The Vermont Statutes Online

Title 8 : 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.)