§7065. Fraudulent transfers prior to petition

Link to law: http://legislature.vermont.gov/statutes/section/08/145/07065
Published: 2015

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The Vermont Statutes Online



Title

08

:
Banking and Insurance






Chapter

145

:
SUPERVISION, REHABILITATION, AND LIQUIDATION OF INSURERS






Subchapter

003
:
FORMAL PROCEEDINGS










 

§

7065. Fraudulent transfers prior to petition

(a) 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 this chapter 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 this chapter, 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 a 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.

(b)(1) 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 subsection 7067(c) of this title.

(2) 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.

(3) 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.

(4) 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.

(5) The provisions

of this subsection apply whether or not there are or were creditors who might

have obtained any liens or persons who might have become bona fide purchasers.

(c) A

transaction of the insurer with a reinsurer shall be deemed fraudulent and may

be avoided by the receiver under subsection (a) of this section if:

(1) 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 transactions, unless the reinsurer gives a present fair

equivalent value for the release; and

(2) 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.

(d) Every person

receiving any property from the insurer or any benefit thereof which is a

fraudulent transfer under subsection (a) of this section shall be personally

liable therefore and shall be bound to account to the liquidator. (Added 1991,

No. 45, § 2, eff. May 29, 1991.)
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