AS Title 21, Chapter 78: Rehabilitation and Liquidation

Chapter 78. Rehabilitation and Liquidation. Sec. 21.78.010. Jurisdiction of delinquency proceedings. (a) The court is vested with exclusive original jurisdiction of delinquency proceedings under this chapter, and is authorized to make all necessary and proper orders to carry out the purposes of this chapter. (b) Except as provided under AS 21.24 , delinquency proceedings under this chapter constitute the sole and exclusive method of liquidating, rehabilitating, reorganizing, or conserving an insurer, and a court may not entertain a petition for the commencement of the proceedings unless it has been filed in the name of the state on the relation of the director. (c) An appeal shall lie to the supreme court from an order granting or refusing rehabilitation, liquidation, or conservation, and from every other order in delinquency proceedings having the character of a final order as to the particular portion of the proceedings embraced therein. Sec. 21.78.020. Commencement of delinquency proceedings. (a) A delinquency proceeding may not be commenced under this chapter unless commenced by the director. A court does not have jurisdiction to entertain, hear, or determine a delinquency proceeding commenced by a person other than the director. (b) The director shall commence the proceedings by application to the court for an order directing the insurer to show cause why the director should not have the relief requested. On the return of the order to show cause, and after a full hearing, the court shall either deny the application or grant the application, together with other relief that the nature of the case and the interest of the policyholders, creditors, stockholders, members, subscribers, or the public might require. (c) A court does not have jurisdiction to entertain, hear, or determine a complaint asking for an injunction or restraining order or other relief concerning the dissolution, liquidation, rehabilitation, sequestration, conservation, or receivership of an insurer, other than as provided under this chapter. (d) In addition to other grounds for jurisdiction provided by the laws of this state, a court having jurisdiction of the subject matter has jurisdiction over a person served under the Alaska Rules of Civil Procedure or other applicable provisions of law in an action brought by the receiver of a domestic insurer or an alien insurer domiciled in this state if the person (1) served is obligated to the insurer in any way as an incident to an agency or brokerage arrangement that might exist or has existed between the insurer and the agent or broker, in an action on or incident to the obligation; (2) served is a reinsurer who has at any time written a policy of reinsurance for an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, or is an agent or broker of or for the reinsurer, in any action or incident related to the reinsurance contract; or (3) is or has been an officer, manager, trustee, organizer, promoter, or person in a position of comparable authority or influence in an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, in any action resulting from such a relationship with the insurer. (e) If the court, on motion of a party, finds that an action should, as a matter of substantial justice, be tried in a forum outside this state, the court may enter an appropriate order to stay further proceedings on the action in this state. (f) The court shall appoint the director as the receiver in all actions taken under this chapter. Sec. 21.78.030. Injunctions and orders. (a) A receiver appointed in a proceeding under this chapter may at any time apply for, and a court may grant, a restraining order, preliminary or permanent injunction, or other order considered necessary to prevent (1) the transaction of further business; (2) the transfer of property; (3) interference with the receiver or with a proceeding under this chapter; (4) waste of the insurer's assets; (5) dissipation and transfer of bank accounts; (6) the institution or further prosecution of any actions or proceedings; (7) the obtaining of preferences, judgments, attachments, garnishments, or liens against the insurer, its assets, or its policyholders; (8) the levying of execution against the insurer, its assets, or its policyholders; (9) the making of a sale or deed for nonpayment of taxes or assessments that would lessen the value of the assets of the insurer; (10) the withholding from the receiver of books, accounts, documents, or other records relating to the business of the insurer; or (11) any other threatened or contemplated action that might lessen the value of the insurer's assets or prejudice the rights of policyholders, creditors, or shareholders, or the administration of a proceeding under this chapter. (b) The receiver may apply to a court outside of the state for the relief described in (a) of this section. (c) A bond may not be required of the director as a prerequisite to issuing an injunction or restraining order under this section. Sec. 21.78.040. Grounds for rehabilitation. (a) The director may apply to the court for an order appointing the director as receiver of and directing the director to rehabilitate a domestic insurer when the insurer (1) is impaired or insolvent; (2) has refused to submit any of its books, records, accounts, or affairs to reasonable examination by the director; (3) has concealed or wrongfully removed records or assets or otherwise violated AS 21.69.390 ; (4) has failed to comply with an order of the director to make good an impairment of capital or surplus or both; (5) has transferred or attempted to transfer substantially its entire property or business, or has entered into a transaction the effect of which is to merge substantially its entire property or business in that of any other insurer without having first obtained the written approval of the director; (6) is found, after examination, to be in such condition that its further transaction of business will be hazardous to its policyholders, or to its creditors, or to its members, subscribers, or stockholders, or to the public; (7) has an officer, director, or manager who has refused to be examined under oath, concerning its affairs, for which purpose the director is authorized to conduct and to enforce by all appropriate and available means an examination under oath in another state or territory of the United States, in which the officer, director, or manager may then presently be, to the full extent permitted by the laws of the other state or territory, this special authorization considered; (8) has been or is the subject of an application for the appointment of a receiver, trustee, custodian, or sequestrator of the insurer or its property otherwise than under the provisions of this title, but only if the appointment has been made or is imminent and its effect is or would be to oust the courts of this state of jurisdiction; (9) has consented to such an order through a majority of its directors, stockholders, members, or subscribers; (10) has failed to pay a final judgment rendered against it in this state upon any insurance contract issued or assumed by it, within 30 days after the judgment became final or within 30 days after the time for taking an appeal has expired, or within 30 days after dismissal of an appeal before final termination, whichever date is the later; (11) has failed to remove a person who, in fact, has executive authority in the insurer, whether an officer, manager, general agent, employee, or other person, if the person has been found after notice and hearing by the director to be dishonest or untrustworthy in a way affecting the insurer's business; (12) after demand by the director under AS 21.06.120 or under this chapter, has failed to promptly make available for examination 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 they pertain to the insurer; (13) has, within the previous four years, wilfully violated its charter or articles of incorporation, its bylaws, an insurance law of this state, or a valid order of the director issued under this title; (14) has failed to file, within the time allowed by law, its annual report or other financial report required by statute and, after written demand by the director, has failed to give an immediate and adequate explanation; or (15) has reached an authorized control level event under AS 21.14.040 or a mandatory control level event under AS 21.14.050 . (b) The director may apply to the court for an order appointing the director as receiver of a domestic insurer, and directing the director to rehabilitate the insurer if (1) 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; (2) 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 to be untrustworthy; (3) 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 director concerning the insurer's affairs, whether in this state or elsewhere, and after reasonable notice of the fact the insurer has failed to promptly and effectively terminate the employment and status of the person and the person's influence on management. Sec. 21.78.050. Grounds for liquidation. The director may apply to the court for an order appointing the director as receiver, if an appointment of the director as receiver is not then in effect, and directing the director to liquidate the business of a domestic insurer or of the United States branch of an alien insurer having trusteed assets in this state, regardless of whether or not there has been a prior order directing the director to rehabilitate the insurer, upon any of the grounds specified in AS 21.78.040 or if the insurer (1) has ceased transacting business for a period of one year; or (2) is an insolvent insurer and has commenced voluntary liquidation or dissolution, or attempts to commence or prosecute an action or proceeding to liquidate its business or affairs, or to dissolve its corporate charter, or to procure the appointment of a receiver, trustee, custodian or sequestrator under any law except this title. Sec. 21.78.060. Grounds for conservation, foreign insurers. The director may apply to the court for an order appointing the director as receiver or ancillary receiver, and directing the director to conserve the assets in this state, of a foreign insurer upon (1) any of the grounds specified in AS 21.78.040 or 21.78.050; or (2) the ground that it's property has been sequestrated in its domiciliary sovereignty or in any other sovereignty. Sec. 21.78.070. Grounds for conservation, alien insurers. The director may apply to the court for an order appointing the director as receiver or ancillary receiver, and directing the director to conserve the assets within this state, of an alien insurer upon (1) any of the grounds specified in AS 21.78.040 or 21.78.050; (2) the ground that the insurer has failed to comply, within the time designated by the director, with an order made by the director to make good an impairment of its trusteed funds; or (3) the ground that the property of the insurer has been sequestrated in its domiciliary sovereignty or elsewhere. Sec. 21.78.080. Grounds for ancillary liquidation. The director may apply to the court for an order appointing the director as ancillary receiver of and directing the director to liquidate the business of a foreign insurer having assets, business, or claims in this state upon the appointment in the domiciliary state of the insurer of a receiver, liquidator, conservator, rehabilitator, or other officer by whatever name called for the purpose of liquidating the business of the insurer. Sec. 21.78.090. Order of rehabilitation. (a) An order to rehabilitate a domestic insurer must require the director to take immediate possession of the property of the insurer and to conduct its business, and to take steps toward removal of the causes and conditions that have made rehabilitation necessary as the court may direct. (b) If at any time the director considers that further efforts to rehabilitate the insurer would be useless, the director may apply to the court for an order of liquidation. (c) The director, or an interested person upon due notice to the director, at any time may apply to the court for an order terminating the rehabilitation proceedings and permitting the insurer to resume possession of its property and the conduct of its business, but the order may not be made or entered except when, after a hearing, the court has determined that the purposes of the proceeding have been fully accomplished. (d) An order issued under this section must require an accounting to the court by the receiver. Accountings must be at the intervals that the court specifies in its order. (e) Entry of an order of rehabilitation does not constitute an anticipatory breach of contracts of the issuer. (f) A court in this state before which an action or proceeding is pending in which the insurer is a party or in which the insurer is obligated to defend a party shall stay the action or proceeding when a rehabilitation order against the insurer is entered. The stay shall be imposed for that period of time necessary for the receiver to obtain proper representation and prepare for further proceedings. The receiver shall take action respecting the pending litigation that the receiver considers necessary in the interests of justice and for the protection of creditors, policyholders, and the public. The receiver shall immediately consider all litigation pending outside this state and shall petition the courts having jurisdiction over that litigation for stays if necessary to protect the estate of the insurer. (g) A statute of limitations or defense of laches does not run with respect to an action by or against an insurer between the filing of a petition for appointment of a receiver for the insurer and the order granting or denying that petition. An action by or against the insurer that might have been commenced when the petition was filed may be commenced for at least 60 days after the order of rehabilitation is entered or the petition is denied. (h) A guaranty association or foreign guaranty association has standing to appear in a court proceeding concerning the rehabilitation of a domestic insurer if the association is or might become liable to act as a result of the rehabilitation. Sec. 21.78.100. Order of liquidation, domestic insurers. (a) An order to liquidate the business of a domestic insurer must require the director to take immediate possession of the property of the insurer, to liquidate its business, to deal with the insurer's property and business in the director's name as director of insurance or in the name of the insurer, as the court may direct, and to give notice to all creditors who may have claims against the insurer to present the claims. (b) The director may apply for and secure an order dissolving the corporate existence of a domestic insurer upon the director's application for an order of liquidation of the insurer or at any time after the order has been granted. (c) An order issued under this section must require an accounting to the court by the receiver. Accountings must be at the intervals that the court specifies in its order. (d) Policies, other than life or health insurance or annuities, in effect at the time of issuance of an order of liquidation continue in force only for the lesser of (1) a period of 30 days after the date of entry of the liquidation order; (2) the expiration of the policy coverage; (3) the date on which the insured replaces the insurance coverage with equivalent insurance in another insurer or otherwise terminates the policy; or (4) the date on which the receiver effects a transfer of the policy obligation to a solvent assuming insurer. (e) For purposes of any other provision of law, an order of liquidation terminates policy coverage at the time specified in (d) of this section. (f) A policy of life or health insurance, or annuities, in effect at the time an order of liquidation is issued, continues in force for the period and under the terms provided for by an applicable guaranty association or foreign guaranty association. (g) A policy of life or health insurance, or annuities, and any period of coverage not covered by a guaranty association or foreign guaranty association terminates as provided in (d) and (e) of this section. (h) Upon issuance of an order appointing a receiver of a domestic insurer or of an alien insurer domiciled in this state, an action may not be brought against the insurer or receiver, whether in this state or elsewhere, and an existing action may not be maintained or further presented after issuance of an order. A court of this state shall give full faith and credit to an injunction against the receiver or the company, or against the continuation of an existing action against the receiver or the company, if an injunction is included in an order to liquidate an insurer that is issued under corresponding provisions in another state. If, in the receiver's judgment, protection of the estate of the insurer necessitates intervention in an action against the insurer that is pending outside this state, the receiver may intervene in the action. The receiver may defend an action in which the receiver intervenes under this section at the expense of the estate of the insurer. (i) The receiver may, within two years after an order for liquidation, or within the additional time that applicable law permits, institute an action or proceeding on behalf of the estate of the insurer if the period of limitation applicable to the action or proceeding fixed by law has not expired at the time of the filing of the petition upon which the liquidation order is entered. If, by agreement, a period of limitation is fixed for instituting a suit or proceeding upon a claim, or for filing a claim, proof of claim, proof of loss, demand, or notice, or if in a judicial or other proceeding a period of limitation is fixed, either in the proceeding or by applicable law, for taking an action, filing a claim or pleading, or doing an act, and if the period had not expired as of the date of the filing of the petition for liquidation, the receiver may, for the benefit of the estate, take an action or do an act, required of or permitted to the insurer, within a period of 180 days after the entry of an order for liquidation, or within a longer period that is shown to the satisfaction of the court not to be unfairly prejudicial to the other party. (j) A statute of limitations or defense of laches does not run with respect to an action against an insurer between the filing of a petition for liquidation against an insurer and the denial of the petition. An action against the insurer that might have been commenced when the petition was filed may be commenced for at least 60 days after the petition is denied. (k) A guaranty association or foreign guaranty association has standing to appear in a court proceeding concerning the liquidation of an insurer if the association is, or might become, liable to act as a result of the liquidation. Sec. 21.78.110. Order of liquidation, alien insurers. An order to liquidate the business of a United States branch of an alien insurer having trusteed assets in this state shall be in the same terms as those prescribed for domestic insurers, except that the assets of the business of the United States branch shall be the only assets included in the order. Sec. 21.78.120. Order of conservation or ancillary liquidation of foreign or alien insurers. (a) An order to conserve the assets of a foreign or alien insurer must require the director to take immediate possession of the property of the insurer in this state and to conserve it, subject to the further direction of the court. (b) An order to liquidate the assets in this state of a foreign insurer must require the director to take immediate possession of the property of the insurer in this state and to liquidate it subject to the orders of the court and with due regard to the rights and powers of the domiciliary receiver, as provided in this chapter. Sec. 21.78.130. Conduct of delinquency proceedings against domestic and alien insurers. (a) When under this chapter a receiver is to be appointed in delinquency proceeding for a domestic or alien insurer, the court shall appoint the director as the receiver. The court shall order the director immediately to take possession of the assets of the insurer and to administer the assets under orders of the court. (b) As a domiciliary receiver, the director shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books and records of the insurer, wherever located, as of the date of entry of the order directing the director to rehabilitate or liquidate a domestic insurer or to liquidate the United States branch of an alien insurer domiciled in this state, and the director shall have the right to recover the same and reduce the same to possession; except that ancillary receivers in reciprocal states shall have, as to assets located in their respective states, the rights and powers that are herein prescribed for ancillary receivers appointed in this state as to assets located in this state. (c) The filing or recording of the order directing possession to be taken, or a certified copy of the order, in any office where instruments affecting title to property are required to be filed or recorded shall impart the same notice as would be imparted by a deed, bill of sale, or other evidence of title duly filed or recorded. (d) The director as domiciliary receiver shall be responsible for the proper administration of all assets coming into the possession or control of the director. The court may at any time require a bond from the director or a deputy of the director if considered desirable for the protection of the assets. (e) Upon taking possession of the assets of an insurer, the domiciliary receiver shall, subject to the direction of the court, immediately proceed to conduct the business of the insurer or to take steps authorized by this chapter for the purpose of rehabilitating, liquidating, or conserving the affairs or assets of the insurer. (f) In connection with delinquency proceedings, the director may appoint one or more special deputies and the director may employ counsel, clerks, and assistants that the director considers necessary. The compensation of the special deputies, counsel, clerks, or assistants and all expenses of taking possession of the insurer and of conducting the proceedings shall be fixed by the receiver, subject to the approval of the court, and shall be paid out of the funds or assets of the insurer. Within the limits of duties imposed upon them, special deputies shall possess all the powers given to, and in the exercise of those powers shall be subject to all of the duties imposed upon, the receiver with respect to the proceedings. (g) If it appears to the receiver that there has been a violation of civil or criminal law, or breach of a contractual or fiduciary obligation detrimental to the insurer by an officer, manager, insurance producer, employee, or other person, the receiver may pursue all appropriate legal remedies on behalf of the insurer. (h) If the receiver determines that reorganization, consolidation, conversion, reinsurance, merger, or other transformation of the insurer is appropriate, the receiver shall prepare a plan to implement the changes. Upon application of the receiver for approval of the plan, and after the notice and hearings that the court prescribes, the court may either approve or disapprove the plan proposed or may modify it and approve it as modified. A plan approved under this section must be, in the judgment of the court, fair and equitable to all parties concerned. If the plan is approved, the receiver shall carry out the plan. In the case of a life insurer, the plan proposed may include the imposition of liens upon the policies of the company, if all rights of shareholders are first relinquished. A plan for a life insurer may also propose imposition of a moratorium upon loan and cash surrender rights under policies, for the period, and to the extent, considered necessary. (i) If the property of the insurer does not contain sufficient cash or liquid assets to defray the costs incurred, the director may advance the costs incurred out of an appropriation to the division for that purpose. Amounts advanced for expenses of administration must be repaid to the state out of the first available money of the insurer. (j) The receiver may (1) hold hearings, subpoena witnesses to compel their attendance, administer oaths, examine a person under oath, and compel a person to subscribe to the person's testimony after it has been correctly reduced to writing, and may require the production of books, papers, records, or other documents that the receiver determines are relevant to the inquiry; (2) remove records and property of the insurer to the offices of the director or to another place that is convenient for the purposes of efficient and orderly execution of the liquidation; a guaranty association or a foreign guaranty association shall be allowed reasonable access to the records of the insurer that is necessary for the association to carry out its statutory obligations; (3) intervene in a proceeding, wherever instituted, that might lead to the appointment of a receiver or trustee, and may act as the receiver or trustee if the appointment is offered; (4) enter into agreements with a receiver or commissioner of another state relating to the rehabilitation, liquidation, conservation, or dissolution of an insurer doing business in both this state and the other state. Sec. 21.78.140. Conduct of delinquency proceedings against foreign insurers. (a) When under this chapter an ancillary receiver is to be appointed in delinquency proceedings for an insurer not domiciled in this state, the court shall appoint the director as ancillary receiver. The director shall file a petition requesting the appointment on the grounds set out in AS 21.78.080 , (1) upon a finding that there are sufficient assets of the insurer located in this state to justify the appointment of an ancillary receiver; or (2) if 10 or more persons resident in this state having claims against the insurer file a petition with the director requesting the appointment of the ancillary receiver. (b) The domiciliary receiver for the purpose of liquidating an insurer domiciled in a reciprocal state shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books and records of the insurer located in this state, and has the immediate right to recover balances due from local agents and to obtain possession of any books and records of the insurer found in this state. The domiciliary receiver shall also be entitled to recover the other assets of the insurer located in this state, except that upon the appointment of an ancillary receiver in this state, the ancillary receiver shall during the ancillary receivership proceedings have the sole right to recover the other assets. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims that are proved and allowed in the ancillary proceedings in this state, and shall pay the necessary expenses of the proceedings. The ancillary receiver shall promptly transfer all remaining assets to the domiciliary receiver. Subject to these provisions, the ancillary receiver and deputies of the receiver shall have the same powers and be subject to the same duties with respect to the administration of the assets as a receiver of an insurer domiciled in this state. (c) The domiciliary receiver of an insurer domiciled in a reciprocal state may sue in this state to recover assets of the insurer to which the domiciliary receiver may be entitled under the laws of this state. Sec. 21.78.150. Claims of nonresidents against domestic insurers. (a) In a delinquency proceeding begun in this state against a domestic insurer, claimants residing in reciprocal states may file claims either with the ancillary receivers, if any, in their respective states, or with the domiciliary receiver. The claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings. (b) Controverted claims belonging to claimants residing in reciprocal states may either (1) be proved in this state; or (2) if ancillary proceedings have been commenced in the reciprocal states, be proved in those proceedings; if a claimant elects to prove the claim in ancillary proceedings, if notice of the claim and opportunity to appeal and be heard is afforded the domiciliary receiver of this state, as provided in AS 21.78.160 with respect to ancillary proceedings in this state, the final allowance of the claim by the courts in the ancillary state shall be accepted in this state as conclusive as to its amount and its priority, if any, against special deposits or other security located in the ancillary state. Sec. 21.78.160. Claims against foreign insurers. (a) In a delinquency proceeding in a reciprocal state against an insurer domiciled in that state, claimants against the insurer who reside in this state may file claims either with the ancillary receiver, if any, appointed in this state, or with the domiciliary receiver. The claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings. (b) Controverted claims belonging to claimants residing in this state may either (1) be proved in the domiciliary state as provided by the law of that state; or (2) if ancillary proceedings have been commenced in this state, be proved in those proceedings; in the event that a claimant elects to prove the claim in this state, the claimant shall file the claim with the ancillary receiver and shall give notice in writing to the receiver in the domiciliary state, either by registered mail or by personal service at least 40 days before the date set for hearing; the notice must contain a concise statement of the amount of the claim, the facts on which the claim is based, and the priorities asserted, if any; if the domiciliary receiver within 30 days after the giving of notice gives notice in writing to the ancillary receiver and to the claimant, either by registered mail or by personal service, of intention to contest the claim, the domiciliary receiver shall be entitled to appear or to be represented in any proceeding in this state involving adjudication of the claim; the final allowance of the claim by the courts of this state shall be accepted as conclusive as to its amount and its priority, if any, against special deposits or other security located in this state. Sec. 21.78.170. Form of claim. (a) All claims against an insurer against which delinquency proceedings have been begun must set out in reasonable detail the amount of the claim, or the basis upon which the amount can be ascertained, the facts upon which the claim is based, and the priorities asserted, if any. The claims shall be verified by the affidavit of the claimant, or someone authorized to act on behalf of the claimant and having knowledge of the facts, and shall be supported by documents that may be material to the claims. (b) All claims filed in this state shall be filed with the receiver, whether domiciliary or ancillary, in this state, on or before the last date of filing as specified in this chapter. (c) If a claim is denied in whole or in part by the receiver, written notice of the determination shall be given to the claimant or the claimant's attorney by first class mail at the address shown in the proof of claim. An objection by the claimant must be filed with the receiver within 60 days after the date of mailing of the notice. If an objection is not filed, the claimant may not object to the determination. (d) If an objection is filed with the receiver and the receiver does not alter the denial of the claim as a result of the objection, the receiver shall ask the court for a hearing as soon as practicable and give notice of the hearing by first class mail to the claimant or the claimant's attorney and to any other person directly affected, not less than 10 nor more than 30 days before the date of the hearing. (e) A claim need not be considered or allowed if it does not contain all the information in (a) of this section that might be applicable. The receiver may require that a prescribed form be used and may require that other information and documents be included. (f) At any time, the receiver may request the claimant to present information or evidence supplementary to that required under (a) of this section, and may take testimony under oath, require production of affidavits or depositions, or otherwise obtain additional information or evidence. (g) A judgment or order against an insured or the insurer entered after the date of filing of a successful petition for liquidation, and a judgment or order against an insured or the insurer entered at any time by default or by collusion, need not be considered as evidence of liability or the amount of damages. A judgment or order against an insured or the insurer entered within the four months before the filing of the petition need not be considered evidence of liability or of the amount of damages. (h) A claim of a guaranty association or foreign guaranty association shall be in the form and contain the substantiation agreed to by the association and the receiver. Sec. 21.78.180. Priority of certain claims. (a) In a delinquency proceeding against an insurer domiciled in this state, claims owing to residents of ancillary states shall be preferred claims if like claims are preferred under the laws of this state. Claims owing to residents or nonresidents shall be given equal priority of payment from general assets regardless of where the assets are located. (b) In a delinquency proceeding against an insurer domiciled in a reciprocal state, claims owing to residents of this state shall be preferred if like claims are preferred by the laws of that state. (c) The owners of special deposit claims against an insurer for which a receiver is appointed in this or any other state shall be given priority against their several special deposits in accordance with the provisions of the statutes governing the creation and maintenance of the deposits. If there is a deficiency in a deposit so that the claims secured by it are not fully discharged from it, the claimants may share in the general assets, but the sharing shall be deferred until general creditors and also claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit. (d) The determination of the value of a security held by a secured creditor shall be under the supervision and control of the court, with due regard for recommendations made by the receiver. The value determined must be credited upon the secured claim, and a deficiency must be treated as an unsecured claim. If the claimant surrenders the security to the receiver, the entire claim shall be allowed as if unsecured. The value of a security held by a secured creditor must be determined in one of the following ways, as the court directs: (1) by converting the security into money according to the terms of the agreement under which the security was delivered to the creditor; or (2) by agreement, arbitration, compromise, or litigation between the creditor and the receiver. (e) If a creditor, whose claim against an insurer is secured in whole or in part by the undertaking of another person, fails to prove and file that claim, the other person may do so in the creditor's name, and is subrogated to the rights of the creditor, whether the claim was filed by the creditor or by the other person in the creditor's name, to the extent that the other person discharges the undertaking. In the absence of an agreement with the creditor, the other person is not entitled to a distribution until the amount paid to the creditor on the undertaking plus the distributions paid on the claim from the insurer's estate to the creditor equals the amount of the entire claim of the creditor. Any excess received by the creditor shall be held by the creditor in trust for the other person. In this subsection, “other person” does not include a guaranty association or foreign guaranty association. Sec. 21.78.190. Attachment and garnishment of assets. During the pendency of delinquency proceedings in this or a reciprocal state, an action or proceeding in the nature of an attachment, garnishment, or execution may not be commenced or maintained in the courts of this state against the delinquent insurer or its assets. A lien obtained for the action or proceeding within four months before the commencement of the delinquency proceeding or at any time thereafter shall be void as against any rights arising in the delinquency proceeding. Sec. 21.78.200. Uniform Insurers Liquidation Act. (a) AS 21.78.020 , 21.78.030, 21.78.130 — 21.78.190 and 21.78.330(1) — (4) and (6) — (12) constitute and may be referred to as the Uniform Insurers Liquidation Act. (b) The Uniform Insurers Liquidation Act shall be interpreted and construed to effectuate its general purpose to make uniform the law of those states that enact it. To the extent that its provisions when applicable conflict with other provisions of this chapter, the provisions of the Uniform Insurers Liquidation Act shall control. Sec. 21.78.210. Deposit of money collected. The money collected by the director in a proceeding under this chapter shall be from time to time deposited in one or more state or national banks, savings banks, and in the case of the insolvency or voluntary liquidation of a depositary that is an institution organized and supervised under the laws of this state, the deposits shall be entitled to priority of payment on an equality with any other priority given by the banking laws of this state. The director may deposit the money or any part of it in a national bank or as a trust fund. Sec. 21.78.220. Exemption from fees. The director shall not be required to pay a fee to a public officer in this state for filing, recording, issuing a transcript or certificate, or authenticating a paper or instrument pertaining to the exercise by the director of any of the powers or duties conferred upon the director under this chapter, whether or not the paper or instrument is executed by the director or the director's deputies, employees, or attorneys of record and whether or not it is connected with the commencement of an action or proceeding by or against the director, or with the subsequent conduct of the action or proceeding. Sec. 21.78.230. Borrowing on pledge of assets. For the purpose of facilitating the rehabilitation, liquidation, conservation, or dissolution of an insurer under this chapter, the director may, subject to the approval of the court, borrow money and execute, acknowledge, and deliver notes or other evidences of indebtedness and secure the repayment of the same by the mortgage, pledge, assignment, transfer in trust, or hypothecation of any or all of the property, whether real, personal, or mixed, of the insurer, and the director, subject to the approval of the court shall have power to take any and all other action necessary and proper to consummate the loan and to provide for its repayment. The director, shall be under no obligation personally or in an official capacity to repay a loan made under this section. Sec. 21.78.240. Date rights fixed on liquidation. The rights and liabilities of the insurer and of its creditors, policyholders, stockholders, members, subscribers, and all other persons interested in its estate shall, unless otherwise directed by the court, be fixed as of the date on which the order directing the liquidation of the insurer is filed in the office of the clerk of the court that made the order, subject to the provisions of this chapter with respect to the rights of claimants holding contingent claims. Sec. 21.78.250. Fraudulent transfers before petition. (a) A transfer made, or an obligation incurred, by an insurer within one year before 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 that is fraudulent under this section, may be avoided by the receiver, unless the transfer or obligation was to a person who in good faith is a purchaser, lienor, or obligee for a present fair equivalent value. A purchaser, lienor, or obligee, who in good faith has given a consideration less than fair for the transfer, lien, or obligation may retain the property, lien, or obligation as security for repayment. The court may, on due notice, order a 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) A transfer (1) of property other than real property is considered to be made 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 AS 21.78.252 ; (2) of real property is considered to be made 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) that creates an equitable lien is not considered to be perfected if there are available means by which a legal lien could be created; (4) not perfected before the filing of a petition for liquidation is considered to be made immediately before the filing of the successful petition. (c) The provisions of (b) of this section apply whether or not there is or was a creditor who might have obtained a lien or a person who might have become a bona fide purchaser. (d) A transaction of the insurer with a reinsurer is considered fraudulent and may be avoided by the receiver under (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 a part of its duty to pay the originally specified share of losses that occurred before the time of the transaction, unless the reinsurer gives a present fair equivalent value for the release; and (2) a part of the transaction took place within one year before the date of filing of the petition through which the receivership was commenced. Sec. 21.78.251. Fraudulent transfer after petition. (a) After a petition for rehabilitation or liquidation has been filed, a transfer of the real property of the insurer made to a person acting in good faith is valid against the receiver if made for a present fair equivalent value, or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid, for which amount the transferee has a lien on the property transferred. The commencement of a proceeding in rehabilitation or liquidation is constructive notice upon the recording of a copy of the petition for, or order of, rehabilitation or liquidation with the recorder of deeds in the jurisdiction where the real property in question is located. The exercise by a court of the United States, or any state or jurisdiction, to authorize or effect a judicial sale of real property of the insurer in any county or borough in any state is not impaired by the pendency of a proceeding unless the copy is recorded in the county or borough before the consummation of the judicial sale. (b) After a petition for rehabilitation or liquidation has been filed, and before either the receiver takes possession of the property of the insurer or an order of rehabilitation or liquidation is granted, (1) a transfer of any of the property of the insurer, other than real property, made to a person acting in good faith is valid against the receiver if made for a present fair equivalent value, or, if not made for a fair equivalent value, then to the extent of the present consideration actually paid, for which amount the transferee has a lien on the property transferred; (2) a person indebted to the insurer or holding property of the insurer may, if acting in good faith, pay the indebtedness or deliver the property, or any part of it, to the insurer or upon the insurer's order, with the same effect as if the petition were not pending; (3) a person having actual knowledge of the pending rehabilitation or liquidation is considered not to have acted in good faith; (4) a person asserting the validity of a transfer under this section has the burden of proof. (c) Except as otherwise provided in this section, a transfer by or on behalf of the insurer after the date of the petition for liquidation by a person other than the receiver is not valid against the receiver. (d) Nothing in this section impairs the negotiability of currency or negotiable instruments. Sec. 21.78.252. Voidable preferences and liens. (a) A transfer of property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made by the insurer within one year before the filing of a successful petition for liquidation under this chapter, the effect of which might be to enable the creditor to obtain a greater percentage of the debt than another creditor of the same class would receive is considered a preference. If a liquidation order is entered while the insurer is already subject to a rehabilitation order, then a transfer is considered a preference if it is made within one year before the filing of the successful petition for rehabilitation, or within two years before the filing of the successful petition for liquidation, whichever time is shorter. (b) A preference may be avoided by the receiver if (1) the insurer was insolvent at the time of the transfer; (2) the transfer was made within the four months before the filing of the petition; (3) the creditor receiving it or to be benefited by it or the creditor's agent had, at the time the transfer was made, reasonable cause to believe that the insurer was insolvent or was about to become insolvent; or (4) the creditor receiving it was an officer, or was an employee, attorney, or other person who acted in that capacity whether or not the creditor held such a position, or was a shareholder holding directly or indirectly more than five percent of a class of an equity security issued by the insurer, or was another person, firm, corporation, association, or group of persons with whom the insurer did not deal at arm's length.

(c) If a preference is voidable, the receiver may recover the property or, if it has been converted, the value of the property, from a person who has received or converted the property, except that if a bona fide purchaser or lienor has given less than fair equivalent value, the person has a lien upon the property to the extent of the consideration actually given by the person. If a preference by way of lien or security title is voidable, the court may, after notice, order the lien or title to be preserved for the benefit of the estate, in event the lien or title passes to the receiver. (d) The provisions of this subsection apply whether or not there are or were creditors who might have obtained liens or persons who might have become bona fide purchasers. A transfer (1) of property other than real property is considered to be made when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a contract could become superior to the rights of the transferee; (2) of real property is considered to be made 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) that creates an equitable lien is not considered to be perfected if there are available means by which a legal lien could be created; or (4) not perfected before the filing of a petition for liquidation is considered to be made immediately before the filing of the successful petition. (e) A lien obtainable by legal or equitable proceedings (1) upon a contract is one arising in the ordinary course of a proceeding upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution, or like process, whether before, upon, or after judgment or decree and whether before or upon levy; it does not include a lien that, under applicable law, is given a special priority over other liens that are prior in time; or (2) could become superior to the rights of a transferee, or a purchaser could obtain rights superior to the rights of a transferee within the meaning of (d) of this section, if the consequences would follow only from the lien or purchase itself, or from the lien or purchase followed by a step completely within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials; a lien could not, however, become superior and a person could not create superior rights for the purpose of (d) of this section through acts subsequent to the obtaining of a lien or subsequent to a purchase that requires the agreement or concurrence of a third party or that requires further judicial action or ruling. (f) A transfer of property for or on account of a new and contemporaneous consideration that is considered under (d) of this section to be made after the transfer because of delay in perfecting it, does not become a transfer for or on account of an antecedent debt if acts required by the applicable law to be performed in order to perfect the transfer against a lien or bona fide purchaser's rights are performed within 21 days, or a period expressly allowed by the law, whichever is less. A transfer to secure a future loan, if a loan is actually made, or a transfer that becomes security for a future loan, has the same effect as a transfer for or on account of a new and contemporaneous consideration. (g) If a lien that is considered voidable under (b) of this section has been dissolved by the furnishing of a bond or other obligation, and the bond or other obligation has been indemnified directly or indirectly by the transfer or creation of a lien upon property of an insurer before the filing of a petition under this chapter that results in a liquidation order, the indemnifying transfer or lien is also considered voidable. (h) The property affected by a lien that is considered voidable under (b) and (g) of this section shall be discharged from the lien, and that property and the indemnifying property transferred to or for the benefit of a surety shall be transferred to the receiver, except that the court may order a lien to be preserved for the benefit of the estate, and the court may direct that a conveyance be executed as is proper or adequate to evidence the title of the receiver. (i) The court has jurisdiction of a proceeding by the receiver to hear and determine the rights of parties under this section. Reasonable notice of a hearing in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other like obligation. If an order is entered for the recovery of indemnifying property in kind or for the avoidance of an indemnifying lien, the court, upon application of a party in interest, shall in the same proceeding determine the value of the property or lien, and if the value of the property is less than the amount of the indemnity or the amount of the lien, the transferee or lienholder may elect to retain the property or lien upon payment of its value, as determined by the court, to the receiver, within the time that the court fixes. (j) The liability of a surety under a releasing bond or other obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien avoided by the receiver, or, if the property is retained under (i) of this section, to the extent of the amount paid to the receiver. (k) If a creditor has been preferred, and afterward in good faith gives the insurer further credit without security of any kind, for property that becomes a part of the insurer's estate, the amount of the new credit remaining unpaid at the time of the petition may be set off against the preference that would otherwise be recoverable from the creditor. (l) If an insurer, directly or indirectly, within four months before the filing of a successful petition for liquidation under this chapter or at any time in contemplation of a proceeding to liquidate it, pays money or transfers property to an attorney for services rendered or to be rendered, the transaction may be examined by the court on its own motion or shall be examined by the court on petition of the receiver. The transaction may be held valid only to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the receiver for the benefit of the estate, except that if the attorney is in a position of influence in the insurer or an affiliate, payment of money or the transfer of property to the attorney for services rendered or to be rendered is governed by (b)(4) of this section. (m) An officer, manager, employee, shareholder, member subscriber, attorney, or other person acting on behalf of an insurer, who knowingly participates in giving a preference even though the person has reasonable cause to believe that the insurer is, or is about to become, insolvent at the time of the preference, is personally liable to the receiver for the amount of the preference. It is a rebuttable presumption that a preference was given with reasonable cause to believe the insurer is or is about to become insolvent if the transfer was made within four months before the filing of a successful petition for liquidation. (n) If a person receives property from the insurer, or the benefit of the property, and the preference for the property is found voidable under (b) of this section, the person is personally liable for the value of the property and shall account to the receiver for it. (o) Nothing in (m) or (n) of this section affects any other claim by the receiver against any person. Sec. 21.78.253. Claims of holders of void or voidable rights. (a) A claim of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment, or encumbrance that is voidable under this chapter may not be allowed unless the creditor surrenders the preference, lien, conveyance, transfer, assignment, or encumbrance. If the avoidance is affected by a proceeding in which a final judgment has been entered, the claim may not be allowed unless the money is paid or the property is delivered to the receiver within 30 days after the date of the entering of the final judgment, except that the court having jurisdiction over the liquidation may allow further time if there is an appeal or other continuation of the proceeding. (b) A claim allowable under (a) of this section by reason of avoidance, whether voluntary or involuntary, or a preference, lien, conveyance, transfer, assignment, or encumbrance, may be filed as an excused late filing under AS 21.78.292 if filed within 30 days after the date of avoidance, or within the further time allowed by the court under (a) of this section. Sec. 21.78.260. Priority of distribution. The priority of distribution of claims from an insurer's estate is in accordance with the order in which each class of claims is set out in this section. Every claim in each class must be paid in full, or adequate money retained for payment, before the members of the next class may receive payment. A subclass may not be established within a class. The order of distribution of claims is (1) class 1: the costs and expenses of administration during rehabilitation and liquidation, including (A) the actual and necessary costs preserving or recovering the assets of the insurer; (B) compensation for all services rendered in the rehabilitation and liquidation; (C) any necessary filing fees; (D) the fees and mileage payable to witnesses; (E) reasonable attorney's fees and other professional services rendered in the rehabilitation and liquidation; (F) the reasonable expenses of a guaranty association or foreign guaranty association that is handling claims; (2) class 2: reasonable compensation to employees for services performed, to the extent that the claim does not exceed two months of monetary compensation and represents payment for services performed within one year before the filing of the petition for liquidation or, if rehabilitation preceded liquidation, within one year before the filing of the petition for rehabilitation; principal officers and directors of the insurer are not entitled to the benefit of this priority except as otherwise approved by the receiver and the court; the priority in this paragraph is in place of any other similar priority that might be authorized by law as to wages or compensation of employees; (3) class 3: all claims under policies, including claims of the federal or a state or local government, for losses incurred, including third-party claims, and all claims of a guaranty association or foreign guaranty association; all claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds, or investment values, shall be treated as loss claims; that portion of a loss for which indemnification is provided by other benefits or advantages recovered by the claimant, may not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations or support, or by way of succession at death, or as proceeds of life insurance, or as gratuities; payment by an employer to an employee may not be treated as a gratuity; (4) class 4: claims under nonassessable policies for unearned premium or other premium refunds and claims of general creditors, including claims of ceding and assuming companies under contracts of reinsurance; (5) class 5: claims of the federal or a state or local government, other than claims under (3) of this section; claims, including those of a government body for a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary loss sustained from the act, transaction, or proceeding out of which the penalty or forfeiture arose, along with reasonable and actual costs attributable to it; the remaining portion of the claims are in the class of claims set out in (7) of this section; (6) class 6: claims filed late, or any other claims other than claims under (7) and (8) of this section; (7) class 7: surplus or contribution notes, or similar obligations, and premium refunds on assessable policies; payments to members of domestic mutual insurance companies shall be limited in accordance with law; (8) class 8: the claims of shareholders or other owners, in their capacity as shareholders. Sec. 21.78.270. Setoffs and counterclaims. (a) Except as provided in (b) of this section and in AS 21.78.271 , a mutual debt or mutual credit between an insurer and another person in connection with an action or proceeding under this chapter shall be set off, and only the balance may be allowed or paid. (b) A setoff or counterclaim may not be allowed in favor of a person if the obligation of the (1) insurer to the person would not, at the date of the filing of a petition for liquidation, entitle the person to share as a claimant in the assets of the insurer; (2) insurer to the person was purchased by or transferred to the person with a view to its being used as a setoff; (3) person is to pay an assessment levied against the members or subscribers of the insurer, or is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution; or (4) person is to pay premiums, whether earned or unearned, to the insurer. Sec. 21.78.271. Recovery of premiums owed. (a) An (1) insurance producer, premium finance company, or any other person, other than the insured, responsible for the payment of a premium is obligated to pay an unpaid earned premium due the insurer at the time of the declaration of insolvency, as shown on the records of the insurer; neither a credit nor a setoff is allowed to an insurance producer or premium finance company for an amount advanced to the insurer by the insurance producer or premium finance company on behalf of, but in the absence of a payment by, the insured; (2) insured is obligated to pay an unpaid earned premium due the insurer at the time of the declaration of insolvency, as shown on the records of the insurer. (b) If there are grounds for believing that a person has violated this section, the director may initiate proceedings under AS 21.06.170 — 21.06.230. (c) Upon a finding of a violation of this section, the director may order a penalty of not more than $1,000 for each act in violation of this section and may suspend or revoke the person's license issued under this title. Sec. 21.78.272. Reinsurer's liability. The amount recoverable by the receiver from reinsurers may not be reduced as a result of delinquency proceedings, regardless of a provision in the reinsurance contract or other agreement. Payment made directly to an insured or other creditor does not diminish the reinsurer's obligation to the insurer's estate unless the reinsurance contract provided for direct coverage of a named insured and the payment was made in discharge of that obligation. Sec. 21.78.280. Special claims. (a) A contingent and unliquidated claim may not share in a distribution of the assets of an insurer that has been adjudicated to be insolvent by an order made under this chapter, except that the claim shall be considered, if properly presented, and may be allowed to share if (1) the claim becomes absolute against the insurer on or before the last day for filing claims against the assets of the insurer; or (2) there is a surplus and the liquidation is, after that, conducted upon the basis that the insurer is solvent. (b) The claim of a third party that is contingent only on the third party claimant first obtaining a judgment against the insured shall be considered and allowed as if there were not a contingency. (c) A claim may be allowed even if contingent, if it is filed under AS 21.78.292 . It may be allowed and may participate in all distributions declared after it is filed to the extent that it does not prejudice the orderly administration of the liquidation. (d) A claim that is due except for the passage of time shall be treated as an absolute claim is treated, except that the claim may be discounted at the legal rate of interest. (e) A claim made under an employment contract by a director, principal officer, or person in fact performing similar functions or having similar powers, is limited to payment for services rendered before the issuance of an order of rehabilitation or liquidation under this chapter. Sec. 21.78.281. Special provisions for third-party claims. (a) If a third party asserts a cause of action against an insured of an insurer in liquidation, the third party may file a claim with the receiver. (b) Whether or not the third party files a claim, the insured may file a claim on the insured's own behalf in the liquidation. If the insured fails to file a claim by the date for filing claims specified in the order of liquidation or within 60 days after mailing of the notice required by AS 21.78.290 , whichever is later, the insured is an unexcused late filer. (c) The receiver shall make a recommendation to the court under AS 21.78.260 for the allowance of an insured's claim under (b) of this section after consideration of the probable outcome of a pending action against the insured on which the claim is based, the probable damages recoverable in the action, and the probable costs and expenses of defense. After allowance by the court, the receiver shall withhold from the undistributed assets of the insurer as a reserve the amounts payable on the claim, pending the outcome of litigation and negotiation with the insured. If appropriate, the receiver may reconsider the claim on the basis of additional information and may amend recommendations made to the court. The insured shall be afforded the same notice and opportunity to be heard on all changes in the recommendations as in its initial determination. The court may amend its allowance. As claims against the insured are settled or barred, the insured shall be paid from the amount withheld the same percentage as was paid on other claims of like property, based on the lesser of (1) the amount actually recovered from the insured by action or paid by agreement plus the reasonable costs and expenses of defense, or (2) the amount allowed on the claims by the court. After all claims are settled or barred, any sum remaining from the amount withheld reverts to the undistributed assets of the insurer. Delay in final payment under this subsection is not a reason for unreasonable delay of the final distribution and discharge of the receiver. (d) If several claims founded upon one policy are filed, whether by third parties or as claims by the insured under this section, and the aggregate allowed amount of the claims to which the same limit of liability in the policy is applicable exceeds that limit, each claim as allowed shall be reduced in the same proportion so that the total amount of the claims equals the policy limit. Claims by the insured shall be evaluated as in (c) of this section. If an insured's claim is subsequently reduced under (c) of this section, the amount available shall be apportioned ratably among the claims that have been reduced under this subsection. (e) A claim may not be presented under this section if it is or might be covered by a guaranty association or foreign guaranty association. Sec. 21.78.290. Notice to creditors and others. (a) Unless the court directs otherwise, the receiver shall give or cause to be given notice of the liquidation order as soon as possible after the date of the entry of the order of liquidation (1) by first class mail and telephone, to the insurance director, commissioner, or superintendent of each jurisdiction in which the insurer is doing business; (2) by first class mail to a guaranty association or a foreign guaranty association that is or that might become obligated as a result of the liquidation; (3) by first class mail to all insurance agents of the insurer; (4) by first class mail to all persons known or reasonably expected to have claims against the insurer, including all policyholders, at the person's last known address as indicated by the records of the insurer; and (5) by publication in a newspaper of general circulation in the locale in which the insurer has its principal place of business and in other locations that the receiver considers appropriate. (b) Notice to potential claimants under (a) of this section must state that a claimant shall file a claim with the receiver, along with the information required by AS 21.78.170 (a), on or before the date specified in the notice. The time specified in the notice may not be less than six months after the date the liquidation order was entered. The liquidation need not require a person claiming a cash surrender value or other investment value in life insurance and annuities to file a claim. A claimant has a duty to keep the receiver informed of a change of address. Sec. 21.78.291. Duties of agents. (a) A person who receives notice in the form prescribed in AS 21.78.290 that an insurer that the person represents as an agent is the subject of a liquidation order, shall, within 15 days after receipt of that notice, give written notice of the liquidation order as provided in this section. The notice must be in writing and shall be sent by first class mail to each policyholder or other person named in a policy issued through the agent by the insurer, at the last address contained in the agent's records. A policy is considered to be issued through an agent if the agent has a property interest in the expiration of the policy, or if the agent has had in the agent's possession a copy of the declarations of the policy at any time during the life of the policy, unless the ownership of the expiration of the policy has been transferred to another. The written notice issued under this section must include the name and address of the insurer, the name and address of the agent, identification of the policy impaired and the nature of the impairment, including termination of coverage as specified in AS 21.78.100 (d) — (g). Notice under this section by a general agent satisfies the notice requirement for an agent under contract to the general agent. Each agent obligated to give notice under this section shall file a report of compliance with the receiver. (b) An agent failing to give notice or file a report of compliance as required in (a) of this section is, after a proceeding under AS 21.06.070 — 21.06.240, subject to a penalty of not more than $1,000 and suspension or revocation of the agent's license issued under this title. (c) The receiver may waive the duties imposed by this section if the receiver determines that other notice to policyholders of the insurer under liquidation is adequate. Sec. 21.78.292. Filing of claims. (a) Proof of a claim shall be filed with the receiver, in the form required by AS 21.78.170 , on or before the last day for filing specified in the notice required under this chapter, except that proof of a claim for cash surrender value or other investment value in life insurance and annuities need not be filed unless expressly required by the receiver. (b) The receiver may, under the following circumstances, permit a claimant who makes a late filing to share in distributions, whether past or future, as if the claim was not late, to the extent that a payment does not prejudice the orderly administration of the liquidation: (1) the existence of the claim was not known to the claimant and the claim was filed as promptly as was reasonably possible after learning of it; (2) a transfer to a creditor was avoided under this chapter, or was voluntarily surrendered under this chapter, and the filing satisfies the conditions of AS 21.78.253 ; or (3) the valuation under AS 21.78.180 (d), of security held by a secured creditor, shows a deficiency, a claim for which is filed within 30 days after the valuation. (c) The receiver shall permit late-filed claims to share in distributions, whether past or future, as if they were not late, if the claims are claims of a guaranty association or foreign guaranty association for reimbursement of covered claims paid or expenses incurred, or both, after the last day for filing, and if the payments were made and expenses were incurred as provided by law. (d) The receiver may consider a claim that is filed late and that is not covered by (b) of this section and may permit it to receive distributions that are subsequently declared on any claims of the same or lower priority, if the payment does not prejudice the orderly administration of the liquidation. The late-filing claimant shall receive, at each distribution, the same percentage of the amount allowed on the claim as is then being paid to claimants of a lower priority, until the claim has been paid in full. Sec. 21.78.293. Receiver's recommendation to the court. (a) The receiver shall review all claims filed in the liquidation and shall make further investigation that the receiver considers necessary. The receiver may compound, compromise, or negotiate the amount for which a claim will be recommended to the court, unless the receiver is required by law to accept a claim as settled by a person or organization, including a guaranty association or foreign guaranty association. As soon as practicable, the receiver shall present to the court a report of the claims against the insurer, along with the receiver's recommendations. The report must include the name and address of each claimant and the amount of the claim finally recommended, if any. If the insurer has issued annuities or life insurance policies, the receiver shall report the persons to whom, according to the records of the insurer, amounts are owed as cash surrender values or other investment values, and the amounts owed. (b) The court shall review and adopt the receiver's report on claims by approving those claims that are supported by substantial evidence and disapproving allowed claims that are not supported by substantial evidence. Claims in a report that are not disapproved by the court within a period of 120 days following submission by the receiver shall be treated by the receiver as allowed claims. Sec. 21.78.294. Distribution of assets. Under the direction of the court, the receiver shall distribute assets in a manner that will assure the proper recognition of priorities and a reasonable balance between the expeditious completion of the liquidation and the protection of unliquidated and undetermined claims, including third-party claims. Distribution of assets in kind may be made at valuations set by agreement between the receiver and the creditor, and approved by the court. Sec. 21.78.295. Unclaimed and withheld money. (a) All unclaimed money that is subject to distribution and remains in the receiver's hands when the receiver is ready to apply to the court for discharge, including the amount distributable to a creditor, shareholder, member, or other person who is unknown and cannot be found, shall be deposited with the Department of Revenue and shall be paid, without interest, to the person entitled to receive it or to the person's legal representative upon proof satisfactory to the Department of Revenue of the person's right to it. Notwithstanding the provisions of AS 34.45 , an amount on deposit with the Department of Revenue that is not claimed within six years after the discharge of the receiver is considered to be abandoned and shall, without further proceedings, be deposited in the general fund. (b) All money retained for claims described in AS 21.78.280 and not distributed, shall, upon discharge of the receiver, be deposited with the Department of Revenue and paid in accordance with AS 21.78.260 . Any amount remaining that, under AS 21.78.260 , would revert to the undistributed assets of the insurer, shall be transferred to the Department of Revenue. Remaining amounts become the property of the state under (a) of this section, unless the director, in the director's discretion, petitions the court to reopen the liquidation under AS 21.78.297 . Sec. 21.78.296. Termination of proceedings. (a) When all assets justifying the expense of collection and distribution have been collected and distributed under this chapter, the receiver shall apply to the court for discharge. The court may grant the discharge and make additional orders the court considers appropriate. (b) Any other person may apply to the court at any time for an order under (a) of this section. If the application is denied, the applicant shall pay the receiver's costs and expenses incurred in resisting the application, including a reasonable attorney fee. Sec. 21.78.297. Reopening liquidation. After the liquidation proceeding has been terminated and the receiver discharged, the director or an interested party may at any time petition the court to reopen the proceedings for good cause, including the discovery of additional assets. If the court is satisfied that there is justification for reopening, it shall order the liquidation proceeding reopened. Sec. 21.78.298. Disposition of records during and after termination of liquidation. If it appears to the director that the records of an insurer that is in the process of liquidation, or is completely liquidated, are no longer useful, the director may recommend to the court, and the court shall direct, which records should be retained for future reference and which should be destroyed. Sec. 21.78.300. Report and petition for assessment. Within three years after the date of the entry of an order of rehabilitation or liquidation of a domestic mutual insurer or a domestic reciprocal insurer, the director may make and file a report and petition to the court setting out (1) the reasonable value of the assets of the insurer; (2) the liabilities of the insurer to the extent thus far ascertained by the director; (3) the aggregate amount of the assessment, if any, that the director considers reasonably necessary to pay all claims, the costs and expenses of the collection of the assessments, and the costs and expenses of the delinquency proceedings in full; (4) other information relative to the affairs or property of the insurer that the director considers material. Sec. 21.78.310. Order and levy of assessment. (a) Upon the filing and reading of the report and petition provided for in AS 21.78.300 , the court, ex parte, may order the director to assess all members or subscribers of the insurer who may be subject to the assessment, in the aggregate amount the court finds reasonably necessary to pay all valid claims as may be timely filed and proved in the delinquency proceedings, together with the costs and expenses of levying and collecting assessments and the costs and expenses of the delinquency proceedings in full. The order must require the director to assess each member or subscriber for a proportion of the aggregate assessment, according to the reasonable classification of the members or subscribers and formula that may be made by the director and approved by the court. (b) The court may order additional assessments upon the filing and reading of any amendment or supplement to the report and petition referred to in (a) of this section, if the amendment or supplement is filed within three years after the date of the entry of the order of rehabilitation or liquidation. (c) After the entry of the order to levy and assess members or subscribers of an insurer referred to in (a) or (b) of this section, the director shall levy and assess members or subscribers in accordance with the order. (d) The total of all assessments against a member or subscriber with respect to a policy, whether levied under this chapter or under another provision of this title, shall be for no greater amount than that specified in the policy or policies of the member or subscriber and as limited under this title, except as to a policy that was issued at a rate of premium below the minimum rate lawfully permitted for the risk insured, in which event the assessment against the policyholder shall be upon the basis of the minimum rate for the risk. (e) An assessment may not be levied against a member or subscriber with respect to a nonassessable policy issued in accordance with this title, when the insurer has a nonrevoked authority to issue nonassessable policies. Sec. 21.78.320. Assessment prima facie correct. (a) An assessment of a subscriber or member of an insurer made by the director under the order of court fixing the aggregate amount of the assessment against all members or subscribers and approving the classification and formula made by the director under AS 21.78.310 shall be prima facie correct. (b) Each member or subscriber shall be notified of the amount of assessment to be paid by the member or subscriber by written notice mailed to the address of the member or subscriber last of record with the insurer. Failure of the member or subscriber to receive the notice so mailed, within the time specified therein for the payment of the assessment or at all, shall be no defense in a proceeding to collect the assessment. (c) If the member or subscriber fails to pay the assessment within the period specified in the notice, which period may not be less than 20 days after mailing, the director may obtain an order in the delinquency proceedings requiring the member or subscriber to show cause at a time and place fixed by the court why judgment should not be entered against the member or subscriber for the amount of the assessment together with all costs, and a copy of the order and a copy of the petition shall be served upon the member or subscriber within the time and in the manner designated in the order. (d) If the subscriber or member after due service of a copy of the order and petition referred to in (c) of this section is made upon the member or subscriber (1) fails to appear at the time and place specified in the order, judgment shall be entered against the member or subscriber as prayed for in the petition; or (2) appears in the manner and form required by law in response to the order, the court shall hear and determine the matter and enter a judgment in accordance with its decision. (e) The director may collect the assessment through any other lawful means. Sec. 21.78.325. Recovery from affiliates. (a) If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under the order has a right to recover on behalf of the insurer (1) from a parent corporation or holding company or person or affiliate who otherwise controlled the insurer, the amount of distributions, other than a distribution of shares of the same class of stock, paid by the insurer on the insurer's capital stock; or (2) a payment in the form of a bonus, termination settlement, or extraordinary lump sum salary adjustment made by the insurer or the insurer's subsidiary to a director, officer, or employee. If the distribution or payment is made during the 12 months preceding the petition for liquidation, conservation, or rehabilitation, the distribution or payment is subject to the limitations of (b) — (d) of this section. (b) A distribution may not be recovered if the parent or affiliate shows that when paid the distribution was lawful and reasonable and that the insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations. (c) A person who was a parent corporation or holding company or a person who otherwise controlled the insurer or affiliate at the time the distribution was paid is liable up to the amount of the distribution or payment that the person received. If two or more persons are liable with respect to the same distribution, the persons are jointly and severally liable. (d) The maximum amount recoverable under this section is the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual obligations of the impaired or insolvent insurer and to reimburse any guaranty funds that expended funds or incurred expenses or may expend funds or may incur expenses in connection with the impaired or insolvent insurer. (e) To the extent that a person liable under (c) of this section is insolvent or otherwise fails to pay a claim due under (c) of this section, the person's parent corporation or holding company or person who otherwise controlled the parent corporation or holding company at the time the distribution was paid is jointly and severally liable for the resulting deficiency in the amount recovered from the parent corporation or holding company or the person who otherwise controlled the parent corporation or holding company. Sec. 21.78.330. Definitions. In this chapter, (1) “delinquency proceeding” means a proceeding commenced against an insurer under this chapter for the purpose of liquidating, rehabilitating, reorganizing, or conserving the insurer; (2) “domiciliary state” means the state in which an insurer is incorporated or organized, or in the case of an insurer incorporated or organized in a foreign country, the state in which the insurer, having become authorized to do business in the state, has at the commencement of delinquency proceedings, the largest amount of its assets held in trust and assets held on deposit for the benefit of its policyholders or policyholders and creditors in the United States, and the insurer is considered to be domiciled in that state; (3) “foreign country” means territory not in a state; (4) “general assets” means all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited, or otherwise encumbered for the security or benefit of specified persons or a limited class or classes of persons, and as to the specifically encumbered property the term includes all the property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby; assets held in trust and assets held on deposit for the security or benefit of all policyholders or all policyholders and creditors in the United States shall be considered general assets; (5) “impairment” or “insolvency” means that the capital of a stock insurer or the surplus of a mutual or reciprocal insurer shall be considered to be impaired and the insurer shall be considered to be insolvent, when the insurer is not possessed of assets at least equal to all liabilities and required reserves together with its total issued and outstanding capital stock if a stock insurer, or the minimum surplus if a mutual or reciprocal insurer required by this title to be maintained for the kind or kinds of insurance it is then authorized to transact; (6) “insurer” means a person, firm, corporation, association, or aggregation of persons doing an insurance business and subject to the insurance supervisory authority of or to liquidation, rehabilitation, reorganization, or conservation by the director or the equivalent insurance supervisory official of another state; (7) “preferred claim” means a claim with respect to which the law of the state or of the United States accords priority of payments from the general assets of the insurer; (8) “receiver” means receiver, liquidator, rehabilitator, or conservator as the context may require; (9) “reciprocal state” means a state other than this state in which in substance and effect the provisions of the Uniform Insurers Liquidation Act, as defined in AS 21.78.200 , are in force, including the provisions requiring that the director of insurance or equivalent insurance supervisory official be the receiver of a delinquent insurer; (10) “secured claim” means a claim secured by mortgage, trust deed, pledge, deposit as security, escrow, or otherwise, but not including special deposit claims or claims against general assets; the term also includes claims which more than four months prior to the commencement of delinquency proceedings in the state of the insurer's domicile have become liens upon specific assets by reason of judicial process; (11) “special deposit claim” means a claim secured by a deposit made under statute for the security or benefit of a limited class or classes of persons, but not including general assets; (12) “state” means a state of the United States, the District of Columbia, and the Commonwealth of Puerto Rico.