2007 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.
History: 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.
History: 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, 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.
History: 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; 2001 c 7 s 13

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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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, its 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.
History: 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 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 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.
History: 1969 c 708 s 16; 1976 c 181 s 2; 1986 c 444; 2005 c 4 s 6

60B.17 POWERS AND DUTIES OF 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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 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 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.
History: 1969 c 708 s 21; 1976 c 181 s 2; 1986 c 444; 1999 c 177 s 18; 2005 c 4 s 7

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.
History: 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. The commissioner shall file a dissolution with the secretary
of state pursuant to section 302A.711, subdivision 2, paragraphs (a), clauses (1), (2), and (5),
and (b); and subdivisions 3 and 4 .
History: 1969 c 708 s 23; 1986 c 444; 2005 c 69 art 2 s 9

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 recorded
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) Record or 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.
History: 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; 2005 c 4 s 8

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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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, including funding agreements issued pursuant to section 61A.276, 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.
History: 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; 2001 c 131 s 6

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.
History: 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).
History: 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 commissioner of finance 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
commissioner of finance 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 commissioner of finance 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 commissioner of finance 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 commissioner of finance and
become the property of the state under subdivision 1, unless the commissioner petitions the court
to reopen the liquidation under section 60B.49.
History: 1969 c 399 s 1; 1969 c 708 s 47; 1986 c 444; 2003 c 112 art 2 s 50

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.
History: 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.
History: 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.
History: 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.
History: 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 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 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.
History: 1969 c 708 s 52; 1976 c 181 s 2; 1986 c 444; 2005 c 4 s 9

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 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 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.
History: 1969 c 708 s 53; 1976 c 181 s 2; 1986 c 444; 2005 c 4 s 10

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.
History: 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 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 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.
History: 1969 c 708 s 55; 1976 c 181 s 2; 1986 c 444; 2005 c 4 s 11

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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 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.
History: 1969 c 708 s 61; 1986 c 444