    HIST: 1969 c 399 s 1; 1969 c 708 s 48 

     60B.49 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.  

    HIST: 1969 c 708 s 49 

     60B.50 Disposition of records during and after 
  termination of liquidation.  

    Whenever it appears to the commissioner that the records of 
 an 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 immediately submit to the state 
 historical society a copy of the court order, and on written 
 application of the historical society within three months after 
 receipt from the commissioner of the copy of the court order, 
 the commissioner shall deliver to the society such records which 
 are to be disposed of as the society deems of historical 
 significance and shall destroy the remainder, whether or not the 
 records have been photographed or otherwise reproduced.  Until 
 further order of the court, the commissioner shall keep all 
 records the court orders preserved.  

    HIST: 1969 c 708 s 50; 1986 c 444 

     60B.51 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 
 sections 60B.01 to 60B.61, 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.  

    HIST: 1969 c 708 s 51 

     60B.52 Conservation of property of foreign or alien 
  insurers found in this state.  

    Subdivision 1.    Grounds for petition.  If a 
 domiciliary liquidator has not been appointed, the commissioner 
 may apply to the district court for Ramsey county by verified 
 petition for an order directing the commissioner to conserve the 
 property of an alien insurer not domiciled in this state or a 
 foreign insurer on any one or more of the following grounds: 

    (a) Any of the grounds in section 60B.15; 

    (b) Any of the grounds in section 60B.20; 

    (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 its certificate of authority to do business in 
 this state has been revoked or that none was ever issued, and 
 there are residents of this state with outstanding claims or 
 outstanding policies. 

    Subd. 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 recorder 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 
 recorder. 

    Subd. 3.    Transformation to liquidation or ancillary 
 receivership.  The conservator may at any time petition for 
 and the court may grant an order under section 60B.53 to 
 liquidate the assets of a foreign or alien insurer under 
 conservation or, if appropriate, for an order under section 
 60B.55 to be appointed ancillary receiver. 

    Subd. 4.    Order to return to company.  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. 

    HIST: 1969 c 708 s 52; 1976 c 181 s 2; 1986 c 444 

     60B.53 Liquidation of property of foreign or alien 
  insurers found in this state.  

    Subdivision 1.    Grounds for petition.  If no 
 domiciliary receiver has been appointed, the commissioner may 
 apply to the district court for Ramsey county by verified 
 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 section 60B.15.  

    (b) Any of the grounds in section 60B.20.  

    (c) Any of the grounds in section 60B.52.  

    Subd. 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 recorder 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 recorder. 

    Subd. 3.    Conversion to ancillary proceedings.  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 section 60B.55. 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 section 
 60B.55. 

    Subd. 4.    Federal receivership.  On the same grounds 
 as are specified in subdivision 1, 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. 

    HIST: 1969 c 708 s 53; 1976 c 181 s 2; 1986 c 444 

     60B.54 Foreign domiciliary receivers in other states.  

    Subdivision 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 
 section 60B.55, subdivision 2. 

    Subd. 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 domicile.  
 The commissioner of this state may petition for a conservation 
 or liquidation order under section 60B.52 or 60B.53, or for an 
 ancillary receivership under section 60B.55, or after approval 
 by the district court for Ramsey county may transfer title to 
 the domiciliary liquidator, as the interests of justice and the 
 equitable distribution of the assets require.  

    Subd. 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.  

    HIST: 1969 c 708 s 54; 1986 c 444 

     60B.55 Ancillary formal proceedings.  

    Subdivision 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 district court for Ramsey county 
 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 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.  

    Subd. 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 recorder 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 recorder. 

    Subd. 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 subdivision 1 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 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. 

    Subd. 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 subdivision 3 for ancillary 
 receivers appointed in this state. 

    HIST: 1969 c 708 s 55; 1976 c 181 s 2; 1986 c 444 

     60B.56 Ancillary summary proceedings.  

    The commissioner has the sole discretionary authority to 
 institute proceedings under sections 60B.11 to 60B.13 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.  

    HIST: 1969 c 708 s 56; 1986 c 444 

     60B.57 Claims of nonresidents against insurers domiciled 
  in this state.  

    Subdivision 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.  

    Subd. 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 sections 
 60B.01 to 60B.61, 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 section 60B.58 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 section 60B.44.  

    HIST: 1969 c 708 s 57 

     60B.58 Claims of residents against insurers domiciled in 
  reciprocal states. 

    Subdivision 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. 

    Subd. 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 who elects to 
 prove a claim in this state shall file the claim with the court 
 in the manner provided in sections 60B.37 and 60B.38.  The 
 ancillary receiver shall make recommendation to the court as 
 under section 60B.45.  The ancillary receiver also shall arrange 
 a date for hearing if necessary under section 60B.41 and shall 
 give notice to the liquidator in the domiciliary state, either 
 by certified mail or by personal service at least 40 days prior 
 to the date set for hearing.  If a domiciliary liquidator, 
 within 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 intention to contest 
 the claim, the domiciliary liquidator 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. 

    HIST: 1969 c 708 s 58; 1978 c 674 s 60; 1986 c 444 

     60B.59 Attachment, garnishment and levy of execution.  

    During the pendency in this or any other state of a 
 liquidation proceeding, whether or not called by that name, 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.  

    HIST: 1969 c 708 s 59 

     60B.60 Interstate priorities. 

    Subdivision 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.  

    Subd. 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 claim against a security fund share in the general 
 assets, but the sharing shall be deferred until general 
 creditors having the same priority, and also claimants against 
 other special deposits having the same priority 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.  

    Subd. 3.    Priority of secured claims.  The owner of a 
 secured claim against an insurer for which a liquidator has been 
 appointed in this or any other state may surrender the security 
 and file a claim as a general creditor, or the claim may be 
 discharged by resort to the security in accordance with section 
 60B.43, 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 having the same priority. 

    HIST: 1969 c 708 s 60; 1986 c 444; 1994 c 425 s 6,7 

     60B.61 Subordination of claims for noncooperation.  

    If an ancillary receiver in another state or foreign 
 country, whether or not called by that name, fails to transfer 
 to the domiciliary liquidator in this state any assets within 
 the receiver's 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 section 60B.44, subdivision 9.  

    HIST: 1969 c 708 s 61; 1986 c 444