§ 7405. Order of liquidation; rights and liabilities. (a) An order to
liquidate the business of a domestic insurer shall direct the
superintendent and his successors in office, as liquidator, forthwith to
take possession of the property of such insurer and to liquidate the
business of the same and deal with such property and business of such
insurer in their own names as superintendents or in the insurer's name
as the court may direct, and to give notice to all creditors to present
their claims.

(b) The superintendent and his successors shall be vested by operation
of law with the title to all property, contracts and rights of action of
such insurer as of the date of the entry of the order so directing them
to liquidate. The filing or recording of such order in any record office
of the state shall impart the same notice that a deed, bill of sale or
other evidence of title duly filed or recorded by such insurer would
have imparted. The rights and liabilities of any such insurer and of its
creditors, policyholders, shareholders, members and all other persons
interested in its estate shall, unless otherwise directed by the court,
be fixed as of the date the order is entered in the office of the clerk
of the county where such insurer had its principal office on the date
the proceeding commenced, subject, however, to the provisions of section
seven thousand four hundred thirty-three of this article to the rights
of claimants holding contingent claims.

(c) The liquidator of any domestic insurance corporation shall
reinsure all its policy obligations in any solvent corporation
authorized to do business in this state if the unearned premium reserve
of the insurer is sufficient to effect such reinsurance. If such reserve
is insufficient for that purpose, the liquidator shall reinsure a
percentage of each policy obligation of the insurer outstanding to the
extent that the reserve may be sufficient for that purpose. No contract
of reinsurance shall be entered into by the liquidator except pursuant
to an order of the court in which the liquidator was appointed directing
the reinsurance and establishing the general form of the reinsurance
contract.

(d) An order to liquidate the business of the United States branch of
an alien insurer having trusteed assets in this state shall be in the
same terms as those hereinbefore prescribed, except that only the assets
of the business of such United States branch shall be included therein.

(e) Where the trustee of a mortgage series consisting in whole or in
part of certificated mortgage investments guaranteed by a domestic
insurer has distributed all of the trust estate collateral, or has been
permitted by court order to abandon all or part of such collateral not
distributed, the court, by order, may, upon the consent of the
liquidator of the insurer, direct the superintendent, upon being
furnished with a list of certificate holders certified to by the
trustee, to record subsequent transfers of certificates and charge and
collect a reasonable fee therefor, and distribute dividends applicable
thereto upon liquidation of company assets in his hands, to the record
owners of such certificates, and make and deduct from such dividend
payments a reasonable charge for such services. The duty of the
superintendent under such order shall terminate upon the termination of
the liquidation proceedings.

(f) (1) No later than one hundred eighty days after a final order of
liquidation with an adjudication of insolvency of an insurer by a court
of competent jurisdiction of this state, the liquidator may in his sole
discretion make application to the court for approval of a proposal to
disburse assets out of marshalled assets, from time to time as such
assets become available, to any fund established by article seventy-six
of this chapter, article six-A of the workers' compensation law and any
foreign entity performing a similar function, having obligations because
of such insolvency. If the liquidator determines that there are
insufficient assets to disburse, the application authorized by this
subsection shall be considered satisfied by a filing by the liquidator
stating the reasons for this determination.

(2) Such proposal shall at least include provisions for:

(A) reserving amounts for the payment of expenses of administration,
claims of secured creditors to the extent of the value of the security
held, and claims falling within the priorities established in section
seven thousand four hundred twenty-six of this article;

(B) disbursement of the assets marshalled to date and subsequent
disbursement of assets as they become available;

(C) disbursements to the funds and entities entitled thereto under
this subsection in amounts estimated to be at least equal to all claim
payments for which such funds or entities could assert claims against
the liquidator, and if the assets available for disbursement from time
to time do not at least equal such claim payments, then disbursements in
the amount of available assets;

(D) equitable allocation of disbursements to each of such funds or
entities;

(E) the securing by the liquidator from each of such funds or entities
of an agreement to return to the liquidator such assets, together with
income earned on assets previously disbursed, as may be required to pay
claims of secured creditors and claims falling within the priorities
established in section seven thousand four hundred twenty-six of this
article in accordance with such priorities. No bond shall be required of
any such fund or entity; and

(F) a full report to be made by each such fund or entity to the
liquidator accounting for all assets so disbursed to the fund or entity,
all disbursements made therefrom, any income earned by the fund or
entity on such assets and any other matters as the court may direct.

(3) Notice of such application shall be given to such funds and
entities and to the commissioners of insurance of each of the states.
Any such notice shall be deemed to have been given when deposited in the
United States certified mails, first class postage prepaid, at least
thirty days prior to submission of such application to the court. Action
on the application may be taken by the court if the required notice has
been given and the liquidator's proposal complies with subparagraphs
(A), (B) and (D) of paragraph two of this subsection.

(g) (1) No later than one hundred twenty days after the end of the
calendar or fiscal year of a domestic insurance corporation subject to
rehabilitation or liquidation, upon whichever standard the corporation
conducts its financial affairs, the rehabilitator or liquidator shall
submit to the department an annual report of the preceding calendar or
fiscal year's activity of such corporation. Such report, which shall
pertain only to such corporation's activities and those of the
rehabilitator or liquidator as they relate to such corporation, shall
include a financial review of the assets and liabilities of the
corporation, the claims accrued or paid in that period, and a summary of
all other corporate activity and a narrative of the actions of the
rehabilitator or liquidator respecting such corporation.

(2) No later than August first of each year, the rehabilitator or
liquidator shall submit to the department and the legislature separate
or combined annual financial statements for the domestic insurance
corporations subject to rehabilitation or liquidation. Upon whichever
standard each corporation conducts its respective financial affairs,
showing their condition at last calendar year end or at the last fiscal
year end ending on or prior to last calendar year end, together with an
opinion or other report of an independent certified public accountant on
such financial statements, provided that such corporations were placed
into rehabilitation or liquidation prior to the commencement of the
calendar or fiscal years covered by such financial statements.

(3) No later than August first of each year, the superintendent as
receiver shall submit to the department and the legislature an annual
financial statement of the liquidation bureau showing its cash receipts
and disbursements for the prior calendar year, together with an opinion
or other report of an independent certified public accountant on such
financial statement.

(4) The reports and statements required under this subsection shall be
separate and apart from other reports and statements issued by the
liquidation bureau of the department in the normal course of its
business.