Print

The Vermont Statutes Online



Title

08

:
Banking and Insurance






Chapter

145

:
SUPERVISION, REHABILITATION, AND LIQUIDATION OF INSURERS






Subchapter

003
:
FORMAL PROCEEDINGS










 

§

7051. Grounds for rehabilitation

The Commissioner

may petition the Superior Court of Washington County for an order authorizing

him or her to rehabilitate a domestic insurer or an alien insurer domiciled in

this State on one or more of the following grounds:

(1) The insurer

is in such condition that the further transaction of business would be

hazardous financially to its policyholders, creditors, or the public.

(2) There is

reasonable cause to believe that there has been embezzlement from the insurer,

wrongful sequestration or diversion of the insurer's assets, forgery or fraud

affecting the insurer, or other illegal conduct in, by, or with respect to the

insurer that if established would endanger assets in an amount threatening the

solvency of the insurer.

(3) The insurer

has failed to remove any person who in fact has executive authority in the

insurer, whether an officer, manager, general agent, employee, or other person;

provided that the person has been found after notice and hearing by the Commissioner

to be dishonest or untrustworthy in a way affecting the insurer's business.

(4) Control of

the insurer, whether by stock ownership or otherwise, and whether direct or

indirect, is in a person or persons found after notice and hearing by the

Commissioner to be untrustworthy.

(5) A person who

in fact has executive authority in the insurer, whether an officer, manager,

general agent, director or trustee, employee, or other person, has refused to

be examined under oath by the Commissioner concerning the insurer's affairs,

whether in this State or elsewhere; and, after reasonable notice of the

allegation, the insurer has failed promptly and effectively to terminate the

employment and status of the person and all his or her influence on management.

(6) After demand

by the Commissioner to examine the books and the records of the insurer, the

insurer has failed to promptly make available for examination any of its own

property, books, accounts, documents, or other records, or those of a

subsidiary or related company within the control of the insurer, or those of a

person having executive authority in the insurer so far as the records pertain

to the insurer.

(7) Without

first obtaining the written consent of the Commissioner, the insurer has

transferred, or attempted to transfer, in a manner contrary to the provisions

of chapter 101 of this title or other applicable statute, substantially its

entire property or business, or has entered into any transaction the effect of

which is to merge, consolidate, or reinsure substantially its entire property

or business in or with the property or business of any other person.

(8) 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 the insurance laws of this State, and such appointment has been made or

is imminent, and such appointment might oust the courts of this State of

jurisdiction or might prejudice orderly delinquency proceedings under this

chapter.

(9) Within the

previous three years the insurer has willfully violated its charter or articles

of incorporation, its bylaws, any provisions of this title, or a valid order of

the Commissioner.

(10) The insurer

has failed to pay within 60 days after due date any obligation to any state or

any subdivision thereof or any judgment entered in any state, if the court in

which such judgment was entered had jurisdiction over such subject matter except

that nonpayment shall not be a ground until 60 days after a good faith effort

by the insurer to contest the obligation has been terminated, whether the

contest is before the Commissioner or before a court, or the insurer has

systematically attempted to compromise or renegotiate previously agreed

settlements with its creditors on the ground that it is financially unable to

pay its obligations in full.

(11) The insurer

has failed to file its annual report or other financial report required by

statute within the time allowed by law and, after written demand by the

Commissioner, has failed to give an adequate explanation immediately.

(12) The board

of directors or the holders of a majority of the shares entitled to vote, or a

majority of those individuals entitled to the control of an insurer, requests

or consents to rehabilitation under this chapter.

(13) The insurer

is insolvent. (Added 1991, No. 45, § 2, eff. May 29, 1991.)