§ 7403. Order of rehabilitation; advances from property/casualty
insurance security fund; termination. (a) An order to rehabilitate a
domestic insurer shall direct the superintendent and his successors in
office, as rehabilitator, forthwith to take possession of the property
of such insurer and to conduct the business thereof, and to take such
steps toward the removal of the causes and conditions which have made
such proceeding necessary as the court shall direct.

* (b) (1) If: (i) provision is made therefor in an order to
rehabilitate a domestic insurer, (ii) more than fifty percent of the
insurer's net direct premiums in the preceding three calendar years were
derived from business in this state which is protected by the
property/casualty insurance security fund, and (iii) such insurer has
consented to rehabilitation, the commissioner of taxation and finance
shall advance monies of such fund, in such amounts as specified in the
court's order, to the rehabilitator to enable the insurer to comply with
any surplus requirement or other requirement of this chapter.

(2) Before issuing such order, the court shall determine that the
insurer has the potential and capability, pursuant to a plan submitted
by the rehabilitator, of complying with all surplus and other
requirements of this chapter and repaying such advance to the fund
within two years after termination of the rehabilitation proceeding, at
a rate of interest approved by the superintendent to be determined
annually which shall not be less than the average rate of return of the
fund as determined by the superintendent for the preceding calendar
year.

(3) The plan shall include: (i) an explanation of the factors leading
to the insurer's condition requiring rehabilitation and the procedures
proposed to improve its condition, and (ii) a provision for posting
collateral with the rehabilitator as security for the advance, to the
extent that the insurer's assets permit.

(4) The court shall not order any advance to the rehabilitator without
his specific request or if the insurer's required capital or surplus is
impaired in an amount exceeding the greater of thirty million dollars or
fifteen percent of the insurer's net direct premium writings in the
previous calendar year. Total advances to an insurer shall not exceed
the greater of forty million dollars or twenty percent of such net
direct premium writings. No advance shall be made on or after July
first, two thousand which would lower the amount of assets in the fund
below one hundred ninety-five million dollars.

(5) Advances shall, in all respects except as to rate of interest, be
subject to the provisions of section one thousand three hundred seven of
this chapter, provided that in the event that an insurer which has
received an advance pursuant to this subsection is subsequently the
subject of an order of liquidation, the claim of the fund for the
advance and any accrued interest shall be paid to the fund in accordance
with the provisions of section seven thousand four hundred thirty-four
of this article.

(6) This subsection shall expire July first, two thousand, provided
that the insurer's obligation to repay to the fund moneys advanced to it
under this subsection, and the fund's claim for the advance, and any
accrued interest, as a priority over all non-secured creditors, shall
survive such expiration date.

* NB Expired July 1, 2000

(c) If at any time the superintendent deems further efforts to
rehabilitate such insurer would be futile, he may apply to the court
under this article for an order of liquidation.

(d) The rehabilitator or any interested person upon due notice to the
superintendent, at any time, may apply for an order terminating any
rehabilitation proceeding and permitting such insurer to resume
possession of its property and the conduct of its business, but no such
order shall be granted except when, after a full hearing, the court
shall determine that the purposes of the proceeding have been fully
accomplished.