The Vermont Statutes Online
Banking and Insurance
SUPERVISION, REHABILITATION, AND LIQUIDATION OF INSURERS
7051. Grounds for rehabilitation
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.
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
(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
(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.)